REG - Creo Medical Group - Half-year Report
12/09/2023 07:00
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RNS Number : 0849M Creo Medical Group PLC 12 September 2023
Creo Medical Group plc
("Creo", the "Group" or the "Company")
Half-year Report
Core technology revenue for H1-2023 equal to entirety of FY-2022; slimmer
Speedboat Inject drives sharp increase in treated patients and trained doctors
Creo Medical Group plc (AIM: CREO), the medical device company focused on the
emerging field of minimally invasive surgical endoscopy, announces its
unaudited results for the six-month period ended 30 June 2023.
Operational and commercial highlights:
· Revenue growth driven by sharp increase in adoption of Creo's Core
technology, underpinned by growing revenue from Creo's Endotherapy consumables
business
· Progress in roll-out of Creo's Core technology:
o 42% increase in the volume of procedures of Speedboat Inject vs. H2-2022
o 44% increase in user base from December 2022
o 65% increase in the number of clinicians able to provide training from 31
December 2022
· Medical Device Regulation ("MDR") CE clearance for Speedboat Inject,
adding upper gastrointestinal ("GI") use (e.g. swallowing disorders,
oesophageal and stomach cancers) in the UK and mainland Europe
· First use of Speedboat Inject in Croatia, Slovenia, Malaysia and
the United Arab Emirates, with Creo's Core technology having now been used in
over 20 countries
· Key product and patient milestones reached:
o Slimmer Speedboat Inject achieving excellent clinical results
o Most significant data set for Speedboat Submucosal Dissection ("SSD")
procedures to date, showing an 82% curative rate for lower GI lesions (e.g.
bowel and colon) with no perforations recorded
o First sales of Endotherapy consumables in the US
o First in-human use of MicroBlate Flex for the microwave ablation of soft
tissue lung lesions safely completed as part of a lung tissue ablation
clinical study
· Speedboat Inject selected by the National Institute for Health and
Care Excellence ("NICE") to be scoped and routed for guidance
· Ongoing discussions with third parties on potential new, and
expansion of existing, Kamaptive licensing opportunities
Financial highlights:
· Revenue of £15.7m (H1-2022: £13.6m, H2-2022: £13.5m), including
£0.9m generated from Creo core products, equal to the same core products
revenue generated in the entirety of FY-2022 (H1-2022 £0.5m, H2-2022: £0.4m)
· 15% increase in revenue vs. H1-2022 driven by Creo's Core technology
and growth in Creo's Endotherapy consumable business
· £33.7m (before expenses) raised in an oversubscribed fundraise in
March 2023
· Cash and cash equivalents of £26.5m at 30 June 2023 (30 June 2022:
£26.1m; 31 December 2022: £13.1m)
· Post balance sheet receipt of £4.5m R&D tax credits
· Underlying EBITDA loss (EBITDA with R&D tax credits and other
accounting adjustments added back) of £9.2m, representing a 15% reduction vs.
H2-2022 (£10.8m)
· Improved gross profit and reduced operating expenditure through cost
control, operational consolidation and a reduction in headcount have
contributed to a continued reduction in cash burn (before tax and interest
adjustments) in each half since H1-2022
· Loss per share of 4p (H1-2022: 7p)
Craig Gulliford, Chief Executive Officer of Creo, said: "The past six months
have been hugely significant for Creo. We continue to be at the forefront of a
paradigm shift, introducing advanced energy to endoscopy in new markets and
procedures - facilitating an array of benefits to patients, clinicians and
healthcare providers. This, combined with an increased focus on business
efficiencies, is solidifying Creo as a platform for growth.
"Attracting the necessary funding earlier in 2023 was clearly an important
moment in our push towards our goal of being cash flow breakeven during
FY2025. I reiterate my thanks to all shareholders, new and old, for their
continued support.
"The rapid pace of adoption of Creo's technology, and the global recognition
it is achieving, has been a particular highlight for me. From India to the US,
Spain to Singapore; patients from around the world are benefitting from our
unique technology, with the body of data supporting the clinical and
commercial benefits growing quickly as a result.
"A slimmer Speedboat Inject device, MicroBlate Flex trial, NICE recognition
and quicker adoption of the technology have all been milestones we've been
working towards for some time. To see them begin to bear fruit is testament to
the relentless hard work across the business over the past years.
"With our Kamaptive partnership work continuing to show real promise and our
Endotherapy range of consumable products now available in markets beyond
Europe, we are confident of building on the momentum generated."
Capital Markets Event
Creo Medical announces that it will be holding a Capital Markets Event on 7
November at the offices of Numis, 45 Gresham Street, London, EC2V 7BF. The
Company will provide greater detail on the commercial and clinical progress of
its products and will feature presentations from a number of clinicians who
are using Creo's products in practice. Further details will be provided in a
separate announcement to be released in due course.
Change of Name of Nominated Adviser and Joint Broker
The Company also announces that its Nominated Adviser and Joint Broker has
changed its name to Cavendish Securities plc following completion of its own
corporate merger.
Enquiries:
Creo Medical Group plc www.creomedical.com (http://www.creomedical.com)
Richard Rees (CFO) +44 (0)1291 606 005
Cavendish Securities plc +44 (0)20 7397 8900
Stephen Keys / Camilla Hume (NOMAD)
Michael Johnson (Sales)
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
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 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 to optimise surgical
capability and patient outcomes. 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)
Interim results for six months ended 30 June 2023
Chief Executive Review
Commercial and Operations
I am pleased to report strong commercial progress for the first half of 2023.
Considerable strides have been made in all facets of the business, boosted by
the launch of a slimmer Speedboat Inject device in late 2022. Trading across
the business has tracked in-line with management's expectation during H1-2023,
including a significant increase in the number of regular users of Creo's
Speedboat Inject device which is reflected by the increase in Creo Core
technology revenues. Highlights during the first six months of 2023 include:
· Generating the same revenue in relation to Creo's Core technology for
H1-23 as we did for the entirety of FY-2022, at £0.9m;
· Revenue growth of 18% from H2-2022 in our Creo Endotherapy consumable
products;
· £33.7m (before expenses) raised in an oversubscribed fundraise in
March 2023; and
· Improved gross profit and reduced operating expenditure through
budget management have contributed to a continued reduced cash burn (before
tax and interest adjustments) in each half since H1-2022.
Creo's products are distributed via direct and indirect sales channels. Creo
has 14 offices in nine countries across Europe, the USA and APAC with access
to other jurisdictions through the support of distribution partners
(predominantly in the EMEA and APAC regions, but more recently in Latin
America). The nature of Creo's sales and distribution channels, coupled with
our enhanced and flexible Pioneer Clinical Education Programme, allows the
implementation of commercialisation models to reflect the markets in which we
are operating (indirect vs. direct). For example, in Israel, Creo's
distributor has taken the lead on running Speedboat Inject training courses,
supported by Creo's in-house Clinical Education team. This approach allows for
local training to be delivered in country, reducing the time between
clinicians completing training and performing their first cases.
The increase in revenue from Creo's Core technology has been driven by an
increase in new and high-volume users, global cases, a strengthened pipeline
of interested clinicians and Creo's technology being introduced into new
territories.
Looking forward, the pipeline of users and prospective users for Creo's Core
technology continues to grow. Multi-national and bespoke regional training and
mentoring events, held during H1-2023, have resulted in 115 confirmed users at
the end of the period, an increase of 44% over the 80 confirmed users as at 31
December 2022, and 30% over the 91 as at 31 March 2023. Cases using Speedboat
Inject in both Q1 and Q2-2023 were 50% higher than the FY-2022 quarterly
average. Management is confident of this significant growth continuing through
the remainder of 2023 and beyond.
Speedboat Inject (targeting gastrointestinal ("GI") lesions (including bowel
and upper GI cancers) and swallowing disorders) is a flexible endoscopic
instrument, delivering both advanced bipolar radiofrequency and microwave
energy through a single device. By bringing advanced energy precision to
endoscopic procedures in the entire GI tract, Speedboat Inject can curatively
and safely resect lesions in the colon, stomach and oesophagus, avoiding the
need for surgery.
The launch of Creo's slimmer Speedboat Inject in late 2022, supported by
Creo's Pioneer training programme, boosted use of the device in H1-2023. The
slimmer Speedboat Inject device is compatible with the working channel of most
major endoscopes which allow clinicians to gain deeper access into the GI
tract and have increased manoeuvrability, facilitating easier retroflection
techniques.
Speedboat Inject is now CE marked according to the Medical Device Regulation
("MDR") for use throughout the entire GI tract (as is already the case in the
US and APAC region). Over 40% of global cases performed with Speedboat
Inject are now in the upper GI across multiple indications. Upper GI
clearance in the UK and Europe significantly increases the number of
procedures for which the device can be utilised. This has been supported by
the number of doctors attending Creo's Pioneer training programme and
post-clearance upper GI case numbers. Management expects that the wider
clearance will continue to increase Creo's potential user base and their usage
substantially.
The results seen by The Royal Oldham Hospital during H1-2023 succinctly
illustrate the positive impact on patient outcomes, waiting lists and the
prevention of bowel cancer from adopting Speedboat Inject and launching
a Speedboat Submucosal Dissection ("SSD") service. Having attended Creo's
Pioneer training programme and installed devices across multiple endoscopy
rooms immediately post-training, the hospital was able to perform five SSD
cases in its first afternoon, and recently reached 40 SSD cases, making it the
fastest hospital to reach the landmark.
During H1-2023, Speedboat Inject was used for the first time
in Croatia, Slovenia, Malaysia and in the United Arab Emirates. The
increased pace of adoption can also be seen in India, where one of the
world's premier healthcare settings, AIG Hyderabad Hospital, quickly became
the first in Asia to treat 50 patients using Speedboat Inject, less than a
year after Creo officially opened its Asia-Pacific ("APAC") regional hub. The
progress across APAC has been particularly significant, and management sees
potential for greater progress as Creo continues to commercialise its
technology in the region.
Cases continue to be successfully performed elsewhere in the world. In
Istanbul, Professor Fatih Aslan successfully performed four SSD procedures
over a single day; importantly, one of these cases was completed in under 15
minutes - a key illustration of how efficiently Speedboat Inject can be
used by clinicians, allowing them to tackle more cases in a shorter period of
time. Further case examples can be seen
at linkedin.com/company/creo-medical/posts/
(https://www.linkedin.com/company/creo-medical/posts/) .
Finally, the validation of Creo's technology has gathered further momentum
with the selection of Speedboat Inject by the National Institute for Health
and Care Excellence ("NICE") to be scoped and routed for guidance, and by an
ongoing collaboration with NHS Supply Chain. NICE selected Speedboat Inject
for scoping and routing because it "anticipate s the topic will be of
importance to patients, carers, professionals, commissioners and the health of
the public to ensure clinical benefit is realised, inequalities in use
addressed, and help them make the best use of NHS resources". If appropriate,
the process may result in a specific NICE output such as Medical Technologies
Guidance.
In addition to Creo's Core technology, Creo also manufactures and sells a
number of complementary products through its European and UK businesses, along
with consumable Original Equipment Manufacturer ("OEM") / Own Brand Labelling
("OBL") and third-party products. These Endotherapy products provide a stable
and growing revenue stream to the Group, as well as access to key customers
for Creo's Core technology. Creo's Endotherapy consumable business continued
to grow during H1-2023, and the Company has implemented a sales and
distribution structure in the US to replicate its European success. First US
sales were achieved during H1-2023 and growth is expected in H2-2023.
Benefitting from the economies of scale from the acquisitions made in 2020 and
2021, Creo is now seeing customers show interest in, and adopt, the Company's
Core technology into their existing practices whilst continuing to purchase
Creo's complementary products.
Creo's Kamaptive Licensing partnerships with Intuitive and CMR Surgical have
also progressed well during the first half of 2023. The team continues to
explore and expand the scope and reach of partnerships, as the potential for
the wider use of Creo's technology presents itself. The investment made in
FY-2022 in the next generation CROMA platform is paying off. Management expect
that the next generation platform will not only enable organic growth of the
Company's product range over the coming years, but, with the additional
functionality under development, it will also facilitate the development and
expansion of its partnerships and licensing programmes.
We continue to evolve and develop Creo's Core technology. As at 30 June 2023,
the Group has 131 patent families, comprising, in total, 318 granted patents
and 397 pending applications. During the period we have sought to rationalise
our patent estate, reducing expenditure and ensuring that our coverage and
investment is focussed on intellectual property in those key territories which
will assist with Creo's current commercial roadmap.
In May, we were delighted to announce the first-in-human use of MicroBlate
Flex, Creo's bronchoscopic microwave ablation device. The use forms part of a
multi-site clinical study (the "Study") to evaluate its safety and feasibility
of MicroBlate Flex for the treatment of lung lesions. The Study is the first
of a number of planned studies designed by Creo, in conjunction with Kamaptive
partners, in respect of Creo's suite of ablation devices during 2023 and
beyond.
In support of our ablation activities, Creo created a Pulmonary Clinical
Advisory Group during H1-2023 and we were pleased to announce that we had
appointed Dr Marco Scarci to advise and help shape
Creo's MicroBlate clinical strategy. Dr Scarci is a highly experienced
London-based consultant thoracic surgeon, specialising in minimally invasive
techniques, and will provide expert clinical advice and counsel in relation to
the Company's microwave ablation technology.
Management and Employees
Creo continues to attract and retain talented and experienced individuals
across all business functions. The second half of 2022 was an employee high
water mark, with an average headcount of 309. Since then, we have sought to
gradually reduce our headcount, taking advantage of natural attrition wherever
possible. As at 30 June 2023, Creo employs 279 people: 249 in EMEA, 23 in the
USA, and seven in APAC. Approximately 143 employees are involved in R&D
and Operations, 93 are focussed on Sales and Marketing and 43 employees are
within G&A.
In line with Creo's overall objective to improve lives, we have always
recognised our wider ESG responsibilities. Our immediate priority is the
communities that we serve, most obviously our patients and their families
along with the clinicians that treat and care for them. This also includes our
staff, their families and the local communities in which we employ them. We
continue to assess our responsibilities under the ESG framework and actively
take steps to ensure that we meet our obligations as well as being prepared
for the future. We will report on the actions we have taken during 2023 in our
Annual Report.
Summary
The team continues to execute against our strategy and deliver against
operational milestones. We continue to look to the Company's future with
confidence, strengthened by our ability to:
· put our CROMA platform and our suite of devices in the hands of more
clinicians to allow more patients to be treated in an increasing number of
locations around the world;
· scale up our Pioneer Programme and deliver simultaneous
multijurisdictional training courses; and
· work with third parties to license our Kamaptive technology.
On behalf of the Board, I thank Creo's shareholders for their continued
support, feedback and encouragement along with all members of the Creo team,
our clinicians and their patients, our customers, suppliers and other partners
for all their hard work, support and positive contributions during the period.
Craig Gulliford
Chief Executive Officer
Financial Review
Total sales for the period were £15.7m across both Creo Core and Consumable
sales. Creo Core revenues, which comprise the Creo Products including the
slimmer Speedboat Inject and CROMA platform, were £0.9m for the period, an
increase of 80% on H2-2022 and 100% of the total Creo Core sales for all of
FY-2022.
Kamaptive revenues were £0.5m for the period (H1-2022: £0.5m, H2-2022:
£0.9m) reflecting the development work with robotics partners during the
period through our Kamaptive licencing programme. No milestone payments have
been recognised in the period (H1-2022: £nil, H2-2022: £0.4m), however these
are expected in H2-2023.
Creo's Endotherapy consumable sales continued to grow during the period,
generating £14.3m of revenue. This represents an 18% increase on H2-2022 and
12% on H1-2022 (H2-2022: £12.1m, H1-2022: £12.8m).
6 months to 6 months to 6 months to 12 months to
All figures £m 30 June 2023 31 December 2022 30 June 2022 31 December 2022
Creo Core 0.9 0.5 0.4 0.9
Kamaptive 0.5 0.9 0.5 1.4
Total Creo Core 1.4 1.4 0.9 2.3
Total Consumables 14.3 12.1 12.8 24.9
Total Revenue 15.7 13.5 13. 7 27.2
Total gross profit for the period increased to £7.5m (H2-2022: £6.6m) whilst
the gross margin percentage marginally decreased by 0.2% to 47.9% (H2-2022:
48.1%) due to no milestone payments in the six-month period to date compared
to one milestone payment in H2-2022.
Creo's cost base peaked in H1-2022 with the investment in infrastructure,
completion of key R&D projects such as the slimmer Speedboat Inject
device, and recruitment required to transition to a commercial and operational
focus paving the way for positive cash generation in the years to come. Since
H1-2022, our underlying administrative expenses have decreased by £1.7m in
aggregate (£0.9m (H2-2022 vs H1-2022) and £0.8m (H1-2023 vs H2-2022)
respectively). Key savings made during this period relate to savings in
R&D spend thanks to the completion of key projects, reduction in patent
costs and reviewing travel policy and expenditure and we will continue to
focus on cost management for the remainder of the year.
6 months to 6 months to 6 months to 12 months to
(All figures £m) 30 June 2023 31 December 2022 30 June 2022 31 December 2022
Administrative expenses (20.9) (21.4) (22.5) (43.9)
Depreciation & Amortisation 1.7 1.7 1.5 3.2
PPE & Other Settlement 0.2 0.0 0.0 0.0
SIP Charge 0.1 0.1 0.1 0.2
Earnout 0.4 0.4 0.5 0.9
Share-based payments 0.6 0.5 0.8 1.3
Underlying Administrative Expenses (17.9) (18.7) (19.6) (38.3)
Underlying EBITDA loss (EBITDA with R&D tax credits and other accounting
adjustments added back) of £9.2m, representing a 15% reduction for the first
six months of 2023 vs. H2-2022 (£10.8m).
The decrease in underlying administrative expenses in the period to £17.9m
against the six-month period to 31 December 2022 (£18.7m) reflects the
reduction in R&D spend and strict cash control by management as we
transition into a commercial and operational based business.
The underlying operating loss for the period is £8.6m (six months to 30 June
2022: £10.5m; six months to 31 December 2022: £10.3m) representing a 16%
reduction in underlying operating loss for the first six months of 2023 vs.
H2-2022. This is a non-statutory measure which adjusts the operating loss as
follows:
6 months to 6 months to 6 months to 12 months to
(All figures £m) 30 June 2023 31 December 2022 30 June 2022 31 December 2022
Revenue 15.7 13.5 13.6 27.1
Cost of Sales (8.2) (6.9) (7.1) (14.0)
Gross Profit 7.5 6.6 6.5 13.1
Gross Profit % 47.9% 48.1% 48.1% 48.3%
Other operating income 0.0 0.0 0.1 0.1
Administrative expenses (20.9) (21.4) (22.5) (43.9)
Operating loss (13.4) (14.9) (15.9) (30.8)
Depreciation & Amortisation 1.7 1.7 1.5 3.2
PPE & Other Settlement 0.2 0.0 0.0 0.0
SIP Charge 0.1 0.1 0.1 0.1
Earnout 0.4 0.4 0.5 0.9
R&D expenditure recovered via tax credit scheme 1.8 1.9 2.6 4.5
Underlying EBITDA loss (non-statutory measure) (9.2) (10.8) (11.3) (22.2)
Share-based payments 0.6 0.5 0.8 1.3
Underlying operating loss (non-statutory measure) (8.6) (10.3) (10.5) (20.9)
* figures showing '-' are where there is no balance for the period, figures
showing '0.0' is where there is a balance but it is below £0.05m.
Tax
The Company has not recognised any additional deferred tax assets in respect
of trading losses arising in the current financial period. The Company
recognises tax assets in respect of claims under the UK research and
development Small or Medium-sized Enterprise ("SME") scheme, accrued in line
with costs with any adjustments being made on submission of a claim. We
received £4.5m cash from R&D tax credits in August 2023 relating to the
2022 claim. Following the changes in the amount reclaimable under the UK
R&D tax incentive schemes which were announced in the March 2023 Budget we
anticipate a reduction in our R&D tax credit for H2-2023 and future
periods compared to previous periods.
Earnings per share
Loss per share was 4 pence for the period (six-months to 30 June 2022: 7
pence).
Cash flow and Balance Sheet
Net cash used in operating activities was £15.2m for the six months to 30
June 2023 (six months to 30 June 2022: £16.7m) driven by the reduction in
operating costs as described above, offset by an increase in working capital
with higher debtors and lower creditors. Cash paid from investing activities
was £17.1m (six months to 30 June 2022: £2.0m) due to £15m put on treasury
deposits with the remainder mainly due to the settlement of the remaining
deferred and contingent liabilities relating to the Aber Electronics, Albyn
Medical and Boucart Medical acquisitions during the period.
Net cash generated from financing activities was £30.6m (six months to 30
June 2022: £1.2m) reflecting the fund raise completed in March 2023
generating £33.7m offset by net repayment of loans and lease payments of
£0.9m in the period.
Total assets at 30 June 2023 increased to £88.7m (30 June 2022: £87.5m).
Cash and cash equivalents and cash on deposit at 30 June 2023 were £26.5m (30
June 2022: £26.1m) following the fund raise of £31.5m in March offset by
cash spent on operation expenditure for the period. Net assets were £69.0m
(30 June 2022: £61.1m).
At 30 June 2023, the debtor position in relation to R&D Tax Credits was
£6.3m including the £4.5m debtor from 2022. Inventory as at 30 June 2023
decreased to £8.0m (30 June 2022: £8.2m), representing the increase in stock
holding to facilitate current and expected future orders of core Creo products
as well as the global expansion of UK and European sales of other products
offset by the settlement of the PPE stock (£1.5m) in Creo Medical Spain with
the PPE loan (£1.5m).
Interest bearing liabilities as at 30 June 2023 decreased to £9.2m (30 June
2022: £10.5m) due to repayment of loans in line with loan schedules.
2023 Outlook
Trading across the Group during H1-2023 has been in-line with management's
expectation including there being a significant increase in the number of
regular users of Creo's Speedboat Inject device. We expect the growth in
revenues to continue on an upwards trajectory and to maintain our strong gross
margin across our products. Active cost control will support a stable cost
base, driving efficiencies through the business.
Consolidated statement of profit and loss and other comprehensive income
6 months to 6 months to 12 months to
30 June 2023 30 June 2022 31 December 2022
(All figures £m) Note Unaudited Unaudited Audited
Revenue 2 15.7 13.6 27.1
Cost of sales (8.2) (7.1) (14.0)
Gross Profit 7.5 6.5 13.1
Other operating income - 0.0 0.1
Administrative expenses (20.9) (22.5) (43.9)
Operating loss (13.4) (16.0) (30.7)
Finance expenses (0.1) (0.1) (0.3)
Finance income 0.3 0.0 0.1
Loss before tax (13.2) (16.1) (30.9)
Taxation 1.6 2.6 4.0
Loss for the year (11.6) (13.5) (26.9)
Exchange loss on foreign subsidiary (1.0) 0.4 1.2
Changes to the fair value of equity investments at fair value through other - - 0.4
comprehensive income
Total comprehensive loss for the year (12.6) (13.1) (25.3)
Loss per Share
Basic and diluted (£) 3 (0.04) (0.07) (0.15)
* figures showing '-' are where there is no balance for the period, figures
showing '0.0' is where there is a balance but it is below £0.05m.
Consolidated statement of financial position
6 months to 6 months to 12 months to
30 June 2023 30 June 2022 31 December 2022
(All figures £m) Unaudited Unaudited Audited
Assets
Intangible assets 7.3 8.4 8.1
Goodwill 19.0 19.0 19.6
Investments 2.1 1.7 2.1
Property, plant and equipment 9.7 9.7 10.2
Deferred tax 1.4 1.5 1.5
Other assets 0.1 0.2 0.2
Non-current assets 39.6 40.5 41.7
Current assets
Inventories 8.0 8.2 9.3
Trade and other receivables 8.3 5.8 6.8
Tax receivable 6.3 6.9 4.5
Fixed term deposits 15.0 - -
Cash and cash equivalents 11.5 26.1 13.1
Total cash and cash on deposits 26.5 26.1 13.1
Current Assets 49.1 47.0 33.7
Total assets 88.7 87.5 75.4
Shareholder equity
Called up share capital 4 0.4 0.2 0.2
Share premium 180.9 149.4 149.5
Merger reserve 13.6 13.6 13.6
Share option reserve 10.0 8.7 9.3
Foreign exchange reserve (2.2) (1.8) (1.1)
Financial Assets at fair value through other comprehensive income 0.6 0.2 0.6
Accumulated losses (134.3) (109.2) (122.7)
Total equity 69.0 61.1 49.4
Liabilities
Non-current liabilities
Interest-bearing liabilities 5.6 6.5 6.1
Deferred tax liability 1.7 1.6 2.0
Provisions 0.5 0.6 0.4
7.8 8.7 8.5
Current liabilities
Interest-bearing liabilities 3.6 4.0 4.0
Trade and other payables 7.5 9.6 9.0
Non interest-bearing loans - 1.6 1.6
Other liabilities 0.6 2.3 2.7
Provisions 0.2 0.2 0.2
11.9 17.7 17.5
Total liabilities 19.7 26.4 26.0
Total equity and liabilities 88.7 87.5 75.4
* figures showing '-' are where there is no balance for the period, figures
showing '0.0' is where there is a balance but it is below £0.05m.
Consolidated statement of changes in equity
Changes to the
fair value of
equity
instruments
at fair value
Called up Share through other Foreign
share Accumulated Share Merger option comprehensive Exchange Total
(All figures £m) capital losses premium reserve reserve income Reserve equity
Balance at 1 January 2022 0.2 (95.8) 149.4 13.6 7.9 0.2 (2.3) 73.2
Total comprehensive loss for the year
Loss for the financial year - (13.4) - - - - - (13.4)
Other comprehensive loss - - - - - - 0.4 0.4
Total comprehensive loss - (13.4) - - - - 0.4 (13.0)
Transactions with owners, recorded directly in equity
Issue of share capital - - - - - - - -
Equity settled share-based payment transactions - - - - 0.8 - - 0.8
Balance at 30 June 2022 0.2 (109.2) 149.4 13.6 8.7 0.2 (1.9) 61.0
Total comprehensive loss for the year
Loss for the financial year - (13.5) - - - - - (13.5)
Other comprehensive loss - - - - - 0.4 0.7 1.1
Total comprehensive loss - (13.5) - - - 0.4 0.7 (12.4)
Transactions with owners, recorded directly in equity
Issue of share capital 0.0 - 0.1 - - - - 0.1
Equity settled share-based payment transactions - - - - 0.6 - - 0.6
Balance at 31 December 2022 0.2 (122.7) 149.5 13.6 9.3 0.6 (1.2) 49.3
Total comprehensive loss for the year
Loss for the financial year - (11.6) - - - - - (11.6)
Other comprehensive loss - - - - - - (1.0) (1.0)
Total comprehensive loss - (11.6) - - - - (1.0) (12.6)
Transactions with owners, recorded directly in equity
Issue of share capital 0.2 - 31.4 - - - - 31.6
Equity settled share-based payment transactions - - - - 0.7 - - 0.7
Balance at 30 June 2023 0.4 (134.3) 180.9 13.6 10.0 0.6 (2.2) 69.0
* figures showing '-' are where there is no balance for the period, figures
showing '0.0' is where there is a balance but it is below £0.05m.
Consolidated statement of cash flows
6 months to 6 months to 12 months to
30 June 2023 30 June 2022 31 December 2022
(All figures £m) Unaudited Unaudited Audited
Loss for the period (11.7) (13.4) (26.9)
Depreciation/amortisation charges 1.7 1.5 3.1
Equity settled share-based payment expenses 0.7 0.8 1.4
Fair value adjustment to derivatives - (0.0) -
Finance expenses 0.1 0.1 0.3
Finance income (0.3) (0.0) (0.2)
Taxation (1.6) (2.6) (4.0)
Cash flows from operating activities before NWC , interest and tax deductions (11.1) (13.6) (26.3)
Decrease/(increase) in inventories 1.0 0.3 (0.4)
Increase in trade and other receivables (1.8) (3.0) (1.6)
Decrease/Increase in trade and other payables (3.2) (0.3) (0.8)
Cashflow from operating activities before interest and tax (15.1) (16.6) (29.1)
Interest paid (0.1) (0.1) (0.3)
Tax paid 0.0 0.0 0.0
Tax received 0.0 0.0 4.3
Net cash used in operating activities (15.2) (16.7) (25.1)
Cash flows from investing activities
Purchase of intangible fixed assets (0.1) (0.1) (0.1)
Purchase of tangible fixed assets (0.4) (1.9) (3.2)
Acquisition of subsidiary net of cash acquired (1.9) 0.0 (2.8)
Fixed term deposits (15.0) - -
Interest received 0.3 0.0 0.1
Net cash used in investing activities (17.1) (2.0) (6.0)
Cash flows from financing activities
Capital repaid in respect of loans (0.7) (0.9) (1.6)
Proceeds of new loan 0.1 2.5 2.9
Capital repaid in respect of lease liabilities (0.3) (0.4) (0.8)
Share issue 31.5 0.0 0.1
Net cash generated from financing activities 30.6 1.2 0.6
(Decrease) in cash and cash equivalents (1.7) (17.5) (30.5)
Effect of exchange rates in cash held 0.1 0.1 0.1
Cash and cash equivalents at beginning of the year 13.1 43.5 43.5
Cash and cash equivalents at end of the year 11.5 26.1 13.1
* figures showing '-' are where there is no balance for the period, figures
showing '0.0' is where there is a balance but it is below £0.05m.
£0.9m of capital repaid in respect of loans for the 6 months to 30(th)
June 2022 has been reclassified to trade and other payables.
Notes to the interim financial statements
1. Basis of preparation
This interim financial report, which is unaudited, does not constitute
statutory accounts within the meaning of section 434(3) of the Companies Act
2006. These interim financial statements have been prepared in accordance with
the AIM rules and the IAS 34.
The accounts of Creo Medical Group plc for the period ended 31 December 2022,
which were prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 ("adopted IFRSs"),
have been delivered to the Registrar of Companies. Those accounts were
prepared and audited as required by the Companies Act 2006. The interim
statements are presented in sterling and rounded to the nearest millionth
pound.
This interim financial report for the six-month period ended 30 June 2023
(including comparatives for the six months ended 30 June 2022) was approved by
the Board of Directors on 11 September 2023.
Going Concern
The business is continually monitoring the economic developments including the
war in Ukraine, inflationary pressures and the current and future impacts they
will have on our business. We are on-track with our current business strategy
with the commercialisation of Creo's Core technology along with our existing
distribution sales helping to reduce the cash burn and get us closer to
positive cash generation.
The Company has prepared detailed forecasts and projections for its planned
activities up to and beyond December 2025. These include multiple scenarios
including where no further funding or financing is obtained.
On the basis of these financial projections the Directors are satisfied that
the Company will have adequate resources to continue in operational existence
for a period of not less than 12 months from the date of signing this interim
financial report. Thus, they continue to adopt the going concern basis of
accounting in preparing the interim financial report.
Accounting policies
The same accounting policies and basis of measurement are followed in this
interim financial report as published by Creo Medical Group plc in its
statutory accounts for the period ended 31 December 2022, as delivered to the
registrar of companies.
Changes in accounting policy and disclosures
New standards, amendments and interpretations
The following new standards, amendments and interpretations have been adopted
by the Group for the first time for the financial year beginning on 1 January
2023:
· Amendments to IFRS 17 Insurance Contracts
· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
· A Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12
· Definition of Accounting Estimates - Amendments to IAS 8
Principal risks and uncertainties
The principal risks and uncertainties impacting the Group are described in our
2022 Annual Report and remain unchanged at 30 June 2023. We continue to
monitor the uncertainty around the War in Ukraine, the UK's exit from the
European Union, global inflationary and economic pressures along with other
geopolitical macro issues.
Critical accounting judgments and key sources of estimation uncertainty
The Group is required to make estimates and assumptions concerning the future.
These estimates and judgements are based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. The resulting accounting estimates will,
by definition, seldom equal the related actual results. Accounting estimates
and judgements have been required for the production of these Financial
Statements.
Share-based payments
Equity-settled share options are granted to certain officers and employees.
Each tranche in an award is considered a separate award with its own vesting
period and grant date fair value. Fair value of each tranche is measured at
the date of grant using the Black-Scholes option pricing model, the Monte
Carlo method, or a hybrid model where appropriate. Compensation expense is
recognised over the tranche's vesting period based on the number of awards
expected to vest, through an increase to equity. The number of awards expected
to vest is reviewed over the vesting period, with any forfeitures recognised
immediately.
Research and development costs
Capitalisation of development costs requires analysis of the technical
feasibility and commercial viability of the project concerned. Capitalisation
of the costs will only be made where there is evidence that an economic
benefit will flow to the Company.
To date no further capitalisation of its products above the Speedboat and
CROMA platform have been recognised.
Deferred tax assets
Management judgement is required on whether the Group should recognise any
deferred tax assets for losses. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available
against which the temporary difference can be utilised.
Given the nature and stage of development of Creo Medical Limited there are
significant losses accumulated to date. To determine whether a deferred tax
asset should be recognised in relation to the future tax deduction that these
losses represent, the Directors have considered the estimated profits over a
medium to long-term forecast and the events required to achieve such
forecasts. Creo Medical UK Limited (formally Albyn Medical Limited acquired in
2020) is forecast to make profits over the medium term and these profits would
be available for Group relief. Therefore, we have recognised a tax asset in
relation to the element of profit expected to be earned in that entity.
Forecasts for Creo Medical Limited continue to show tax losses for at least
the medium term (to three years) as the Group continues to develop and
commercialise its products. Given the extent of uncertainty with forecasting
over a longer-term horizon, it is determined that there is not the level of
convincing evidence that sufficient taxable profit will be available against
which further tax losses or tax credits can be utilised. Thus, there is
considered to be insufficient certainty over the timing and amount of loss
recoverability for any further deferred tax asset to be recognised.
Segmental reporting
An entity is required to disclose information to enable users of its financial
statements to evaluate the nature and financial effects of the business
activities in which it engages and the economic environments in which it
operates. As the Group's global reach has expanded in the period, management
have exercised significant judgement in determining whether presenting segment
information on an alternative basis would better adhere to this core
principle.
Whilst the operations in different geographical locations form a fundamental
part of the Group's long-term strategy, they are in the early stages of
development and the Group continues to focus on the development and
commercialisation of its Core technology and the key range of unique
endoscopic surgical devices and CROMA Advanced Energy Platform. In making
their judgement, the directors considered the Group's activities and the
internal reporting structures and information regularly reviewed by the
entity's chief operating decision-maker to make decisions about resources to
be allocated and assessing performance.
After the assessment, the directors concluded that financial information at a
consolidated Group level appropriately reflects the business activities in
which the Group is currently engaged, and the economic environment in which it
operates. As explained in the 2022 Annual Report, as the Group continues to
grow it is expected that the internal reporting structure will evolve in order
to meet the changing activities, goals and objectives of the business and
therefore additional operating segments may be identified as appropriate in
future reporting periods.
2. Revenue and other operating income
The revenue split for the Group at 30 June 2023 was as follows:
6 months to 6 months to 6 months to 12 months to
All figures £m 30 June 2023 31 December 2022 30 June 2022 31 December 2022
UK 4.0 3.7 7.7
4.9
Europe 9.3 9.8 19.1
10.4
RoW 0.2 0.1 0.3
0.4
Total 13.5 13.6 27.1
15.7
3. Earnings per share
6 months to 6 months to 12 months to
30 June 2023 30 June 2022 31 December 2022
(All figures £) Unaudited Unaudited Audited
Loss
Loss attributable to equity holders of Company (basic) (11,704,505) (13,434,150) (26,936,464)
Shares (number)
Weighted average number of ordinary shares in issue during the period 266,484,071 181,293,171 181,335,216
Loss per share
Basic and diluted (0.04) (0.07) (0.15)
Earnings 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.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue to assume conversion of all potential
dilutive ordinary shares. The potential ordinary shares are considered to be
antidilutive on the basis that they reduce the loss per share and are such are
not included in the Company's EPS calculation, meaning that diluted EPS is the
same as basic EPS.
4. Share capital
Balance at 31 December 2021 (£) 181,099
Issue of share capital
Number of shares 105,810
Price per share (£) 0.001
Share value (£) 106
Balance at 30 June 2022 (£) 181,205
Issue of share capital
Number of shares 340,890
Price per share (£) 0.001
Share value (£) 341
Balance at 31 December 2022 (£) 181,546
Issue of share capital
Number of shares 169,345,387
Price per share (£) 0.001
Share value (£) 169,345
Balance at 30 June 2023 (£) 350,891
5. Post balance sheet events
There were no reportable post balance sheet events.
6. Responsibility statement of the directors in respect of the interim
report
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting
· the interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
Richard Rees
Chief Finance Officer
11 September 2023
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