TIDMCREO
RNS Number : 8011A
Creo Medical Group PLC
04 June 2021
Creo Medical Group plc
("Creo" the "Group" or the "Company")
Final results for the 12 months ended 31 December 2020
A Transformational Year: Significant growth and continued
regulatory progress
Creo Medical Group plc (AIM: CREO), a medical device company
focused on the emerging field of surgical endoscopy, announces its
audited final results for the 12 months ended 31 December 2020
.
The Board is pleased to be able to report that, despite the
COVID-19 pandemic, the year ended 31 December 2020 was a strong
period for Creo marked by significant internal development and
expansion, along with the continued development of the Company's
suite of devices to complement the Company's CROMA Advanced Energy
Platform ("CROMA") and Speedboat device for use in Gastrointestinal
("GI") therapeutic endoscopy.
Operational Highlights:
-- Albyn Medical and Boucart Medical acquired providing a direct
sales presence in key European markets and strengthening Creo's
commercial team
-- An increased ESG focus with a strong COVID-19 response
-- Appointment of David Woods as Chief Commercial Officer in
August 2020, brought a wealth of knowledge and experience to the
business
-- Recruitment of a direct sales team in the USA and APAC
-- 10-fold increase in the commercial, marketing and distribution resource
-- Direct presence across five European countries, four regions
of the USA and a centralised hub in Asia
-- CE marking an additional five devices
-- US Food and Drug Administration ('FDA') 510(k) clearance achieved for:
o SlypSeal;
o MicroBlate Fine; and
o MicroBlate Flex (post period end)
-- The first clinical use of MicroBlate Fine in a successful pancreatic tumour ablation
-- Strengthened IP portfolio, with 247 granted patents and 763 pending applications
Financial Highlights :
-- Total sales in the period were GBP9.4m (2019: GBP0.01m)
-- Cash and cash equivalents of GBP45.1m at 31 December 2020 (31 December 2019: GBP81.0m)
-- Operating loss of GBP23.5m (2019: GBP18.9m) including GBP0.7m
share based payments, in line with management expectations and
reflects increased R&D and commercial activities
-- Net cash outflow from operating activities of GBP16.3m (2019: GBP11.9m)
Craig Gulliford, Chief Executive Officer, commented:
"It has been a transformational year and we have made impressive
progress against our build, buy and partner strategy. Perhaps the
most satisfying achievement for the whole team has been the first
clinical use of MicroBlate Fine to successfully treat a number of
patients with pancreatic tumours in early December 2020, with no
adverse events reported to date.
"Though the evolution of Creo since IPO has been exceptional our
mission remains the same: to improve patient outcomes and this is
evidence that we are doing that.
"Having started the year with only one CE marked device, we have
successfully cleared five additional advanced energy devices
through the CE mark process and gained FDA 501(k) clearance for
three devices. Furthermore, we have completed two transformational
acquisitions which are delivering meaningful revenue to the
business and we have exceeded our objectives in expanding our sales
team globally.
"We are extremely well positioned to be the next generation
solution in minimally invasive surgery and, whilst our current
focus is on GI therapeutic endoscopy, looking forward we see
significant further opportunities in other surgical
disciplines/specialities and then beyond into diagnostics."
Creo Medical Group plc
Richard Rees (CFO) +44 (0)1291 606005
Cenkos Securities plc +44 (0)20 7397 8900
Stephen Keys / Camilla Hume (NOMAD)
Michael Johnson / Russell Kerr (Sales)
Walbrook PR Ltd +44 (0)20 7933 8780 or creo@walbrookpr.com
Paul McManus / Lianne Cawthorne +44 (0)7980 541 893 / +44 (0) 7515
909 238
About Creo Medical
Creo Medical, founded in 2003, is a medical device company
focused on the development and commercialisation of minimally
invasive surgical devices, bringing advanced energy to endoscopy.
The Company's mission is to improve patient outcomes by applying
microwave and RF energy to surgical endoscopy. Creo has developed
CROMA, an electrosurgical Advanced Energy Platform that delivers
bipolar radiofrequency for precise localised cutting and microwave
for controlled coagulation. This technology provides clinicians
with flexible, accurate and controlled surgical solutions.
The Company's strategy is to bring its CROMA Advanced Energy
Platform powered by its full spectrum Kamaptive Technology to
market, enabling a suite of medical devices which the Company has
designed, initially for the emerging field of GI therapeutic
endoscopy, an area with high unmet needs. The CROMA Advanced Energy
Platform will be developed further for bronchoscopy and laparoscopy
procedures. The Company believes its technology can impact the
landscape of surgery and endoscopy by providing a safer, less
invasive and more cost-efficient option of treatment. An overview
of the Creo Medical device technology portfolio can be seen
here:
https://www.rns-pdf.londonstockexchange.com/rns/8918P_1-2020-6-14.pdf
For more information about Creo Medical please see our website,
www.creomedical.com
Chairman's statement
As for many businesses, families and individuals across the
globe, 2020 was an extraordinary year for Creo. The Board is full
of admiration for how effectively our senior management team and
staff rose to the challenges presented by COVID-19 and navigated
the Company through the year, achieving significant regulatory and
commercial progress.
While the excitement around the clinical results being achieved
remains high in each of our key markets, as expected, the various
lockdowns and other national and international restrictions
impacted the ability for Creo's products to be commercially
adopted. The senior management team wisely refocused resources to
build an international commercial platform and, in parallel with
our R&D and engineering teams, continued to develop our
technology and intellectual property faster and further than
planned. Consequently, we achieved better than expected progress in
developing new products, filing intellectual property and have
secured regulatory clearances in Europe and the USA.
In July, we announced the transformational acquisition of Albyn
Medical, the first and largest of the two acquisitions executed
during the period. Completing cross-border acquisitions of
businesses based in Europe against the headwinds of both COVID-19
and Brexit presented a set of challenges to which the Executive
Directors and wider team rose admirably to. In November, we also
acquired Boucart Medical to further strengthen Albyn's European
platform. We welcome both the Albyn and Boucart teams into the
Group and thank them for their hard work and flexibility in
integrating the businesses so quickly. Albyn exceeded our
expectations in its first five months as part of the Group and, as
announced in the trading update on 19 May 2021, the Directors are
very positive about its ongoing contribution to the enlarged
business.
Management and staff
In 2020, Creo's executive team and staff have continued to
evolve and expand and this positions us very favourably for the
years ahead. David Woods was appointed Chief Commercial Officer in
August and has quickly recruited an experienced international team
to support him in the US and APAC. David was, of course, already
part of the Creo family, having served as a Non-Executive Director
of the Group since the IPO. He now takes on a vital executive role
in building out our global commercial platform and we are very
pleased to welcome him and his new colleagues onto the executive
team.
Central to the seamless integration into Creo of Albyn has been
the addition of its CEO Luis Collantes to the Group's senior
management team. Supported by his team, Luis has made an immediate
and positive contribution to Creo so we are similarly delighted to
welcome them into the Group.
Last year we reported that our staff had trebled since the IPO
and with two acquisitions, by the end of 2020, the Group employed
217 staff based in eight countries; this represents a roughly
eightfold increase in our overall headcount since our admission to
AIM in 2016. The Creo team now includes first class talent from a
wide range of nationalities, technical skill sets and professional
backgrounds. The Board would like to express its thanks and
admiration for all they have achieved during this year and the
energy, good humour and resourcefulness with which they have
addressed the added challenges presented by the pandemic.
Shareholders
Creo has a supportive shareholder base of which we are highly
appreciative. With their support, and having completed our equity
raise in December 2019, we entered 2020 with a strong balance
sheet. This gave us a solid platform on which to grow during what
proved, for everyone, a turbulent year. We continue to maintain
frequent communications with our shareholders and remain very
grateful for their enthusiasm, support and understanding.
ESG
This year, in line with evolving best practice, our annual
report will for the first time include an ESG report, which we hope
shareholders will find informative especially around the shared
response to the pandemic. Creo has always recognised its wider
responsibilities and has prioritised those communities it serves,
most obviously our patients and their families, the clinicians that
treat and care for them, but also our staff and their families and
the local communities in which we employ them.
Outlook
Against the backdrop of the pandemic we made impressive progress
in 2020 targeting internal development and expansion to provide
strong foundations upon which to build in the future. We have a
solid book of clinicians waiting to be trained and are strongly
placed to support healthcare systems clearing patient screening and
treatment backlogs built up through the pandemic. This, combined
with the commercial progress we expect to make with our expanded
core portfolio as restrictions on hospital access ease, give us
confidence for 2021 and beyond and so we remain excited by what the
future holds for Creo and its shareholders.
Chief Executive's Review
I am proud of the progress we have made in delivering against
our strategy during 2020. COVID-19 caused a huge upheaval in our
industry, demanding that clinical resource be reassigned to assist
on the front line. At the start of the pandemic I asked the Creo
team to "focus on what you can achieve, and not on what you can't
achieve". I believe that they did just that and, in so doing,
enabled Creo to take great strides forward so I thank each and
every colleague for playing their part in our achievements during
the year.
Having started the year with only one CE marked device, we have
successfully cleared five additional advanced energy devices
through the CE mark process and gained FDA 501(k) clearance for
three devices. Furthermore, we have completed two transformational
acquisitions which are delivering meaningful revenue to the
business and we have exceeded our objectives in expanding our sales
team globally.
Like all businesses we have been impacted by COVID-19, but we
are resourceful and have used the period to adapt and grow. We
rapidly adjusted our day-to-day operations to ensure employee
safety, supporting our community by being able to source
ventilators for NHS hospitals, donating bikes for medical staff and
acquiring 3D printers to allow Creo employees to manufacture PPE
from home, in local schools and in small businesses. We have
included further details on our COVID-19 response within our annual
report.
We have organically grown our commercial team in 2020. David
Woods, previously a Non-Executive Director of Creo and former
President and CEO of PENTAX Americas, joined Creo full-time as
Chief Commercial Officer. Since joining the executive team David
has built an experienced team in the US and APAC providing the
Company with greater access to these important markets. This
additional strength, together with the acquisitions of Albyn
Medical and Boucart Medical, have resulted in a tenfold increase in
Creo's commercial, marketing and distribution resource so,
importantly, we now have an established commercial and distribution
platform to accelerate our growth.
Building momentum
We have made strong progress against our build, buy and partner
strategy.
Build
We have significantly strengthened our product portfolio during
the year having CE marked five new devices across
our four technology platforms: Speedboat, SlypSeal, SpydrBlade
and MicroBlate. Despite the disruption caused by COVID-19, we were
also pleased to receive FDA 510(k) clearance for SlypSeal Flex and
MicroBlate Fine. After the year end, MicroBlate Flex was our fourth
product to receive FDA 510(k) clearance.
We have continued to receive commercial orders for Speedboat
Inject from the UK, US, South Africa and Australia where the
initial focus is on establishing clinical education centres.
Perhaps even more satisfying for the whole team, was the first
clinical use of MicroBlate Fine to successfully treat a number of
patients with pancreatic tumours in early December 2020, with no
adverse events reported to date.
Buy
The acquisition of Albyn Medical in July 2020 brought breadth
and depth to Creo within Europe, accelerating our commercial
progress there. Albyn is a European specialist in the supply and
manufacture of Gastroenterology, Urology and Endoscopy products to
healthcare providers in Spain, France, Germany and the UK. With a
well established sales and marketing team, this acquisition gives
us an enhanced commercial and distribution platform, providing a
direct route to market for our products. Albyn's product range is
highly complementary to Creo's and also brings with it the
opportunity to broaden into the pulmonary and urology markets. We
were delighted to welcome Luis Collantes, CEO of Albyn Medical, to
Creo's senior management team and the enlarged Group is already
benefitting from his significant experience and market
expertise.
In November 2020, we further enhanced our European commercial
platform and direct European coverage through the acquisition of
Boucart Medical, the largest independent supplier of
gastrointestinal (GI) endoscopy consumables in Belgium and
Luxembourg.
Partner
As we look forward to 2021, we are focused on delivering
clinical outcomes for all our current devices. In addition, we see
further opportunities to exploit the potential of Kamaptive, the
advanced energy technology that powers our devices, in the adjacent
fields of laparoscopic and robotic assisted surgery. We intend to
address these markets through building partnerships and, where
appropriate, licensing our Kamaptive Technology for use with third
party solutions.
The journey to commercialisation
The delivery of our first significant revenues marked a further
milestone on our journey to commercialisation. Whilst the GBP9
million of revenue generated in 2020 was largely from our recent
acquisitions, the expansion of our global commercial team and
imminent product launches, puts us in a strong position to build on
this and enhance the value of the businesses that we have
acquired.
People
In addition to Dave Woods and Luis Collantes joining our senior
management team, we welcomed a further 95 new employees into the
Creo family through the Albyn and Boucart acquisitions. Combined
with the organic growth in our engineering talent, the Company
exited the year with 217 employees. Maintaining and nurturing our
culture across this fast-growing organisation has been a priority,
along with the careful integration of the newly acquired
businesses.
Against the backdrop of an uncertain world, the commitment and
dedication of all our staff has been impressive. I would like to
thank them all for the resilience and pragmatism they have shown in
tackling the challenges COVID-19 has presented.
COVID-19 Reflection
It would be remiss of me to not take a moment to reflect on
COVID-19 and the impact it has had on all of us. Creo started 2020
with a strong balance sheet having closed a funding round at the
end of December 2019 and looking forward to the challenges that lay
ahead. Little did any of us realise that we would be facing a
global pandemic on a scale not seen for over a century.
In line with UK Government guidance, in March 2020 I instructed
the Creo team to work from home where possible and to stay safe.
The resilience that we have built into the Creo team proved
invaluable, with everyone pulling their weight and more, to ensure
that the business could respond appropriately to the Pandemic
whilst continuing to deliver against Creo's goals and
objectives.
Our 2020 Report and Accounts sets out examples of how Creo
played its part in the COVID-19 response, not just within Creo but
with the wider community. I am extremely proud of the response that
we have been able to coordinate.
Whilst we have had cases of COVID-19 within the team, we have
been lucky to have no fatalities. This being said, I am aware that
within our network of friends, family and business associates there
are those who have suffered; our thoughts remain with them.
Looking forward
2020 has been a transformational year for the Company. The
reduction in elective surgery and redeployment of medical staff in
response to COVID-19 has inevitably delayed Creo's short-term
commercialisation activities. However, the significant backlog in
surgery and procedures that have resulted as a consequence of the
pandemic will require faster, more efficient healthcare solutions
and the solutions available through Creo's technology and devices
have never been more relevant than now.
The steps we have taken this year to gain regulatory clearances
for our devices and build our global commercial and distribution
platform means we are ready for the next phase of our growth and to
play our part in improving timeframes and outcomes for patients. In
2021 we will expect to see a wider adoption of our devices and to
begin developing broader commercial opportunities for our Kamaptive
Technology.
Though the evolution of Creo since IPO has been exceptional our
mission remains the same: to improve patient outcomes. We are
extremely well positioned to be the next generation solution in
minimally invasive surgery and, whilst our current focus is on GI
therapeutic endoscopy, looking forward we see significant further
opportunities in other surgical disciplines/specialities and then
beyond into diagnostics.
Craig Gulliford
Chief Executive Officer
Financial Review
I am pleased to announce Creo's audited results for the year
ended 31 December 2020. The adversity faced by the business from
COVID-19 has, in part, been mitigated through the strength of the
balance sheet following the 2019 fund raise. Applying this funding
in line with the objectives set out in 2019 to acquire Albyn
Medical and Boucart Medical brings immediate revenue and positive
cash flow to the Group, strengthens the business and confirms Creo
as a platform for future growth.
Revenue and other income
Despite Covid-19 disrupting sales channels limiting access to
clinical training and travel, the Group has made significant
progress in establishing a longer-term sales channel through new
products as well as development of our commercial footprint via
acquisitions and organic growth. We secured distribution contracts
in the APAC region, developed our sales team in the US, headed by
David Woods, and acquired Albyn Medical to provide additional
cashflow, access to and sales expertise throughout Europe and
further enhanced our European presence with the acquisition of
Boucart Medical.
Revenues billed in the period in relation to Speedboat and CROMA
totalled GBP0.1m of which GBP39k has been recognised as revenue
with the balance accounted for below the line in administrative
expenses. Since the acquisition of Albyn Medical SL, the Albyn
Group of the business generated Albyn GBP9.4m of revenue in the
five-month period since 24 July 2020. Other operating income of
GBP0.05m in the 12-month period to 31 December 2020 (2019: GBP0.1m)
relates to research grants.
Operating loss
The operating loss for the period increased to GBP23.5m (2019:
GBP18.9m) reflecting the increased operating expenses in relation
to clinical and development activities together with further
investment in headcount and business infrastructure to support the
business and enable it to continue to develop and commercialise its
technology. This continued investment in the business will support
anticipated growth and development in the coming periods.
The underlying operating loss (also referred to as adjusted
EBITDA) for the period was GBP18.0m (2019: GBP14.0m).
Whilst EBITDA is not a statutory measure, the Board believes it
is helpful to investors to include as an additional metric 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 begins to commercialise its approved products. The
adjusted EBITDA position excludes share-based payment 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.
31 December 31 December
(All figures GBP) 2020 2019
------------------------------------------ ------------- -------------
Operating loss (23,484,062) (18,875,378)
Loss before Income tax (23,461,805) (18,615,381)
Total comprehensive loss for the period (20,744,241) (15,911,150)
Underlying operating loss adjustments:
Share-based payments 728,145 1,554,845
Depreciation and amortisation 1,596,419 641,725
R&D expenditure recovered via tax credit
scheme 3,146,080 2,710,239
Underlying operating loss (non-statutory
measure) (18,013,418) (13,968,569)
-------------------------------------------- ------------- -------------
*R&D expenditure includes a GBP1,839 claimed under the large
company ('RDEC') scheme in relation to monies received from
Research Grants.
Tax
The tax credits recognised in the current and previous fiscal
year relate solely to R&D tax credit claims. A deferred tax
asset has been recognised in respect of the business combination
relating to our Albyn subsidiaries. A deferred tax asset has yet to
be recognised for the losses of Creo Medical Limited due to the
uncertainty over the timing of future recoverability.
Expenses
Administrative expenses comprising R&D, operational support,
sales and marketing, and finance and administration costs totalled
GBP27.1m (2019: GBP19.0m). Adjusting for share-based payments,
depreciation, amortisation and tax income as shown in the table
above, underlying administrative expenses are GBP21.7m (2019:
GBP14.0m).
This annualised increase of GBP8.1m reflects the continued
investment made by the Group in clinical and development activities
and the move from small discrete production batches into full-scale
manufacturing. Personnel costs continue to be the largest expense
and represent approximately 60% of the Group's underlying
administrative expenses.
Loss per share
Loss per share was 13 pence (2019: 13 pence).
Dividend
No dividend has been proposed for the period to 31 December 2020
(31 December 2019: GBPnil).
Cash flow and balance sheet
Net cash used in operating activities was GBP16.3m (December
2019: GBP11.8m), driven by the continued investment in research and
development of new devices, establishing a U.S. and APAC presence.
Net cash used in investing activities was GBP21.0m (2019: GBP0.8m)
driven by the acquisition of Albyn and Boucart to bolster market
access and sales expertise.
Total assets at the end of the period increased to GBP93.5m (31
December 2019: GBP88.3m), a 5.9% increase, reflecting the increase
in assets and goodwill, as a result of the business combination,
offset by the operating cash outflow for the period. Cash and cash
equivalents at 31 December 2020 was GBP45.1m (31 December 2019:
GBP81.0m). Net assets were GBP62.8m (31 December 2019: GBP82.6m), a
25% decrease due to liabilities associated with the business
combination.
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 2020 Report and
Accounts.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group are set
out in the 2020 Report and Accounts.
Richard Rees
Chief Financial Officer
Consolidated Statement of Profit and Loss and Other
Comprehensive Income
31 December 31 December
(All figures GBP) 2020 2019
------------------------------ ------------- -------------
Revenue 9,428,880 13,473
Cost of sales (5,393,884) (8,522)
Gross Profit 4,034,996 4,951
Other operating income 49,192 126,719
Administrative expenses (27,121,353) (19,007,048)
Impairment loss on trade and
other receivables (446,897) -
Operating loss (23,484,062) (18,875,378)
Finance expenses (172,875) (51,291)
Finance income 195,132 311,288
Loss before tax (23,461,805) (18,615,381)
Taxation 3,146,080 2,704,231
Loss for the period/year (20,315,725) (15,911,150)
--------------------------------- ------------- -------------
Other comprehensive income (428,516) -
Total comprehensive loss for
the period/year (20,744,241) (15,911,150)
--------------------------------- ------------- -------------
Loss per Share
Basic and diluted (0.13) (0.13)
Consolidated Statement of Financial Position
31 December 31 December
(All figures GBP) 2020 2019
------------------------------- ------------- -------------
Assets
Non-current assets
Intangible assets 10,267,868 865,241
Goodwill 18,261,605 -
Investments 500,000 -
Property, plant and equipment 3,378,425 1,295,818
Deferred tax 474,289 -
Other non-current receivables 111,780 8,400
32,993,967 2,169,459
Current assets
Inventories 6,812,252 727,158
Trade and other receivables 5,633,205 1,616,319
Tax receivable 2,973,364 2,702,198
Cash and cash equivalents 45,091,552 81,048,448
60,510,373 86,094,123
Total assets 93,504,340 88,263,582
-------------------------------- ------------- -------------
Shareholder equity
Called up share capital 157,891 150,378
Share premium 115,263,193 115,111,506
Merger reserve 13,602,735 13,602,735
Share option reserve 5,376,060 4,647,915
Foreign exchange reserve (428,516) -
Retained earnings (71,164,915) (50,849,190)
62,806,448 82,663,344
Liabilities
Non-current liabilities
Interest bearing liabilities 6,541,597 543,892
Other liabilities 2,318,909 -
8,860,506 543,892
Current liabilities
Interest bearing liabilities 4,023,119 173,193
Trade and other payables 9,960,279 4,883,153
Deferred tax liability 1,996,246 -
Non interest bearing loans 1,789,944 -
Other liabilities 4,067,798 -
21,837,386 5,056,346
Total liabilities 30,697,892 5,600,238
Total equity and liabilities 93,504,340 88,263,582
-------------------------------- ------------- -------------
Consolidated Statement of Changes in Equity
Called
up Share Foreign
share Retained Share Merger option Exchange Total
(All figures GBP) Note capital earnings premium reserve reserve Reserve equity
------------------- ------ -------- ------------- ------------ ----------- ---------- ---------- -------------
Balance at 31 December
2018 120,495 (34,938,040) 65,835,555 13,602,735 3,093,070 - 47,713,815
Total
comprehensive
income for the
period
Profit or loss - (15,911,150) - - - - (15,911,150)
Total comprehensive
income - (15,911,150) - - - - (15,911,150)
Transactions with
owners,
recorded directly
in
equity
Issue of share capital 29,883 - 49,275,951 - - - 49,305,834
Equity settled share-based
payment transactions - - - - 1,554,845 - 1,554,845
Balance at 31 December
2019 150,378 (50,849,190) 115,111,506 13,602,735 4,647,915 - 82,663,344
--------------------------- -------- ------------- ------------ ----------- ---------- ---------- -------------
Total
comprehensive
income for the
period
Profit or loss - (20,315,725) - - - (428,516) (20,744,241)
Total comprehensive
income - (20,315,725) - - - (428,516) (20,744,241)
Transactions with
owners,
recorded directly
in
equity
Issue of share capital 7,513 - 151,687 - - - 159,200
Equity settled share-based
payment transactions - - - - 728,145 - 728,145
Balance at 31 December
2020 157,891 (71,164,915) 115,263,193 13,602,735 5,376,060 (428,516) 62,806,448
--------------------------- -------- ------------- ------------ ----------- ---------- ---------- -------------
Consolidated Statement of Cash Flows
31 December 31 December
(All figures GBP) 2020 2019
-------------------------------------------------- ------------- -----------------------------------
Cash flows from operating activities
Loss for the period (20,315,725) (15,911,150)
Depreciation/amortisation charges 1,596,419 641,726
Equity settled share-based payment expenses 728,145 1,554,845
Fair value adjustment to derivatives - 27,894
Finance expenses 172,875 23,397
Finance income (195,132) (311,288)
R&D expenditure credit (1,839) (5,362)
Taxation (3,146,080) (2,704,231)
Impairment of intangible assets 140,814 -
(21,020,523) (16,684,170)
Increase in inventories 766,553 (424,686)
Decrease in trade and other receivables (394,012) (552,696)
Increase in trade and other payables 1,686,474 3,283,533
(18,961,508) (14,378,019)
Interest paid (172,875) (51,291)
Tax Paid 153,277 -
Tax received 2,702,198 2,577,026
Net cash from operating activities (16,278,908) (11,852,284)
Cash flows from investing activities
Purchase of intangible fixed assets (91,462) (633,795)
Purchase of tangible fixed assets (484,771) (484,006)
Acquisition of subsidiary net of cash acquired (20,586,496) -
Interest received 195,132 311,288
Net cash from investing activities (20,967,597) (806,513)
Cash flows from financing activities
Capital repaid in respect of loans (497,047) -
Proceeds for new loan 2,055,000 -
Capital repaid in respect of lease liabilities (391,404) (187,310)
Share issue 159,200 49,305,833
Net cash from financing activities 1,325,749 49,118,523
(Decrease)/increase in cash and cash equivalents (35,920,756) 36,459,726
Effect of exchange rates in cash held (36,140) -
Cash and cash equivalents at beginning of period 81,048,448 44,588,722
Cash and cash equivalents at end of period 45,091,552 81,048,448
--------------------------------------------------- ------------- -----------------------------------
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 2020
or 31 December 2019 but is derived from those accounts. Statutory
accounts for the period ended 31 December 2019 have been delivered
to the registrar of companies, and those for the period ended 31
December 2020 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
Revenue from contracts with customers
Revenue is recognised when substantially all of the risk and
reward of ownership of the goods are transferred to the customer on
despatch, and thus has the ability to direct the use and obtain the
benefits from the goods. Revenue is recognised net of any sales
tax.
Collaborative arrangements
All Collaboration agreements as at 31 December 2020 have been
terminated or moved to non-collaboration agreements. s. The result
of this is that these new distribution agreements are now deemed to
be a 'customer' of the entity, as defined in IFRS 15 and all sales
made under these new distributor agreements are assessed against
the IFRS 15 criteria upon inception of the contract to determine
the appropriate accounting treatment.
Performance obligations and revenue recognition policies
Revenue is recognised in accordance with IFRS 15 at the point at
which the Groups performance obligation has been satisfied. Below
is a summary of the recognition policies for each type of sale:
Type of product/service Nature and timing of satisfaction of Revenue recognition policies
performance obligations, including
significant payments
terms
---------------------------------- ---------------------------------------- ----------------------------------------
Direct Sales of Devices/Products Customers obtain control of medical Revenue is recognised when the goods
devices or products when the goods leave the warehouse or are delivered to
either leave the warehouse the customers
or when they physically arrive at the premises (depending on shipment terms).
customer premises based on the shipment
terms.
Invoices are generated at this point
with payment required within 30-60 days
depending on
customer terms.
---------------------------------- ---------------------------------------- ----------------------------------------
Sales to Distributors Distributors obtain control of medical Revenue is recognised when the goods
devices or products when the goods leave the warehouse or are delivered to
either leave the the customers
warehouse or when they physically premises (depending on shipment terms).
arrive at the distributor premises
based on the shipment
terms.
Invoices are generated at this point
with payment required within 30-60 days
depending on
distributor terms.
---------------------------------- ---------------------------------------- ----------------------------------------
Service/Maintenance Contracts Service & maintenance contracts are for Revenue is recognised over the life of
a set period of time as specified with the contract on a straight line basis.
the customer. We consider
Our performance obligations are this matches the satisfaction of our
satisfied over the length of the performance obligations of the
contract. contract.
Customers are invoiced monthly based on
the annual value of the contract
agreed.
---------------------------------- ---------------------------------------- ----------------------------------------
Demonstration/Placement Equipment Equipment may be provided free of Where the rights to an asset are
charge to the customer provided they retained by the Group the asset is
purchase ancillary depreciated over its useful
products, or it may transfer to them if life.
they purchase a set volume.
Where the customer obtains control of
No contract is deemed to exist under the equipment the revenue is recognised
IFRS 15 in relation to theplacement of over the period
the equipment, in which the right was obtained.
due to the Group retaining the
significant element of risks and Ancillary products sold are recognised
rewards including future cashflows, at the point of sale.
a lack of commercial substance in
relation to the equipment and
recoverability of the asset
without ability to enforce compensation
for the period of use of the equipment.
Where the
Group retains control of the equipment
it is classified as fixed asset.
Where the customer obtains control the
asset will be classified as a sold
product and not
held as an asset.
---------------------------------- ---------------------------------------- ----------------------------------------
Warranty Products manufactured by the Group have Revenue is only recognised when we
a warranty period. Customers have the consider it likely that the product
right to return will not be returned.
the product if it is faulty within this
period. We calculate a warranty provision based
on historical warranty data of
comparable products.
The warranty provision is
accounted of under IAS 37 as a
provision
and an expense.
---------------------------------- ---------------------------------------- ----------------------------------------
The revenue split between the Group for 2020 was as follows:
All figures GBP
----------------------------------- --------------------------------------------
Albyn subsidiaries 9,397,104
Creo Medical Limited subsidiaries 31,776
Total 9,428,880
----------------------------------- --------------------------------------------
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 acquisition of Albyn Medical SL and Boucart Medcial SRL in
the year was made to helps us achieve our objectives in this
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 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 GBP49k
(2019: GBP126k).
3. Loss before tax
The loss before income tax is stated after
charging/(crediting):
12 months 12 months
to to
31 December 31 December
(All figures GBP) 2020 2019
-------------------------------------------------- ------------ ------------
Depreciation - owned assets 581,813 369,382
Depreciation - assets on hire purchase contracts 36,235 41,545
Depreciation - right of use assets 320,751 154,429
Amortisation 657,620 76,368
Impairment of Intangible Assets 140,814 -
Research and development expenditure 10,192,891 8,146,338
--------------------------------------------------- ------------ ------------
4. Earnings per share
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.
12 months 18 months
to to
31 December 31 December
(All figures GBP) 2020 2019
---------------------------------- ------------- -------------
(Loss)
(Loss) attributable to equity
holders of Company (basic) (20,315,725) (15,911,150)
Shares (number)
Weighted average number of
ordinary shares in issue during
the period 155,797,600 121,343,612
Earnings per share
Basic and diluted (0.13) (0.13)
------------------------------------- ------------- -------------
5. Share Capital 31 December 31 December
(All figures GBP) 2020 2019
----------------------------- ------------ ------------
Balance at start of period 150,378 120,495
Issue of share capital
Number of shares 7,512,423 29,883,373
Price per share (GBP) 0.001 0.001
Share value (GBP) 7,513 29,883
Balance at 31 December 2020 157,891 150,378
------------------------------ ------------ ------------
6. Subsequent events
MicroBlate Flex received FDA regulatory clearance in January
2021 and is the fourth device within Creo's portfolio of flexible
endoscopy devices for the gastrointestinal ('GI') market to receive
FDA regulatory clearance, alongside CE marking already received
across the range in 2020.
Post year end we have signed agreements with a number of
distributors to purchase and promote Creo products throughout
various regions. The distributor agreements signed were as
follows:
Distributor Signing Date Location
Welmore Co. Ltd. 27 January 2021 Taiwan
---------------- ------------
Hat-Med 04 March 2021 Vietnam
---------------- ------------
Suntek Medical 09 March 2021 South Korea
---------------- ------------
Medical Distributor Alliance 11 March 2021 Hong Kong
---------------- ------------
Avro Medical Sdn. Bhd. 19 April 2021 Malaysia
---------------- ------------
Hayleys Lifesciences (Pvt) Ltd 22 April 2021 Sri Lanka
---------------- ------------
Innovamedical 12 May 2021 Italy
---------------- ------------
Meditop Co Ltd 14 May 2021 Thailand
---------------- ------------
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END
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