Final Results

Creo Medical Group PLC

26 April 2023

 

Creo Medical Group plc

("Creo", the "Group" or the "Company")

Final Results

Foundations for sustained growth: significant increase in revenue & operational progress

Creo Medical Group plc (AIM: CREO), the medical device company focused on the emerging field of surgical endoscopy, announces its audited final results for the 12 months ended 31 December 2022.

Financial Highlights:

·     Total sales in the period of £27.2m (FY21: £25.2m), including first revenues from Creo's Kamaptive licensing programme of £1.4m

·     Threefold increase in revenues to £0.9m from Speedboat Inject and CROMA, laying the foundation for further growth in 2023 as the Group continues to commercialise its technology

·     Gross profit up 13.3% to £13.1m (FY21: £11.6m), with gross margin up 2.3% points to 48.3% (FY21: 46.0%)

·     Underlying EBITDA loss of £22.1m for FY22 (FY21: £22.6m) in-line with market expectations, including £13.5m (FY21: £12.9m) of R&D costs

·     Underlying administrative costs reduced in H2-22 vs H1-22 by 5% despite the inflationary environment, and this is expected to continue into FY23 following a restructuring of the R&D teams as we move to the next phase of commercial development with the completion of many projects in FY22

·     £33.7m raised through oversubscribed fundraise in March 2023 (post-period end), providing the Company with a pathway to cash flow breakeven and, ultimately, to profitability

Commercial Highlights (including post-period end):

·     Global cases have more than doubled in FY22 vs FY21. Continued cases in the key USA, EMEA and APAC markets

·    Speedboat Inject now in everyday use treating bowel (lower GI), and oesophagus and stomach (upper GI) indications. Q1-23 cases 50% higher than FY22 quarterly average and Q4-22 actual

·    Continued initial use of MicroBlate Fine for soft tissue ablation within both the pancreas and the liver

·     Multi-national and bespoke regional training and mentoring events held, resulting in 80 confirmed users as at December 2022 (a four-fold increase over FY21), and 91 as at 31 March 2023

·     A slimmer Speedboat Inject was released to market in late Q4-22, significantly increasing Creo's addressable market due to its compatibility with a greater number of smaller endoscopes

·     Kamaptive licensing programme

·   First Kamaptive licensing partnership announced with the world's biggest robotics company, Intuitive (NASDAQ : ISGR), and first revenues received

·   Non-exclusive IP licence and royalty agreement entered into with CMR Surgical, the global surgical robotics business

Operational Highlights (including post-period end):

·     Development of Creo's slimmest Speedboat, Speedboat Flush, with 510k FDA submitted early in 2023

·     Multi-site post-market clinical study announced in Q1-23 with MicroBlate Flex, Creo's microwave ablation device, to evaluate the safety and feasibility in the bronchoscopic treatment of lung lesions, with patients being recruited and the first in-human case for the device expected to take place during Q2-23

FY23 Update and Outlook

Q1-23 trading has been in line with expectations. The Company has experienced strong orders and growing sales in its core technology including cases using the slimmer Speedboat Inject. Consumables sales in Q1-23 were 10% higher than FY22 quarterly average.

Following the re-organisation of the business in Q4-22, costs have been reduced and OPEX in Q1-23 was 10% lower than the FY22 quarterly average.

Management remain confident of achieving their 2023 objectives and delivering on the potential of Creo's technology.

Craig Gulliford, Chief Executive Officer, commented: "2022 saw a significant increase in revenue from core technology as we built on the foundations laid in previous years during the pandemic to deliver further growth and operational progress. With global cases using Speedboat Inject more than doubling in FY22 vs FY21, and a fourfold increase in core technology users, our approach to training, mentoring and converting clinicians into regular users is gaining considerable traction. It has been especially pleasing to see the pioneering work that has been done by our clinicians around the world to expand the use of Creo's technology into new indications, improving outcomes for even more patients. With this being the first full year of commercial operations, post-pandemic, we can now see where and how to apply our resources to achieve increasingly predictable results as we accelerate growth.

"We developed and launched innovative new products, including the slimmer Speedboat Inject, and launched our Kamaptive partnerships in the field of robotic assisted surgery which are progressing well.

"Our post-period oversubscribed funding round provided us with the working capital necessary to continue executing our strategic vision and has provided us with a path to cashflow breakeven. I would again like to reiterate my sincere thanks to our shareholders for their support during the round. This has left Creo well positioned for further sustained growth. We expect to see the continued acceleration of the commercialisation of our core technology and the introduction of new innovative products, as well as the expansion of our Kamaptive programme as we continue to build a world class medical device and tech licensing company."

Enquiries

Creo Medical Group plc	www.creomedical.com
Richard Rees (CFO)	[phone]
Cenkos Securities plc	[phone]
Stephen Keys / Camilla Hume (NOMAD)
Michael Johnson / Russell Kerr (Joint Broker)
Numis Securities Limited (Joint Broker)	[phone]
Freddie Barnfield / Duncan Monteith / Euan Brown
Walbrook PR Ltd	Tel: [phone] or [e-mail]
Paul McManus / Sam Allen  / Phillip Marriage	Mob: [phone]

About Creo Medical 

Creo Medical is a medical device company focused on the development and commercialisation of minimally invasive electrosurgical devices, bringing advanced energy to endoscopy.

The Company's vision is to improve patient outcomes through the development and commercialisation of a suite of electrosurgical medical devices, each enabled by CROMA, powered by Kamaptive. The Group has developed the CROMA powered by Kamaptive full-spectrum adaptive technology, which aims to optimise surgical capability and patient outcomes by applying the benefits of advanced laparoscopic surgical technology to areas of therapy where there is significant unmet clinical need but such technology has been extremely challenging to deliver to date.

Kamaptive is a seamless, intuitive integration of multi-modal energy sources, optimised to dynamically adapt to patient tissue during procedures such as resection, dissection, coagulation and ablation of tissue. Kamaptive technology provides clinicians with increased flexibility, precision and controlled surgical solutions. CROMA currently delivers bipolar radiofrequency ("RF") energy for precise localised cutting and focused high frequency microwave ("MW") energy for controlled coagulation and ablation via a single accessory port. This technology, combined with the Group's range of patented electrosurgical devices, is designed to provide clinicians with flexible, accurate and controlled clinical solutions. The Directors believe the Company's technology can impact the landscape of surgery and endoscopy by providing a safer, less-invasive and more cost-efficient option for procedures.

For more information, please refer to the website www.creomedical.com

Chief Executive's Review

During 2022 we have moved quickly and decisively to build on the strong global foundations laid over the last few years. This resulted in: a four-fold increase in users of our core technology; partnering with two of the world's biggest robotic surgery companies with first revenues being received; and making notable improvements to our flagship devices (significantly, releasing of a slimmer Speedboat Inject to market in November 2022).

Since the second half of 2021, operating losses have consistently reduced. Notwithstanding our progress, like all shareholders, I was disappointed with Creo's share price performance during the period. The combination of a number of macro factors outside of Creo's control, including the economic whirlwind caused by UK's mini-budget in September, fuelled market nervousness which disproportionally impacted the access to capital needed by many early stage, high growth prospect businesses like Creo. With the support from our shareholders, we were able to execute on a planned anticipated final fundraise which was significantly over-subscribed, early in 2023 to provide Creo with a strong cash position from which we can enter the next stage of our development and commercialisation of Core Technologies and drive the business through to cash flow break even, and, ultimately, profitability. I thank all shareholders, new and old, for the support provided. Looking back to our IPO in 2016 and the early-stage, pre-revenue, pre-clearance medtech business that Creo has grown from, it is clear that we have made significant progress.  Despite the worldwide disruption caused by COVID-19, the War in Ukraine and macro economic pressures, we have remained ahead of our projections and continue to improve lives.

Widespread Adoption

In 2022 our core technology improved lives in EMEA, USA and APAC daily. flexible endoscopic surgical capability into the hands of interventional endoscopists and surgeons is real. 

Over the year we significantly enhanced our heralded Pioneer Clinical Education Programme, doubling the number of training centres and offering multi-national and bespoke regional models. Most importantly, we supported the treatment of more patients than ever before.

As more clinicians utilise our technology, the likelihood that it will be used to perform additional procedures increases too. In July 2022, a team of clinicians in Israel, led by Dr Sergei Vosko, applied Speedboat Inject to remove a GIST from a patient for the first time.

We continue to progress device clearances across additional territories; the first reimbursement code for resection procedures in the Upper GI tract was approved by the AMA in late 2022 and is something we expect to be of real commercial interest to our customers across the lucrative US market.

The process we need to execute for continued growth and to deliver a step change in patient care across multiple areas of therapy is clear. The rapid increase in patients treated, our growing pipeline of future users and our international successes all validate this.

Additional Revenue Streams

We have developed Creo's business from the outset to have a multi-tiered revenue structure. Through our previous three-tiered build-buy-partner strategy we successfully acquired and integrated Albyn Medical and Boucart Medical, maximising the potential of both our core technology and acquired complementary product ranges.

The subsequent acquisition of Aber Electronics in 2021 secured some of the best microwave and RF engineering capability in the world, bolstered our existing team and secured a key element of our supply chain. With our accelerated growth and significant international footprint, we are leveraging this growth and our economies of scale for the benefit of our core product range.

During 2022 we launched some of our endotherapy accessories, which sit alongside the core Creo GI products, in the US. We aim to replicate this into APAC during 2023, building on the successes of our European model and growing the Creo brand.

I am particularly pleased with the progress of our Kamaptive Licensing Programme during 2022. We secured agreements with two of the world's biggest robotic surgery companies. The quality of our partners demonstrates the wide potential of our technology. The receipt of our first revenues from our Kamaptive Licensing Programme affirms this valuable revenue tier for Creo.

Our focus on the optimisation and commercialisation of our product range will maximise the impact of our Kamaptive Licensing Programme. Reshaping our engineering resources to meet the challenge of these opportunities has naturally resulted in some difficult decisions being made to structure our team composition and capabilities as we concentrate on successfully delivering the next phase of Creo. My sincere thanks go to those departing colleagues who helped us reach this point.

We now have a clear roadmap to enable our Kamaptive licensing programme and additional products to work in tandem with Creo's core technology, providing a multifaceted business capable of reaching far more patients and potential markets than we would have imagined a few years ago.

We are now bringing laparoscopic capability to flexible endoscopy, both large and exciting markets underserved by advanced energy.

The Future

2022 was an inflection point for Creo, with significant operational progress and commercial traction cementing our technology at the forefront of a paradigm shift in the treatment of patients across multiple indications.

Building on this progress, we continue to commercialise Creo's core technology, improving the precision and control we afford our customers whilst enabling the delivery of further surgical outcomes.

The Kamaptive Licensing Programme offers significant potential beyond our current partnerships to develop a range of potential derivatives of our technology into other partner programmes. The next stage of the "tech play in medical devices" is equally exciting. As our partnerships bear fruit, my vision is to launch the CROMA - powered by Kamaptive - developer eco-system, safely giving commercial access to the unique core technology we have to a wide range of potential partners, inspired by the reality of the current partner programmes.

2023 is already moving at pace. Having submitted 510K FDA clearance for our slimmest Speedboat, the Speedboat Flush, we will continue the introduction of Microblate Fine to soft tissue ablation in the liver. We are preparing for clinical trials for Microblate Flex in the lung and a whole host besides. This will be delivered alongside the further integration of our wider portfolio of products and their introduction to significant new markets, whilst continuing to evolve the Pioneer Clinical Education Programme.

Tying this all together is the continued development of CROMA and with it the prospect of delivering truly game changing real time tissue characterisation software. Building on some key engineering undertaken in 2022, "Tissue Sensing" has the potential to add tremendous value to flexible endoscopy. The prospect of enhanced precision and control opens up a new frontier for patient outcomes, not to mention the potential benefits to robotic surgical programmes.

It is both a source of great pride and satisfaction to me that we have created a terrific team who know what we need to do in each sector to execute. Alongside partnerships with some of the world's best surgical robotic partners, our job is clear: to deliver on what we have very clear sight of over the coming months and years to become a premier, cash generative global medical device and tech licensing business, transforming and improving the lives of many thousands as we do so.

Craig Gulliford

Chief Executive Officer

25 April 2023

Chairman's statement

Creo Medical continues its evolution from a UK medical device innovator into an international group focused on the clinical and commercial adoption of a full suite of electrosurgical products. With multi-tiered revenue streams and a global reach servicing over 4,800 customers from fourteen offices, our core products are now in daily use around the world.

During the year, the Group further embedded its core technologies into its acquired businesses to create a shared culture spanning multiple markets and driving real synergies across the business. This is seen from the launch of our Creo branded consumable products in the US providing additional revenue streams from these synergies. We signed a landmark collaboration agreement with Intuitive Surgical and announced a license and royalty agreement with CMR Surgical.

Consequently, we are now working on both sides of the Atlantic with two of the leading robotic surgery brands to deploy our proprietary technology into new surgical markets that complement our core electrosurgical products.

Notwithstanding this progress, like most companies, we faced economic headwinds fuelled by both war in Europe and global fears around inflation and recession. These hit the equity markets for small-cap, technology companies like ours especially hard and increased as the year progressed and our share price worsened. This resulted in uncertainty over sources of equity finance in the second half of the year but has thankfully been addressed, post-period, by the placing, subscription and open offer that completed in March 2023 to raise gross proceeds of approximately £33.7million. The Directors believe our strengthened balance sheet provides a pathway to cashflow breakeven and profitability and gives comfort to our shareholders, bank debt providers, customers, suppliers and partners.

Sustainability

Creo Medical is committed to best practice in its environmental and social policies under the umbrella term of 'sustainability' which emphasises our core social impact of improving clinical outcomes for patients. Ivonne Cantu leads the charge as the non-exec champion on sustainability and represents the Board on the Sustainability Committee.

The Sustainability Report in our 2022 Annual Report and Accounts outlines the three areas where we believe we can make the greatest impact: by improving patient outcomes for our patients, clinicians and healthcare providers; by promoting diversity, equality and enhanced opportunities for our people and communities; and by ensuring that the actions we take as a business mitigate our environmental impact on our planet.

Governance

The Company continues to strengthen our governance framework with energetic engagement by the Non-Executive Directors at board level, through the Board committees and in discussion with shareholders. As detailed in the 2022 Compliance Statement in the 2022 Annual Report and Accounts, the Group has adopted the QCA Code of Conduct with its ten principles to deliver growth, maintain a dynamic management framework and build trust.

The Board recognise the challenging MDR/MDD environment particularly for relatively new Companies and the uncertainties that arise from this. Therefore, the Directors share a close focus on risk management as the Group develops new products, new clinical procedures and new markets.

The Audit Committee, chaired by John Bradshaw, our Senior Independent Director, meets regularly to review and monitor the financial statements, accounting principles, internal controls and risk management systems as detailed in our maiden Audit Committee Report in our 2022 Annual Report and Accounts.

The Committee also monitors the relationship with our auditors to ensure independence and objectivity. The Board continues to seek guidance from our professional advisers, including solicitors, auditors, remuneration consultants and nominated adviser, on recommended best practice for AIM companies.

Employees

Creo Medical's staff has grown from just 27 employees in the year before IPO to approximately 289 employees operating in 10 countries spanning Europe, the US and Asia. Approximately 120 employees came from acquisitions we completed in 2020 and 2021. 

2022 was a tough year for all our management and employees with challenging delivery requirements set against constrained resources and disrupted economies and capital markets. A reorganisation reflecting the transition of the Company towards operational focus means we have had to say goodbye to some great people who have helped us get where we are today.

The Board would like to thank all the Creo Medical team for their hard work, commitment and patience during the year which laid the foundations for the successful equity raise and therefore the exciting next stage of our evolution.

The Group promotes an entrepreneurial employee culture guided by five values: collaborative, creative, disruptive, 'can-do', and life-changing patient outcomes. The Remuneration Committee, chaired by Ivonne Cantu, aims to implement a remuneration policy that promotes long-term success, consistent with our culture and values and that is aligned with the interests of our shareholders and other stakeholders. Further details are included in the Remuneration Report in our 2022 Annual Report and Accounts.

Shareholders

While the Company's frustrating share price performance during 2022 can be partly blamed on the external factors outlined above, it was exacerbated by its weakening balance sheet and uncertainty over future sources of capital. This necessitated frequent discussions between the Company and its shareholders to determine the best route forwards. These resulted in the equity raise in Q1 2023 that was oversubscribed by both existing and new shareholders. The Directors extend heartfelt thanks to our fellow shareholders for this engagement and support in exceptionally challenging market conditions.

Outlook

Our CEO, Craig Gulliford, has outlined in his report, the Group's ambitions to become a premier global medical devices company transforming many thousands more lives. With a now strengthened balance sheet and clear targets for the next few years, management and staff can focus on these bold ambitions. In the meanwhile, we will continue to build systems for governance, sustainability and remuneration that are well aligned, with the ambitions of all our stakeholders.

Charles Spicer

Non-Executive Chairman

25 April 2023

Financial Review

I am pleased to announce the results for the financial year to 31 December 2022. We have seen the first revenues from our Kamaptive Licensing Programme in the year along with growth in sales of our CROMA and Speedboat Inject device. These revenues along with cost savings and operational efficiencies have reduced the underlying EBITDA loss year on year. The fund raise of £33.7m (before expenses) in Q1 2023 provides us with the platform to achieve positive underlying EBITDA by 2025.

Revenue and other income

The Group has made significant progress in establishing sales channels through new products, as well as the development of our commercial footprint with our Kamaptive Licensing Programme seeing its first revenues and additional Heads of Terms signed with new partners.

Our European operations have continued to be cash generative to the business and we are starting to see growing sales through broader direct and indirect sales channels for CREO across our large portfolio of products.

Revenues billed in the period in relation to Speedboat Inject and CROMA increased to £0.9m (2021: £0.3m) and Kamaptive licensing revenues of £1.4m (2021: £nil). £24.9m was generated through consumable sales in Creo Europe. Other operating income of £0.1m in the 12-month period to 31 December 2022 (2021: £0.1m) relates to research grants.

Gross Margin

Gross margin improved from 46.0% in 2021 to 48.3% in 2022 driven by an increase in margin from consumable sales from 46.3% in 2021 to 48.0% in 2022.

Operating loss

The operating loss for the period increased to £30.8m (2021: £29.9m), reflecting a full year of additional heads recruited towards the end of 2021, to support the increased operational growth and completion of key R&D projects. The underlying operating loss for the year was £20.8m (2021: £20.0m). The underlying EBITDA loss for the period was £22.1m (2021: £22.6m). Operating expenses peaked during the year as we completed key R&D projects and invested in our operational capacity and operational resources. In the second half of the year we saw these costs reduce against H1-22 by 5%, a trend we expect to continue into 2023 and we have already seen evidence of this in Q1-23 management numbers.

Whilst underlying EBITDA and underlying operating loss are not statutory measures, the Board believes they are helpful to include for investors as additional metrics to help provide a meaningful understanding of the financial information as this measure provides an approximation of the ongoing cash requirements of the business as it continues to pursue its future development and pursue ongoing commercialisation focus of its approved products.

The underlying EBITDA position excludes SIP charges and Earnout charges (contingent and deferred payments on previous acquisitions) expenses which are non-cash and incorporates the recovery of research and development expenditure which the Group is able to benefit from through R&D tax credit schemes. The underlying operating loss position is the same as underlying EBITDA but also excludes share-based payment which are non-cash.

			12 months to	12 months to
(All figures £'000)			31 December 2022	31 December 2021
Revenue			27,169	25,161
Cost of Sales			(14,047)	(13,576)
Gross Profit			13,122	11,585
Other Operating Income			51	52
Administrative Expenses			(43,929)	(41,544)
Operating Loss			(30,756)	(29,907)
SIP Charge			119	-
Earnout			933	500
Depreciation & Amortisation			3,112	2,562
R&D expenditure recovered via tax credit scheme			4,507	4,299
Underlying EBITDA (non statutory measure)			(22,084)	(22,546)
Share based payments			1,279	2,564
Underlying operating loss (non-statutory measure)			(20,805)	(19,982)

Tax

The tax credits recognised in the current and previous financial year relate mainly to R&D tax credit claims. A deferred tax asset has been recognised in respect of the business combination relating to our Creo Europe subsidiaries. A £0.75m deferred tax asset has been recognised in respect of tax losses in Creo Medical Limited which we expect to utilise through group relief of the future profits in Creo Medical UK Limited. No further tax assets in relation to these losses has been recognised due to the uncertainty over the timing of future recoverability.

Expenses

Administrative expenses totalled £43.9m for the year (2021: £41.5m). The increase was largely driven by headcount costs which increased to £22.9m for the year from £20.5m in 2021 due to an increase in employees at the end of Q4-21. Non employment R&D costs were £6.9m in the year (2021: £7.3m) due to the completion of key R&D projects and a move towards funded R&D projects such as the Intuitive agreement, offset by increase in Patent costs.

Sales and marketing costs were £3.8m (2021: £3.2m) driven by increased travel compared to 2021 due to COVID-19 restrictions as well as costs associated with growing our Core Technology sales.

General and Administrative expenses were £5.1m (2021: £5.0m) with our facility and utility costs all increased due to inflationary pressures. Non-cash expenses comprising of SIP charge, earnout expenses, share-based payments and depreciation and amortisation were £5.2m (2021: £5.5m). Adjusting for these our underlying admin expenses were £38.8m (2021: £35.8m).

In the second half of the year, we saw these underlying administrative costs reduce against H1-22 by 5% a trend we expect to continue into 2023 and we have already seen evidence in Q1-23 in management numbers reported.  This was following a restructuring of the R&D teams as we move to the next phase of commercial development with the completion of many projects in 2022.

Loss per Share

Loss per share was 15 pence (2021: 15 pence).

Dividend

No dividend has been proposed for the period to 31 December 2022 (2021: £nil).

Cash flow and balance sheet

Net cash used in operating activities was £25.0m (2021: £26.0m), driven by the increased investment in operational capacity, focusing on commercial activities and initial cash outlay for endotherapy consumable products in the US and Europe. Net cash used in investing activities was £6.0m (2021: £7.8m) driven by the investments in new facilities for our UK headquarters and contingent and deferred payments from previous acquisitions. Cash generated from financing activities was £0.5m during the period. 

Total assets at the end of the period decreased to £75.3m (31 December 2021: £100.6m), a 25% decrease, reflecting the reduction in cash from operations for the period. Cash and cash equivalents at 31 December 2022 was £13.1m (31 December 2021: £43.5m). Net assets were £49.4m (31 December 2021: £73.3m), a 33% decrease due to operating loss and share based payment expense. 

Post balance sheet event

We raised £33.7m (before expenses) through an oversubscribed fundraise in March 2023 which enables Creo to push commercialisation of the suite of products and move to break even and being self-cash sustaining within the near future.

Accounting policies

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards. The Group's accounting policies have been applied consistently throughout the period and are described in the 2022 Annual Report and Accounts.

Key Performance Indicators

As the Group continues to develop and commercialise its core technology, the Directors consider the key financial performance indicators to be the level of cash held in the business, sales and operating expenses controlled to budget. The Board performs regular reviews of actual results against budget, and management monitors cash balances on a monthly basis to ensure that the business has sufficient resources to enact its current strategy.

Certain KPIs concern non-financial measures, such as the number of trainees for our Pioneer Clinical Education Programme, integration of acquired entities, ESG metrics such as carbon emissions, diversity ratios and employee engagement as detailed in our 2022 Annual Report and Accounts. All non-financial measures are monitored monthly.

The Board will continue to review the KPIs used within the business and assess them as the business grows.

Principal risks and uncertainties

The principal risks and uncertainties facing the Group are set out in the 2022 Report and Accounts.

Richard Rees

Chief Financial Officer

Consolidated Statement of Profit and Loss and Other Comprehensive Income

(All figures £'000)	Note		12 months to 31 December 2022	12 months to 31 December 2021
Revenue	2		27,169	25,161
Cost of sales			(14,047)	(13,576)
Gross Profit			13,122	11,585
Other operating income	2		51	52
Administrative expenses			(43,929)	(41,544)
Operating loss			(30,756)	(29,907)
Finance expenses			(287)	(463)
Finance income			66	31
Loss before tax			(30,977)	(30,339)
Taxation			4,041	5,744
Loss for the year			(26,936)	(24,595)
Exchange gain/(loss) on foreign subsidiary			1,166	(1,896)
Changes to the fair value of equity investments at fair value through other comprehensive income			388	231
Total other comprehensive income			1,554	(1,665)
Total comprehensive loss for the year			(25,382)	(26,260)
Loss per Share
Basic and diluted (£)	4		(0.15)	(0.15)

Consolidated Statement of Financial Position
(All figures £'000)	Note		As at 31 December 2022	As at 31 December 2021
Assets
Non-current assets
Intangible assets			8,080	8,692
Goodwill			19,563	18,563
Investments			2,122	1,733
Property, plant and equipment			10,184	8,603
Deferred tax			1,548	1,705
Other assets			153	146
			41,650	39,442
Current assets
Inventories			9,325	8,504
Trade and other receivables			6,765	4,830
Tax receivable			4,500	4,299
Cash and cash equivalents			13,097	43,534
			33,687	61,167
Total assets			75,337	100,609
Shareholder equity
Called up share capital	5		182	181
Share premium			149,516	149,448
Merger reserve			13,603	13,603
Share option reserve			9,338	7,940
Foreign exchange reserve			(1,159)	(2,325)
Financial Assets at fair value through other comprehensive income			619	231
Accumulated losses			(122,696)	(95,760)
Total equity			49,403	73,318
Liabilities
Non-current liabilities
Interest-bearing liabilities			6,067	5,175
Deferred tax liability			2,000	1,786
Provisions			384	593
			8,451	7,554
Current liabilities
Interest-bearing liabilities			4,029	3,705
Trade and other payables			9,000	9,921
Non interest-bearing loans			1,587	1,676
Other liabilities			2,622	4,221
Provisions			245	214
			17,483	19,737
Total liabilities			25,934	27,291
Total equity and liabilities			75,337	100,609

 Consolidated Statement of Changes in Equity

(All figures £'000)	Note	Called up share capital	Accumulated losses	Share premium	Merger reserve	Share option reserve	Changes to the fair value of equity instruments at fair value through other comprehensive income	Foreign Exchange Reserve	Total equity
Balance at 1 January 2020		150	(50,849)	115,112	13,603	4,648	-	-	82,664
Total comprehensive loss for the year
Loss for the financial year		-	(20,316)	-	-	-	-	-	(20,316)
Other comprehensive loss/income		-	-	-	-	-	-	(429)	(429)
Total comprehensive loss		-	(20,316)	-	-	-	-	(429)	(20,745)
Transactions with owners, recorded directly in equity
Issue of share capital		8	-	152	-	-	-	-	160
Equity settled share-based payment transactions		-	-	-	-	728	-	-	728
Balance at 31 December 2020		158	(71,165)	115,264	13,603	5,376	-	(429)	62,807
Total comprehensive loss for the year
Loss for the financial year		-	(24,595)	-	-	-	-	-	(24,595)
Other comprehensive loss/income		-	-	-	-	-	231	(1,896)	(1,665)
Total comprehensive loss		-	(24,595)	-	-	-	231	(1,896)	(26,260)
Transactions with owners, recorded directly in equity
Issue of share capital		23	-	34,184	-	-	-	-	34,207
Equity settled share-based payment transactions		-	-	-	-	2,564	-	-	2,564
Balance at 31 December 2021		181	(95,760)	149,448	13,603	7,940	231	(2,325)	73,318
Total comprehensive loss for the year
Loss for the financial year		-	(26,936)	-	-	-	-	-	(26,936)
Other comprehensive loss/income		-	-	-	-	-	388	1,166	1,554
Total comprehensive loss		-	(26,936)	-	-	-	388	1,166	(25,382)
Transactions with owners, recorded directly in equity
Issue of share capital	4	1	-	68	-	-	-	-	69
Equity settled share-based payment transactions		-	-	-	-	1,398	-	-	1,398
Balance at 31 December 2022		182	(122,696)	149,516	13,603	9,338	619	(1,159)	49,403

Consolidated Statement of Cash Flows

		12 months to	12 months to
(All figures £'000)	Note	31 December 2022	31 December 2021
Cash flows from operating activities
Loss for the year		(26,936)	(24,595)
Depreciation/amortisation charges		3,112	2,562
Equity settled share-based payment expenses		1,398	2,564
Finance expenses		287	463
Finance income		(66)	(31)
Taxation		(4,041)	(5,744)
Decrease/(increase) in inventories		(348)	(2,967)
Increase in trade and other receivables		(1,400)	(3,170)
Increase in trade and other payables		(1,002)	1,975
Interest paid	9	(287)	(463)
Tax received		4,299	3,395
Net cash used in operating activities		(24,984)	(26,011)
Cash flows from investing activities
Purchase of intangible fixed assets	12	(95)	(146)
Purchase of tangible fixed assets	13	(3,179)	(5,976)
Acquisition of subsidiary net of cash acquired	17	(2,753)	(1,752)
Interest received	9	66	31
Net cash used in investing activities		(5,961)	(7,843)
Cash flows from financing activities
Capital repaid in respect of loans	18	(1,572)	(1,844)
Proceeds of new loan	18	2,851	144
Principal elements of lease repayments	18	(827)	(515)
Share issue	22	-	34,208
Net cash generated from financing activities		452	31,993
(Decrease) in cash and cash equivalents		(30,493)	(1,861)
Effect of exchange rates in cash held		56	303
Cash and cash equivalents at beginning of the year		43,534	45,092
Cash and cash equivalents at end of the year		13,097	43,534

Notes to the financial statements

1. Financial information set out in this announcement 

The financial information set out above does not constitute the Company's statutory accounts for the period ended 31 December 2022 or 31 December 2021 but is derived from those accounts. Statutory accounts for the period ended 31 December 2021 have been delivered to the registrar of companies, and those for the period ended 31 December 2022 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2. Revenue and other operating income

The revenue split between the Group was as follows (based on where the sale originated):

	12 months to	12 months to
(All figures £'000)	31 December 2022	31 December 2021
UK	7,780	6,027
Europe	19,099	19,068
RoW	290	66
Total	27,169	25,161

Segmental reporting

Operating segments are identified on the basis of internal reporting and decision making. Creo currently has one operating segment which is the research, development and distribution of electrosurgical medical devices relating to the field of surgical endoscopy.

The Group has started the process of integrating the previous Albyn and Boucart brands into the Creo brand and offering customers our full suite of products. As such the Group is still operating in a single segment. As the Group continues to grow we expect the internal reporting structure to change to meet the changing goals and objectives of the business and additional operating segments may be identified in future reporting periods.

As there is only one reportable operating segment whole profit, expenses, assets, liabilities and cashflows are measured and reported on a basis consistent with the financial statements, with no additional disclosures necessary.

Other operating income

Other operating income relates to research grants. Income is recognised as necessary to match it with the related costs in the profit or loss on a systematic basis over the periods in which the entity recognises expenses for the related costs for which the grants are intended to compensate. Furthermore, income is recognised only when there is reasonable assurance that the Company will comply with any conditions attached to the grant and the grant will be received. Grant income received during the year was £0.1m (2021: £0.1m).

3. Loss before tax

The loss before income tax is stated after charging/(crediting):

(All figures £'000)		12 months to 31 December 2022	12 months to 31 December 2021
Depreciation - owned assets		1,295	782
Depreciation - right of use assets		672	651
Amortisation		1,145	1,129
Research and development expenditure		13,492	12,869

4. Loss per share

Loss per share has been calculated in accordance with IAS 33 - Earnings Per Share using the loss for the period after tax, divided by the weighted average number of shares in issue.

(All figures £)				12 months to 31 December 2022	12 months to 31 December 2021
Loss Loss attributable to equity holders of Company (basic)				(26,936,464)	(24,594,919)
Shares (number)
Weighted average number of ordinary shares in issue during the year				181,335,216	164,433,455
Loss per share
Basic and diluted				(0.15)	(0.15)

5. Share Capital

(All figures £'000)		2022	2021
Balance at start of the year		181	158
Issue of share capital
Number of shares		447	23,208
Price per share (£)		0.001	0.001
Share value (£'000)		1	23
Balance at 31 December		182	181

6. Subsequent events

Fund raise

On 16 February 2023, Creo announced it had raised £28.5 million (before expenses) by way of a conditional Placing and Subscription and on 7 March 2023 it had raised an additional £5.2m (before expenses) by way of an open offer, therefore raising gross proceeds of approximately £33.7 million, in aggregate.

Investment by Key Management Personnel:

Further to the announcements made on 16 February 2023 and 8 March 2023, and pursuant to the recent fundraising, the Company confirms that each of the Company's Directors, Luis Collantes, a member of the Company's senior leadership team and a director of various of the Company's subsidiaries and certain PCAs, have either themselves or through parties affiliated with them acquired New Ordinary Shares at the Issue Price of 20 pence per Ordinary Share as follows:

Director/PDMR Name	No. of New Ordinary Shares Acquired	Resultant Shareholding post transaction	% of voting rights post transaction
Charles Spicer	165,119	308,530	0.09%
Craig Gulliford*	1,000,000	1,630,466	0.46%
Richard Rees	2,715,322	2,805,902	0.79%
Professor Christopher Hancock	383,171	4,802,352	1.36%
David Woods	415,255	440,255	0.13%
John Bradshaw	1,265,135	1,371,082	0.39%
Ivonne Cantu	125,000	125,000	0.04%
Luis Collantes**	4,442,485	4,442,485	1.27%

* These 1,000,000 shares are held by the spouse of Craig Gulliford

** Shares held via Monkey Business Consultants SL, a company owned and managed by Luis Collantes.

 

END