TIDMCREO
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 GBP15.7m ( H1-2022: GBP13.6m, H2-2022: GBP13.5m),
including GBP0.9m generated from Creo core products, equal to the
same core products revenue generated in the entirety of FY-2022
(H1-2022 GBP0.5m, H2-2022: GBP0.4m)
-- 15% increase in revenue vs. H1-2022 driven by Creo's Core
technology and growth in Creo's Endotherapy consumable business
-- GBP33.7m (before expenses) raised in an oversubscribed fundraise in March 2023
-- Cash and cash equivalents of GBP26.5m at 30 June 2023 (30
June 2022: GBP26.1m; 31 December 2022: GBP13.1m)
-- Post balance sheet receipt of GBP4.5m R&D tax credits
-- Underlying EBITDA loss (EBITDA with R&D tax credits and
other accounting adjustments added back) of GBP9.2m, representing a
15% reduction vs. H2-2022 (GBP10.8m)
-- 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
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)
Freddie Barnfield / Duncan Monteith
/ Euan Brown +44 (0)20 7260 1000
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
Phillip Marriage 558 258 / +44 (0)7867 984 082
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
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-2 02 2, at
GBP0.9m;
-- Revenue growth of 18% from H2-2022 in our Creo Endotherapy consumable products;
-- GBP33.7m (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/
.
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 GBP15.7m across both Creo Core
and Consumable sales. Creo Core revenues, which comprise the Creo
Products including the slimmer Speedboat Inject and CROMA platform,
were GBP0.9m 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 GBP0.5m for the period (H1-2022:
GBP0.5m, H2-2022: GBP0.9m) 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: GBPnil, H2-2022: GBP0.4m), however these are expected in
H2-2023.
Creo's Endotherapy consumable sales continued to grow during the
period, generating GBP14.3m of revenue. This represents an 18%
increase on H2-2022 and 12% on H1-2022 (H2-2022: GBP12.1m, H1-2022:
GBP12.8m).
6 months to 6 months 6 months 12 months
to to to
All figures 30 June 2023 31 December 30 June 31 December
GBPm 2022 2022 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 GBP7.5m (H2 -20
22: GBP6.6m) whilst the gross margin percentage marginally
decreased by 0.2% to 47.9% (H2 -20 22: 48.1%) due to no milestone
payments in the six-month period to date compared to one milestone
payment in H2 -20 22.
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 GBP1.7m in
aggregate (GBP0.9m (H2-2022 vs H1-2022) and GBP0.8m (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 GBPm) 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 GBP9.2m, representing a
15% reduction for the first six months of 2023 vs. H2- 20 22
(GBP10.8m).
The decrease in underlying administrative expenses in the period
to GBP17.9m against the six-month period to 31 December 2022
(GBP18.7m) 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 GBP8.6m ( six
months to 30 June 2022: GBP10.5m; six months to 31 December 2022:
GBP10.3m ) representing a 16% reduction in underlying operating
loss for the first six months of 2023 vs. H2- 20 22 . This is a
non-statutory measure which adjusts the operating loss as
follows:
6 months 6 months 6 months 12 months
to to to to
30 June 31 December 30 June 31 December
(All figures GBPm) 2023 2022 2022 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)
(30. 8
Operating loss (13.4) (14.9) (15.9) )
------------------------------- --------- ------------ --------- ------------
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 0.1
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 (9. 2 (11.
(non-statutory measure) ) (10.8) 3 ) (22. 2)
------------------------------- --------- ------------ --------- ------------
Share-based payments 0.6 0.5 0.8 1.3
Underlying operating loss (10.
(non-statutory measure) (8.6) (10.3) 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 GBP0.05m.
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
GBP4.5m 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 GBP15.2m for the six
months to 30 June 2023 ( six months to 30 June 2022: GBP16.7m )
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 GBP17.1m (
six months to 30 June 2022: GBP2.0m ) due to GBP15m 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 GBP30.6m ( six
months to 30 June 2022: GBP1.2m ) reflecting the fund raise
completed in March 2023 generating GBP33.7m offset by net repayment
of loans and lease payments of GBP0.9m in the period.
Total assets at 30 June 2023 increased to GBP88.7 m ( 30 June
2022: GBP87.5m ). Cash and cash equivalents and cash on deposit at
30 June 2023 were GBP26.5m ( 30 June 2022: GBP26.1m ) following the
fund raise of GBP31.5m in March offset by cash spent on operation
expenditure for the period. Net assets were GBP69.0 m ( 30 June
2022: GBP61.1m ).
At 30 June 2023, the debtor position in relation to R&D Tax
Credits was GBP6.3m including the GBP4.5m debtor from 2022.
Inventory as at 30 June 2023 decreased to GBP8.0 m ( 30 June 2022:
GBP8.2m ), 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 (GBP1.5m) in Creo Medical
Spain with the PPE loan (GBP1.5m).
Interest bearing liabilities as at 30 June 2023 decreased to
GBP9.2 m ( 30 June 2022: GBP10.5m ) 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 GBPm) 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 comprehensive
income - - 0.4
Total comprehensive loss for the year (12.6) (13.1) (25.3)
---------------------------------------------------------- ----- ------------- ------------- -----------------
Loss per Share
Basic and diluted (GBP) 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 GBP0.05m.
Consolidated statement of financial position
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
(All figures GBPm) 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 GBP0.05m.
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 GBPm) 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 GBP0.05m.
Consolidated statement of cash flows
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
(All figures GBPm) 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 GBP0.05m.
GBP0.9m 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:
12
months
6 months to 6 months to 6 months to to
All 31
figures December
GBPm 30 June 2023 31 December 2022 30 June 2022 2022
--------- ------------------------------------------------------------------------------------------- --------------------------------------- ----------------------- ---------
UK 4.9 4.0 3.7 7.7
Europe 10.4 9.3 9.8 19.1
RoW 0.4 0.2 0.1 0.3
Total 15.7 13.5 13.6 27.1
--------- ------------------------------------------------------------------------------------------- --------------------------------------- ----------------------- ---------
3. Earnings per share
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
(All figures GBP) 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 (GBP) 181,099
------------------------------------ ------------
Issue of share capital
Number of shares 105,810
Price per share (GBP) 0.001
Share value (GBP) 106
Balance at 30 June 2022 (GBP) 181,205
------------------------------------ ------------
Issue of share capital
Number of shares 340,890
Price per share (GBP) 0.001
Share value (GBP) 341
Balance at 31 December 2022 (GBP) 181,546
------------------------------------ ------------
Issue of share capital
Number of shares 169,345,387
Price per share (GBP) 0.001
Share value (GBP) 169,345
Balance at 30 June 2023 (GBP) 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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