REG - Creo Medical Group - Final Results
26/04/2023 07:00
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RNS Number : 4523X Creo Medical Group PLC 26 April 2023
Creo Medical Group plc
("Creo", the "Group" or the "Company")
Final Results
Foundations for sustained growth: significant increase in revenue &
operational progress
Creo Medical Group plc (AIM: CREO), the medical device company focused on the
emerging field of surgical endoscopy, announces its audited final results for
the 12 months ended 31 December 2022.
Financial Highlights:
· Total sales in the period of £27.2m (FY21: £25.2m), including
first revenues from Creo's Kamaptive licensing programme of £1.4m
· Threefold increase in revenues to £0.9m from Speedboat Inject and
CROMA, laying the foundation for further growth in 2023 as the Group continues
to commercialise its technology
· Gross profit up 13.3% to £13.1m (FY21: £11.6m), with gross margin
up 2.3% points to 48.3% (FY21: 46.0%)
· Underlying EBITDA loss of £22.1m for FY22 (FY21: £22.6m) in-line
with market expectations, including £13.5m (FY21: £12.9m) of R&D costs
· Underlying administrative costs reduced in H2-22 vs H1-22 by 5%
despite the inflationary environment, and this is expected to continue into
FY23 following a restructuring of the R&D teams as we move to the next
phase of commercial development with the completion of many projects in FY22
· £33.7m raised through oversubscribed fundraise in March 2023
(post-period end), providing the Company with a pathway to cash flow breakeven
and, ultimately, to profitability
Commercial Highlights (including post-period end):
· Global cases have more than doubled in FY22 vs FY21. Continued
cases in the key USA, EMEA and APAC markets
· Speedboat Inject now in everyday use treating bowel (lower GI), and
oesophagus and stomach (upper GI) indications. Q1-23 cases 50% higher than
FY22 quarterly average and Q4-22 actual
· Continued initial use of MicroBlate Fine for soft tissue ablation
within both the pancreas and the liver
· Multi-national and bespoke regional training and mentoring events
held, resulting in 80 confirmed users as at December 2022 (a four-fold
increase over FY21), and 91 as at 31 March 2023
· A slimmer Speedboat Inject was released to market in late Q4-22,
significantly increasing Creo's addressable market due to its compatibility
with a greater number of smaller endoscopes
· Kamaptive licensing programme
· First Kamaptive licensing partnership announced with the world's
biggest robotics company, Intuitive (NASDAQ : ISGR), and first revenues
received
· Non-exclusive IP licence and royalty agreement entered into with CMR
Surgical, the global surgical robotics business
Operational Highlights (including post-period end):
· Development of Creo's slimmest Speedboat, Speedboat Flush, with
510k FDA submitted early in 2023
· Multi-site post-market clinical study announced in Q1-23
with MicroBlate Flex, Creo's microwave ablation device, to evaluate the
safety and feasibility in the bronchoscopic treatment of lung lesions, with
patients being recruited and the first in-human case for the device expected
to take place during Q2-23
FY23 Update and Outlook
Q1-23 trading has been in line with expectations. The Company has experienced
strong orders and growing sales in its core technology including cases using
the slimmer Speedboat Inject. Consumables sales in Q1-23 were 10% higher than
FY22 quarterly average.
Following the re-organisation of the business in Q4-22, costs have been
reduced and OPEX in Q1-23 was 10% lower than the FY22 quarterly average.
Management remain confident of achieving their 2023 objectives and delivering
on the potential of Creo's technology.
Craig Gulliford, Chief Executive Officer, commented: "2022 saw a significant
increase in revenue from core technology as we built on the foundations laid
in previous years during the pandemic to deliver further growth and
operational progress. With global cases using Speedboat Inject more than
doubling in FY22 vs FY21, and a fourfold increase in core technology users,
our approach to training, mentoring and converting clinicians into regular
users is gaining considerable traction. It has been especially pleasing to see
the pioneering work that has been done by our clinicians around the world to
expand the use of Creo's technology into new indications, improving outcomes
for even more patients. With this being the first full year of commercial
operations, post-pandemic, we can now see where and how to apply our resources
to achieve increasingly predictable results as we accelerate growth.
"We developed and launched innovative new products, including the slimmer
Speedboat Inject, and launched our Kamaptive partnerships in the field of
robotic assisted surgery which are progressing well.
"Our post-period oversubscribed funding round provided us with the working
capital necessary to continue executing our strategic vision and has provided
us with a path to cashflow breakeven. I would again like to reiterate my
sincere thanks to our shareholders for their support during the round. This
has left Creo well positioned for further sustained growth. We expect to see
the continued acceleration of the commercialisation of our core technology and
the introduction of new innovative products, as well as the expansion of our
Kamaptive programme as we continue to build a world class medical device and
tech licensing company."
Enquiries
Creo Medical Group plc www.creomedical.com (http://www.creomedical.com)
Richard Rees (CFO) +44 (0)1291 606 005
Cenkos Securities plc +44 (0)20 7397 8900
Stephen Keys / Camilla Hume (NOMAD)
Michael Johnson / Russell Kerr (Joint Broker)
Numis Securities Limited (Joint Broker) +44 (0)20 7260 1000
Freddie Barnfield / Duncan Monteith / Euan Brown
Walbrook PR Ltd Tel: +44 (0)20 7933 8780 or creo@walbrookpr.com (mailto:creo@walbrookpr.com)
Paul McManus / Sam Allen Mob: +44 (0)7980 541 893 / +44 (0)7502 558 258 / +44 (0)7867 984 082
/ Phillip Marriage
About Creo Medical
Creo Medical is a medical device company focused on the development and
commercialisation of minimally invasive electrosurgical devices, bringing
advanced energy to endoscopy.
The Company's vision is to improve patient outcomes through the development
and commercialisation of a suite of electrosurgical medical devices, each
enabled by CROMA, powered by Kamaptive. The Group has developed the CROMA
powered by Kamaptive full-spectrum adaptive technology, which aims to optimise
surgical capability and patient outcomes by applying the benefits of advanced
laparoscopic surgical technology to areas of therapy where there is
significant unmet clinical need but such technology has been extremely
challenging to deliver to date.
Kamaptive is a seamless, intuitive integration of multi-modal energy sources,
optimised to dynamically adapt to patient tissue during procedures such as
resection, dissection, coagulation and ablation of tissue. Kamaptive
technology provides clinicians with increased flexibility, precision and
controlled surgical solutions. CROMA currently delivers bipolar radiofrequency
("RF") energy for precise localised cutting and focused high frequency
microwave ("MW") energy for controlled coagulation and ablation via a single
accessory port. This technology, combined with the Group's range of patented
electrosurgical devices, is designed to provide clinicians with flexible,
accurate and controlled clinical solutions. The Directors believe the
Company's technology can impact the landscape of surgery and endoscopy by
providing a safer, less-invasive and more cost-efficient option for
procedures.
For more information, please refer to the website www.creomedical.com
(http://www.creomedical.com)
Chief Executive's Review
During 2022 we have moved quickly and decisively to build on the strong global
foundations laid over the last few years. This resulted in: a four-fold
increase in users of our core technology; partnering with two of the world's
biggest robotic surgery companies with first revenues being received; and
making notable improvements to our flagship devices (significantly, releasing
of a slimmer Speedboat Inject to market in November 2022).
Since the second half of 2021, operating losses have consistently reduced.
Notwithstanding our progress, like all shareholders, I was disappointed with
Creo's share price performance during the period. The combination of a number
of macro factors outside of Creo's control, including the economic whirlwind
caused by UK's mini-budget in September, fuelled market nervousness which
disproportionally impacted the access to capital needed by many early stage,
high growth prospect businesses like Creo. With the support from our
shareholders, we were able to execute on a planned anticipated final fundraise
which was significantly over-subscribed, early in 2023 to provide Creo with a
strong cash position from which we can enter the next stage of our development
and commercialisation of Core Technologies and drive the business through to
cash flow break even, and, ultimately, profitability. I thank all
shareholders, new and old, for the support provided. Looking back to our IPO
in 2016 and the early-stage, pre-revenue, pre-clearance medtech business that
Creo has grown from, it is clear that we have made significant progress.
Despite the worldwide disruption caused by COVID-19, the War in Ukraine and
macro economic pressures, we have remained ahead of our projections and
continue to improve lives.
Widespread Adoption
In 2022 our core technology improved lives in EMEA, USA and APAC daily.
flexible endoscopic surgical capability into the hands of interventional
endoscopists and surgeons is real.
Over the year we significantly enhanced our heralded Pioneer Clinical
Education Programme, doubling the number of training centres and offering
multi-national and bespoke regional models. Most importantly, we supported the
treatment of more patients than ever before.
As more clinicians utilise our technology, the likelihood that it will be used
to perform additional procedures increases too. In July 2022, a team of
clinicians in Israel, led by Dr Sergei Vosko, applied Speedboat Inject to
remove a GIST from a patient for the first time.
We continue to progress device clearances across additional territories; the
first reimbursement code for resection procedures in the Upper GI tract was
approved by the AMA in late 2022 and is something we expect to be of real
commercial interest to our customers across the lucrative US market.
The process we need to execute for continued growth and to deliver a step
change in patient care across multiple areas of therapy is clear. The rapid
increase in patients treated, our growing pipeline of future users and our
international successes all validate this.
Additional Revenue Streams
We have developed Creo's business from the outset to have a multi-tiered
revenue structure. Through our previous three-tiered build-buy-partner
strategy we successfully acquired and integrated Albyn Medical and Boucart
Medical, maximising the potential of both our core technology and acquired
complementary product ranges.
The subsequent acquisition of Aber Electronics in 2021 secured some of the
best microwave and RF engineering capability in the world, bolstered our
existing team and secured a key element of our supply chain. With our
accelerated growth and significant international footprint, we are leveraging
this growth and our economies of scale for the benefit of our core product
range.
During 2022 we launched some of our endotherapy accessories, which sit
alongside the core Creo GI products, in the US. We aim to replicate this into
APAC during 2023, building on the successes of our European model and growing
the Creo brand.
I am particularly pleased with the progress of our Kamaptive Licensing
Programme during 2022. We secured agreements with two of the world's biggest
robotic surgery companies. The quality of our partners demonstrates the wide
potential of our technology. The receipt of our first revenues from our
Kamaptive Licensing Programme affirms this valuable revenue tier for Creo.
Our focus on the optimisation and commercialisation of our product range will
maximise the impact of our Kamaptive Licensing Programme. Reshaping our
engineering resources to meet the challenge of these opportunities has
naturally resulted in some difficult decisions being made to structure our
team composition and capabilities as we concentrate on successfully delivering
the next phase of Creo. My sincere thanks go to those departing colleagues who
helped us reach this point.
We now have a clear roadmap to enable our Kamaptive licensing programme and
additional products to work in tandem with Creo's core technology, providing a
multifaceted business capable of reaching far more patients and potential
markets than we would have imagined a few years ago.
We are now bringing laparoscopic capability to flexible endoscopy, both large
and exciting markets underserved by advanced energy.
The Future
2022 was an inflection point for Creo, with significant operational progress
and commercial traction cementing our technology at the forefront of a
paradigm shift in the treatment of patients across multiple indications.
Building on this progress, we continue to commercialise Creo's core
technology, improving the precision and control we afford our customers whilst
enabling the delivery of further surgical outcomes.
The Kamaptive Licensing Programme offers significant potential beyond our
current partnerships to develop a range of potential derivatives of our
technology into other partner programmes. The next stage of the "tech play in
medical devices" is equally exciting. As our partnerships bear fruit, my
vision is to launch the CROMA - powered by Kamaptive - developer eco-system,
safely giving commercial access to the unique core technology we have to a
wide range of potential partners, inspired by the reality of the current
partner programmes.
2023 is already moving at pace. Having submitted 510K FDA clearance for our
slimmest Speedboat, the Speedboat Flush, we will continue the introduction of
Microblate Fine to soft tissue ablation in the liver. We are preparing for
clinical trials for Microblate Flex in the lung and a whole host besides. This
will be delivered alongside the further integration of our wider portfolio of
products and their introduction to significant new markets, whilst continuing
to evolve the Pioneer Clinical Education Programme.
Tying this all together is the continued development of CROMA and with it the
prospect of delivering truly game changing real time tissue characterisation
software. Building on some key engineering undertaken in 2022, "Tissue
Sensing" has the potential to add tremendous value to flexible endoscopy. The
prospect of enhanced precision and control opens up a new frontier for patient
outcomes, not to mention the potential benefits to robotic surgical
programmes.
It is both a source of great pride and satisfaction to me that we have created
a terrific team who know what we need to do in each sector to execute.
Alongside partnerships with some of the world's best surgical robotic
partners, our job is clear: to deliver on what we have very clear sight of
over the coming months and years to become a premier, cash generative global
medical device and tech licensing business, transforming and improving the
lives of many thousands as we do so.
Craig Gulliford
Chief Executive Officer
25 April 2023
Chairman's statement
Creo Medical continues its evolution from a UK medical device innovator into
an international group focused on the clinical and commercial adoption of a
full suite of electrosurgical products. With multi-tiered revenue streams and
a global reach servicing over 4,800 customers from fourteen offices, our core
products are now in daily use around the world.
During the year, the Group further embedded its core technologies into its
acquired businesses to create a shared culture spanning multiple markets and
driving real synergies across the business. This is seen from the launch of
our Creo branded consumable products in the US providing additional revenue
streams from these synergies. We signed a landmark collaboration agreement
with Intuitive Surgical and announced a license and royalty agreement with CMR
Surgical.
Consequently, we are now working on both sides of the Atlantic with two of the
leading robotic surgery brands to deploy our proprietary technology into new
surgical markets that complement our core electrosurgical products.
Notwithstanding this progress, like most companies, we faced economic
headwinds fuelled by both war in Europe and global fears around inflation and
recession. These hit the equity markets for small-cap, technology companies
like ours especially hard and increased as the year progressed and our share
price worsened. This resulted in uncertainty over sources of equity finance in
the second half of the year but has thankfully been addressed, post-period, by
the placing, subscription and open offer that completed in March 2023 to raise
gross proceeds of approximately £33.7million. The Directors believe our
strengthened balance sheet provides a pathway to cashflow breakeven and
profitability and gives comfort to our shareholders, bank debt providers,
customers, suppliers and partners.
Sustainability
Creo Medical is committed to best practice in its environmental and social
policies under the umbrella term of 'sustainability' which emphasises our core
social impact of improving clinical outcomes for patients. Ivonne Cantu leads
the charge as the non-exec champion on sustainability and represents the Board
on the Sustainability Committee.
The Sustainability Report in our 2022 Annual Report and Accounts outlines the
three areas where we believe we can make the greatest impact: by improving
patient outcomes for our patients, clinicians and healthcare providers; by
promoting diversity, equality and enhanced opportunities for our people and
communities; and by ensuring that the actions we take as a business mitigate
our environmental impact on our planet.
Governance
The Company continues to strengthen our governance framework with energetic
engagement by the Non-Executive Directors at board level, through the Board
committees and in discussion with shareholders. As detailed in the 2022
Compliance Statement in the 2022 Annual Report and Accounts, the Group has
adopted the QCA Code of Conduct with its ten principles to deliver growth,
maintain a dynamic management framework and build trust.
The Board recognise the challenging MDR/MDD environment particularly for
relatively new Companies and the uncertainties that arise from this.
Therefore, the Directors share a close focus on risk management as the Group
develops new products, new clinical procedures and new markets.
The Audit Committee, chaired by John Bradshaw, our Senior Independent
Director, meets regularly to review and monitor the financial statements,
accounting principles, internal controls and risk management systems as
detailed in our maiden Audit Committee Report in our 2022 Annual Report and
Accounts.
The Committee also monitors the relationship with our auditors to ensure
independence and objectivity. The Board continues to seek guidance from our
professional advisers, including solicitors, auditors, remuneration
consultants and nominated adviser, on recommended best practice for AIM
companies.
Employees
Creo Medical's staff has grown from just 27 employees in the year before IPO
to approximately 289 employees operating in 10 countries spanning Europe, the
US and Asia. Approximately 120 employees came from acquisitions we completed
in 2020 and 2021.
2022 was a tough year for all our management and employees with challenging
delivery requirements set against constrained resources and disrupted
economies and capital markets. A reorganisation reflecting the transition of
the Company towards operational focus means we have had to say goodbye to some
great people who have helped us get where we are today.
The Board would like to thank all the Creo Medical team for their hard work,
commitment and patience during the year which laid the foundations for the
successful equity raise and therefore the exciting next stage of our
evolution.
The Group promotes an entrepreneurial employee culture guided by five values:
collaborative, creative, disruptive, 'can-do', and life-changing patient
outcomes. The Remuneration Committee, chaired by Ivonne Cantu, aims to
implement a remuneration policy that promotes long-term success, consistent
with our culture and values and that is aligned with the interests of our
shareholders and other stakeholders. Further details are included in the
Remuneration Report in our 2022 Annual Report and Accounts.
Shareholders
While the Company's frustrating share price performance during 2022 can be
partly blamed on the external factors outlined above, it was exacerbated by
its weakening balance sheet and uncertainty over future sources of capital.
This necessitated frequent discussions between the Company and its
shareholders to determine the best route forwards. These resulted in the
equity raise in Q1 2023 that was oversubscribed by both existing and new
shareholders. The Directors extend heartfelt thanks to our fellow shareholders
for this engagement and support in exceptionally challenging market
conditions.
Outlook
Our CEO, Craig Gulliford, has outlined in his report, the Group's ambitions to
become a premier global medical devices company transforming many thousands
more lives. With a now strengthened balance sheet and clear targets for the
next few years, management and staff can focus on these bold ambitions. In the
meanwhile, we will continue to build systems for governance, sustainability
and remuneration that are well aligned, with the ambitions of all our
stakeholders.
Charles Spicer
Non-Executive Chairman
25 April 2023
Financial Review
I am pleased to announce the results for the financial year to 31 December
2022. We have seen the first revenues from our Kamaptive Licensing Programme
in the year along with growth in sales of our CROMA and Speedboat Inject
device. These revenues along with cost savings and operational efficiencies
have reduced the underlying EBITDA loss year on year. The fund raise of
£33.7m (before expenses) in Q1 2023 provides us with the platform to achieve
positive underlying EBITDA by 2025.
Revenue and other income
The Group has made significant progress in establishing sales channels through
new products, as well as the development of our commercial footprint with our
Kamaptive Licensing Programme seeing its first revenues and additional Heads
of Terms signed with new partners.
Our European operations have continued to be cash generative to the business
and we are starting to see growing sales through broader direct and indirect
sales channels for CREO across our large portfolio of products.
Revenues billed in the period in relation to Speedboat Inject and CROMA
increased to £0.9m (2021: £0.3m) and Kamaptive licensing revenues of £1.4m
(2021: £nil). £24.9m was generated through consumable sales in Creo Europe.
Other operating income of £0.1m in the 12-month period to 31 December 2022
(2021: £0.1m) relates to research grants.
Gross Margin
Gross margin improved from 46.0% in 2021 to 48.3% in 2022 driven by an
increase in margin from consumable sales from 46.3% in 2021 to 48.0% in 2022.
Operating loss
The operating loss for the period increased to £30.8m (2021: £29.9m),
reflecting a full year of additional heads recruited towards the end of 2021,
to support the increased operational growth and completion of key R&D
projects. The underlying operating loss for the year was £20.8m (2021:
£20.0m). The underlying EBITDA loss for the period was £22.1m (2021:
£22.6m). Operating expenses peaked during the year as we completed key
R&D projects and invested in our operational capacity and operational
resources. In the second half of the year we saw these costs reduce against
H1-22 by 5%, a trend we expect to continue into 2023 and we have already seen
evidence of this in Q1-23 management numbers.
Whilst underlying EBITDA and underlying operating loss are not statutory
measures, the Board believes they are helpful to include for investors as
additional metrics to help provide a meaningful understanding of the financial
information as this measure provides an approximation of the ongoing cash
requirements of the business as it continues to pursue its future development
and pursue ongoing commercialisation focus of its approved products.
The underlying EBITDA position excludes SIP charges and Earnout charges
(contingent and deferred payments on previous acquisitions) expenses which are
non-cash and incorporates the recovery of research and development expenditure
which the Group is able to benefit from through R&D tax credit schemes.
The underlying operating loss position is the same as underlying EBITDA but
also excludes share-based payment which are non-cash.
12 months to 12 months to
(All figures £'000) 31 December 2022 31 December 2021
Revenue 27,169 25,161
Cost of Sales (14,047) (13,576)
Gross Profit 13,122 11,585
Other Operating Income 51 52
Administrative Expenses (43,929) (41,544)
Operating Loss (30,756) (29,907)
SIP Charge 119 -
Earnout 933 500
Depreciation & Amortisation 3,112 2,562
R&D expenditure recovered via tax credit scheme 4,507 4,299
Underlying EBITDA (non statutory measure) (22,084) (22,546)
Share based payments 1,279 2,564
Underlying operating loss (non-statutory measure) (20,805) (19,982)
Tax
The tax credits recognised in the current and previous financial year relate
mainly to R&D tax credit claims. A deferred tax asset has been recognised
in respect of the business combination relating to our Creo Europe
subsidiaries. A £0.75m deferred tax asset has been recognised in respect of
tax losses in Creo Medical Limited which we expect to utilise through group
relief of the future profits in Creo Medical UK Limited. No further tax assets
in relation to these losses has been recognised due to the uncertainty over
the timing of future recoverability.
Expenses
Administrative expenses totalled £43.9m for the year (2021: £41.5m). The
increase was largely driven by headcount costs which increased to £22.9m for
the year from £20.5m in 2021 due to an increase in employees at the end of
Q4-21. Non employment R&D costs were £6.9m in the year (2021: £7.3m) due
to the completion of key R&D projects and a move towards funded R&D
projects such as the Intuitive agreement, offset by increase in Patent costs.
Sales and marketing costs were £3.8m (2021: £3.2m) driven by increased
travel compared to 2021 due to COVID-19 restrictions as well as costs
associated with growing our Core Technology sales.
General and Administrative expenses were £5.1m (2021: £5.0m) with our
facility and utility costs all increased due to inflationary pressures.
Non-cash expenses comprising of SIP charge, earnout expenses, share-based
payments and depreciation and amortisation were £5.2m (2021: £5.5m).
Adjusting for these our underlying admin expenses were £38.8m (2021:
£35.8m).
In the second half of the year, we saw these underlying administrative costs
reduce against H1-22 by 5% a trend we expect to continue into 2023 and we have
already seen evidence in Q1-23 in management numbers reported. This was
following a restructuring of the R&D teams as we move to the next phase of
commercial development with the completion of many projects in 2022.
Loss per Share
Loss per share was 15 pence (2021: 15 pence).
Dividend
No dividend has been proposed for the period to 31 December 2022 (2021:
£nil).
Cash flow and balance sheet
Net cash used in operating activities was £25.0m (2021: £26.0m), driven by
the increased investment in operational capacity, focusing on commercial
activities and initial cash outlay for endotherapy consumable products in the
US and Europe. Net cash used in investing activities was £6.0m (2021: £7.8m)
driven by the investments in new facilities for our UK headquarters and
contingent and deferred payments from previous acquisitions. Cash generated
from financing activities was £0.5m during the period.
Total assets at the end of the period decreased to £75.3m (31 December 2021:
£100.6m), a 25% decrease, reflecting the reduction in cash from operations
for the period. Cash and cash equivalents at 31 December 2022 was £13.1m (31
December 2021: £43.5m). Net assets were £49.4m (31 December 2021: £73.3m),
a 33% decrease due to operating loss and share based payment expense.
Post balance sheet event
We raised £33.7m (before expenses) through an oversubscribed fundraise in
March 2023 which enables Creo to push commercialisation of the suite of
products and move to break even and being self-cash sustaining within the near
future.
Accounting policies
The Group's financial statements have been prepared in accordance with
International Financial Reporting Standards. The Group's accounting policies
have been applied consistently throughout the period and are described in the
2022 Annual Report and Accounts.
Key Performance Indicators
As the Group continues to develop and commercialise its core technology, the
Directors consider the key financial performance indicators to be the level of
cash held in the business, sales and operating expenses controlled to budget.
The Board performs regular reviews of actual results against budget, and
management monitors cash balances on a monthly basis to ensure that the
business has sufficient resources to enact its current strategy.
Certain KPIs concern non-financial measures, such as the number of trainees
for our Pioneer Clinical Education Programme, integration of acquired
entities, ESG metrics such as carbon emissions, diversity ratios and employee
engagement as detailed in our 2022 Annual Report and Accounts. All
non-financial measures are monitored monthly.
The Board will continue to review the KPIs used within the business and assess
them as the business grows.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group are set out in the 2022
Report and Accounts.
Richard Rees
Chief Financial Officer
Consolidated Statement of Profit and Loss and Other Comprehensive Income
(All figures £'000) Note 12 months to 12 months to
31 December 2022 31 December 2021
Revenue 2 27,169 25,161
Cost of sales (14,047) (13,576)
Gross Profit 13,122 11,585
Other operating income 2 51 52
Administrative expenses (43,929) (41,544)
Operating loss (30,756) (29,907)
Finance expenses (287) (463)
Finance income 66 31
Loss before tax (30,977) (30,339)
Taxation 4,041 5,744
Loss for the year (26,936) (24,595)
Exchange gain/(loss) on foreign subsidiary 1,166 (1,896)
Changes to the fair value of equity investments at fair value through other 388 231
comprehensive income
Total other comprehensive income 1,554 (1,665)
Total comprehensive loss for the year (25,382) (26,260)
Loss per Share
Basic and diluted (£) 4 (0.15) (0.15)
Consolidated Statement of Financial Position
Note As at As at
(All figures £'000) 31 December 2022 31 December
2021
Assets
Non-current assets
Intangible assets 8,080 8,692
Goodwill 19,563 18,563
Investments 2,122 1,733
Property, plant and equipment 10,184 8,603
Deferred tax 1,548 1,705
Other assets 153 146
41,650 39,442
Current assets
Inventories 9,325 8,504
Trade and other receivables 6,765 4,830
Tax receivable 4,500 4,299
Cash and cash equivalents 13,097 43,534
33,687 61,167
Total assets 75,337 100,609
Shareholder equity
Called up share capital 5 182 181
Share premium 149,516 149,448
Merger reserve 13,603 13,603
Share option reserve 9,338 7,940
Foreign exchange reserve (1,159) (2,325)
Financial Assets at fair value through other comprehensive income 619 231
Accumulated losses (122,696) (95,760)
Total equity 49,403 73,318
Liabilities
Non-current liabilities
Interest-bearing liabilities 6,067 5,175
Deferred tax liability 2,000 1,786
Provisions 384 593
8,451 7,554
Current liabilities
Interest-bearing liabilities 4,029 3,705
Trade and other payables 9,000 9,921
Non interest-bearing loans 1,587 1,676
Other liabilities 2,622 4,221
Provisions 245 214
17,483 19,737
Total liabilities 25,934 27,291
Total equity and liabilities 75,337 100,609
Consolidated Statement of Changes in Equity
(All figures £'000) Note Called up share capital Accumulated losses Share premium Merger reserve Share option reserve Changes to the fair value of equity instruments at fair value through other Foreign Exchange Reserve Total equity
comprehensive
income
Balance at 1 January 2020 150 (50,849) 115,112 13,603 4,648 - - 82,664
Total comprehensive loss for the year
Loss for the financial year - (20,316) - - - - - (20,316)
Other comprehensive loss/income - - - - - - (429) (429)
Total comprehensive loss - (20,316) - - - - (429) (20,745)
Transactions with owners, recorded directly in equity
Issue of share capital 8 - 152 - - - - 160
Equity settled share-based payment transactions - - - - 728 - - 728
Balance at 31 December 2020 158 (71,165) 115,264 13,603 5,376 - (429) 62,807
Total comprehensive loss for the year
Loss for the financial year - (24,595) - - - - - (24,595)
Other comprehensive loss/income - - - - - 231 (1,896) (1,665)
Total comprehensive loss - (24,595) - - - 231 (1,896) (26,260)
Transactions with owners, recorded directly in equity
Issue of share capital 23 - 34,184 - - - - 34,207
Equity settled share-based payment transactions - - - - 2,564 - - 2,564
Balance at 31 December 2021 181 (95,760) 149,448 13,603 7,940 231 (2,325) 73,318
Total comprehensive loss for the year
Loss for the financial year - (26,936) - - - - - (26,936)
Other comprehensive loss/income - - - - - 388 1,166 1,554
Total comprehensive loss - (26,936) - - - 388 1,166 (25,382)
Transactions with owners, recorded directly in equity
Issue of share capital 4 1 - 68 - - - - 69
Equity settled share-based payment transactions - - - - 1,398 - - 1,398
Balance at 31 December 2022 182 (122,696) 149,516 13,603 9,338 619 (1,159) 49,403
Consolidated Statement of Cash Flows
12 months to 12 months to
(All figures £'000) Note 31 December 2022 31 December 2021
Cash flows from operating activities
Loss for the year (26,936) (24,595)
Depreciation/amortisation charges 3,112 2,562
Equity settled share-based payment expenses 1,398 2,564
Finance expenses 287 463
Finance income (66) (31)
Taxation (4,041) (5,744)
Decrease/(increase) in inventories (348) (2,967)
Increase in trade and other receivables (1,400) (3,170)
Increase in trade and other payables (1,002) 1,975
Interest paid 9 (287) (463)
Tax received 4,299 3,395
Net cash used in operating activities (24,984) (26,011)
Cash flows from investing activities
Purchase of intangible fixed assets 12 (95) (146)
Purchase of tangible fixed assets 13 (3,179) (5,976)
Acquisition of subsidiary net of cash acquired 17 (2,753) (1,752)
Interest received 9 66 31
Net cash used in investing activities (5,961) (7,843)
Cash flows from financing activities
Capital repaid in respect of loans 18 (1,572) (1,844)
Proceeds of new loan 18 2,851 144
Principal elements of lease repayments 18 (827) (515)
Share issue 22 - 34,208
Net cash generated from financing activities 452 31,993
(Decrease) in cash and cash equivalents (30,493) (1,861)
Effect of exchange rates in cash held 56 303
Cash and cash equivalents at beginning of the year 43,534 45,092
Cash and cash equivalents at end of the year 13,097 43,534
Notes to the financial statements
1. Financial information set out in this announcement
The financial information set out above does not constitute the Company's
statutory accounts for the period ended 31 December 2022 or 31 December 2021
but is derived from those accounts. Statutory accounts for the period ended 31
December 2021 have been delivered to the registrar of companies, and those for
the period ended 31 December 2022 will be delivered in due course. The auditor
has reported on those accounts; their reports were (i) unqualified, (ii) did
not include a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
2. Revenue and other operating income
The revenue split between the Group was as follows (based on where the sale
originated):
12 months to 12 months to
(All figures £'000) 31 December 2022 31 December 2021
UK 6,027
7,780
Europe 19,068
19,099
RoW 66
290
Total 25,161
27,169
Segmental reporting
Operating segments are identified on the basis of internal reporting and
decision making. Creo currently has one operating segment which is the
research, development and distribution of electrosurgical medical devices
relating to the field of surgical endoscopy.
The Group has started the process of integrating the previous Albyn and
Boucart brands into the Creo brand and offering customers our full suite of
products. As such the Group is still operating in a single segment. As the
Group continues to grow we expect the internal reporting structure to change
to meet the changing goals and objectives of the business and additional
operating segments may be identified in future reporting periods.
As there is only one reportable operating segment whole profit, expenses,
assets, liabilities and cashflows are measured and reported on a basis
consistent with the financial statements, with no additional disclosures
necessary.
Other operating income
Other operating income relates to research grants. Income is recognised as
necessary to match it with the related costs in the profit or loss on a
systematic basis over the periods in which the entity recognises expenses for
the related costs for which the grants are intended to compensate.
Furthermore, income is recognised only when there is reasonable assurance that
the Company will comply with any conditions attached to the grant and the
grant will be received. Grant income received during the year was £0.1m
(2021: £0.1m).
3. Loss before tax
The loss before income tax is stated after charging/(crediting):
(All figures £'000) 12 months to 31 December 2022 12 months to
31 December 2021
Depreciation - owned assets 1,295 782
Depreciation - right of use assets 672 651
Amortisation 1,145 1,129
Research and development expenditure 13,492 12,869
4. Loss per share
Loss per share has been calculated in accordance with IAS 33 - Earnings Per
Share using the loss for the period after tax, divided by the weighted average
number of shares in issue.
(All figures £) 12 months to 12 months to
31 December 2022 31 December 2021
Loss (26,936,464) (24,594,919)
Loss attributable to equity holders of Company (basic)
Shares (number)
Weighted average number of ordinary shares in issue during the year 181,335,216 164,433,455
Loss per share
Basic and diluted (0.15) (0.15)
5. Share Capital
(All figures £'000) 2022 2021
Balance at start of the year 181 158
Issue of share capital
Number of shares 447 23,208
Price per share (£) 0.001 0.001
Share value (£'000) 1 23
Balance at 31 December 182 181
6. Subsequent events
Fund raise
On 16 February 2023, Creo announced it had raised £28.5 million (before
expenses) by way of a conditional Placing and Subscription and on 7 March 2023
it had raised an additional £5.2m (before expenses) by way of an open offer,
therefore raising gross proceeds of approximately £33.7 million, in
aggregate.
Investment by Key Management Personnel:
Further to the announcements made on 16 February 2023 and 8 March 2023, and
pursuant to the recent fundraising, the Company confirms that each of the
Company's Directors, Luis Collantes, a member of the Company's senior
leadership team and a director of various of the Company's subsidiaries and
certain PCAs, have either themselves or through parties affiliated with them
acquired New Ordinary Shares at the Issue Price of 20 pence per Ordinary Share
as follows:
Director/PDMR Name No. of New Ordinary Shares Acquired Resultant Shareholding post transaction % of voting rights post transaction
Charles Spicer 165,119 308,530 0.09%
Craig Gulliford* 1,000,000 1,630,466 0.46%
Richard Rees 2,715,322 2,805,902 0.79%
Professor Christopher Hancock 383,171 4,802,352 1.36%
David Woods 415,255 440,255 0.13%
John Bradshaw 1,265,135 1,371,082 0.39%
Ivonne Cantu 125,000 125,000 0.04%
Luis Collantes** 4,442,485 4,442,485 1.27%
* These 1,000,000 shares are held by the spouse of Craig Gulliford
** Shares held via Monkey Business Consultants SL, a company owned and managed
by Luis Collantes.
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