CREO Creo Medical Group Plc

Creo Medical Group plc

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

Final Results

Strong revenue growth and significant commercial 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 2023.

Financial Highlights:

*underlying operating loss is loss after accounting for share-based payments, depreciation and amortisation, R&D tax credit, earnout and other one-off settlements.

Operational and Commercial Highlights (including post-period end):

FY24 Update and Outlook

Q1-24 trading has been in-line with expectations following the approvals for UltraSlim at the turn of the year. Following a strong finish in Q4-23, sales momentum in Creo core products has continued with core revenue in Q1-24 showing a 14% increase over the FY23 quarterly average, and the Company expects to see this accelerate in Q2-24, driven by anticipated strong sales of Speedboat UltraSlim and building on the strong performance in Q4-23. Consumable sales were impacted by the early Easter compared to Q4-23, but the Group remains on track for H1-24 targets.  Tight control on costs has been maintained, ensuring that the Group's operating expenses, to date, remain on budget. This, together with the continuing sales momentum, gives the Board confidence that the Group will achieve its 2024 objectives for core revenue and deliver on the potential of Creo's technology.

Craig Gulliford, Chief Executive Officer, commented:

"2023 was a significant year for Creo, with core technology sales increasing by c. 2.5x and a 119% increase in our global user base underpinning a Group-wide revenue increase of 13%.

"We successfully launched Speedboat UltraSlim in December 2023, the culmination of the work done to miniaturise our technology to be compatible with the working channel of all commercially available endoscopes, further broadening our market reach. The product has now been used in the UK, USA, LATAM and APAC since launch, with exceptional feedback received from clinicians around the world.

"Our MicroBlate brand has also seen strong progress, with increasing clinical cases, and pioneering work performed. In combination with our robotics partners, MicroBlate Flex was used at the Royal Brompton to ablate a cancerous lung nodule in the same sitting as a diagnosis performed with robotic platform. This world's-first combined procedure has the potential to not only dramatically improve outcomes for lung cancer patients, but to remove the long and worrying waits between diagnosis and treatment.

"We expect to launch our SpydrBlade brand during 2024 via our core sales channel. SpydrBlade is also of great interest to our robotic partners, and we are working hard with them to deliver the technology into the robotics space.

"The growth seen during the year throughout all key parts of the business, and lowered costs all contributed to a reduced operating loss for the year. This, coupled with the continued momentum we've seen to start 2024, encourages me as we move closer towards our goal of achieving cashflow break even in 2025."

Enquiries:

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 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

Chief Executive Review

2023 was a pivotal year for Creo, with considerable strides made by all areas of the business. With a particular focus on the commercialisation of our core technology, and continuing to maximise the value of our global distribution business, Creo branded products represented 80% of revenues for the year.

In February 2023, despite the challenging macroeconomic backdrop and market conditions, we executed a planned and significantly oversubscribed fundraise. This fantastic support from existing and new shareholders has provided us with the financial platform to achieve significant milestones during the year and has strengthened our cash position from which we have entered the next stage of our development. We are committed to the commercialisation of our core technologies and driving the business to generate self-sustaining cashflows. I thank all shareholders, new and old, for their support.

The launch of Speedboat UltraSlim in Q4, our smallest device to date, was a significant milestone and helped us to achieve record sales for the quarter as well as a strong orderbook for the first quarter of 2024. During the year, core technology sales and Kamaptive licensing income increased to £4.0m (FY22 £2.3m) with core technology sales increasing c. 2.5x, despite the regulatory clearance for UltraSlim coming later than we expected in the US, but much earlier than planned in the EU, setting a strong foundation for 2024.

Overall Group revenues increased during the year by 13% to £30.8m with our core product revenues increasing 2.5x from 2022 to £2.3m. We are now starting to see our user base growth translate into significant revenues for the business, as shown by strong and growing Q1 24 sales.

Following our cost-intensive product development cycle in prior years, we have shifted our development efforts towards funded partnership programmes as part of our Kamaptive brand, with a heavy focus on our robotics partners.

This shifting of the innovation cost base from us to third parties has led to a decrease in operating costs by 7.9% year-on-year. This evolution led to some overall headcount reductions where the phase of the programme is less resource intensive. Despite this exercise, we were able to deliver a meaningful cost of living corrections, primarily to staff below the median salary where the dramatic increases in inflation have hit those the most.

Continuing this traction throughout 2024, and seeing our other key projects and partnerships come to fruition, puts us in a great position to achieve our goals with increasing revenues and appropriate cost management.

Product Offering

Our Speedboat UltraSlim is the ultimate miniaturisation version of our unique Speedboat advanced energy device. Building on our applauded Speedboat technology, this process was no mean feat as we deliver unique miniaturised and widely adopted laparoscopic technology into user environments where no other company has been able to do so before.

The Speedboat UltraSlim clearance and launch is a significant event for Creo as it opens up access to all major commercially used endoscopes on the market, allowing Creo's technology to treat more patients, collaborate with even more doctors and provide better patient outcomes - our core aim.

FDA clearance for Speedboat UltraSlim came in November 2023. Whilst this was just over a quarter behind our original goal, the significant additional work required to achieve this meant that this was an outstanding performance by the entire Creo team. Not only did we get the USA clearance, but we were also able to clear the device for use in Europe more than a year ahead of our expected schedule. This clearance enabled us to prepare for commercial launch in the European market and sets us up really well for 2024.

It's really reassuring to me that the core product brands, which leverage the Creo technology developed over the past decade, are all starting to monetise themselves and generate traction commercially.

In 2023 our core technology improved lives in EMEA, USA and APAC. The vision of placing laparoscopic surgical capability into the hands of interventional flexible endoscopists and surgeons is a reality, and the next couple of years will see us crystallising revenues across our brand portfolio, both through our core technology sales channels as well as through our Kamaptive partnerships.

It was announced recently that our very first case and the first robotic ablation clinical case took place in late 2023 with Microblate Flex. I have had the privilege of observing one of these cases, where our technology, in conjunction with our partner's robotic technology, presents a night and day comparison with the current alternative patient pathway. The time, effort and hard work from the team over the last few years; from design and development to the team working with our partners represents a terrific achievement. There is still a lot of work to do with the completion of our clinical studies, but the expansion beyond this to move towards commercial activity with customers is really exciting. This brings together commercial execution, with partner value, innovation and most important of all, a potential opportunity to improve the survivability of lung cancer. All this alongside the continued work to expand the clinical data and experience with Microblate Fine in the early treatment of pancreatic cancer, liver cancer and other conditions gives us all a sense of real pride as we are seeing a whole new cohort of patients whose lives are now beginning to benefit from our technology which we are confident will be crystallised in revenue in the coming years.

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.

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. In November, we held a significant Capital Markets Event, at which several of our clinical users presented their perspective not just on the technology but, more importantly, the significant benefits that our technology brings to patients. One of the most pertinent presentations to me was an example of a procedure utilising Speedboat to treat oesophageal cancer, where patients have been known to have to endure up to 30 repeat endoscopies over three years to manage strictures. However, utilising Speedboat and Creo's advanced energy, the clinician has seen significantly reduced, and in some cases no need for repeat endoscopies. The impact this will have on reduced demand for endoscopy as well as surgical resources, waiting lists and improved patient outcomes is what motivates everyone at Creo the most.

Additional Product and Revenue Streams

We have developed Creo's business from the outset to have a multi-tiered revenue structure. Our successful acquisitions have allowed us to maximise the potential of both our core technology and acquired complementary product ranges as well as securing some of the best Microwave and RF engineering capability in the world. 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.

Our SpydrBlade brand delivers laparoscopic cut and coagulate functionality through an endoscopic device. This means that clinicians receive significant surgical performance from a tiny instrument at the end of an endoscope. We expect to launch this device in 2024 via our core sales channels. However, in addition, we are also developing the same technology in partnership with robotic partners. Our technology is unique in the world of robotic surgery as we can deliver the energy and device performance beyond the wrist of the robot to deliver laparoscopic surgery. Our connected Kamaptive partners, Intuitive Surgical and CMR, both recognise that and we're working hard with them to deliver SpydrBlade technology into this exciting arena.

Our MicroBlate programme is focussed on areas such as treatments for lung, pancreatic, liver, kidney and bladder cancers.

We've announced early cases with MicroBlate Fine in the past. The clinical programme has now been extended to MicroBlate Flex where we successfully delivered first cases for the treatment of lung cancer as part of a clinical study with the Royal Brompton Hospital in London. This study looks at the treatment of lung cancer using bronchoscopic microwave ablation. This has also included first cases where the device has been used in combination with Intuitive's Ion platform, which has traditionally been utilised as a diagnostic tool to detect cancer in a patient but, now, by using Creo's technology, clinicians can remove tumours effectively and safely in a matter of minutes during the same procedure.

This is both amazing for the patient and rewarding for the clinical teams and sets us up for commercial traction going forward. As with any business, our achievements are not without challenges. But we are positioned strongly for 2024, supported with the financial results delivered in 2023.

Kamaptive Programme

I am particularly pleased with the progress of our Kamaptive Licensing Programme during 2023. The quality of our partners demonstrates the wide potential of our technology, and the revenues received affirm 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.

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, in both large and exciting markets underserved by advanced energy.

We have also recently announced our strategic partnership with Khalifa University which will enable us to utilise its world class facilities and resources to further develop our product offering and take advantage of IP that is currently not being monetised.

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 our unique core technology to a wide range of potential partners, inspired by the reality of the current partner programmes.

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. This 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, as well as the potential benefits to robotic surgical programmes.

Third party validation

During 2023, Royal Oldham Hospital purchased the CROMA system for use across their endoscopy department to launch a Speedboat Submucosal Dissection ("SSD") service. The results reported illustrate the positive impact of Speedboat and the launch of the SSD service on patient outcomes, waiting lists and the prevention of bowel cancer. Having attended Creo's 'Pioneer' training programme and installed devices across multiple endoscopy rooms immediately, the hospital performed five SSD cases in its first afternoon, with over thirty further patients successfully treated within weeks, delivering excellent patient outcomes and at a significantly lower cost to the Trust plus reducing patient backlog and reducing time to be seen.

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. Early data collected from over 130 patients shows that we have saved a Trust 62% or over £5,000 in cash per procedure undertaken, reduce bed stays by 87% and critical care by 100%. Importantly, this data is only related to the SSD procedure element, and does not include additional benefits and costs savings previously identified and reported by the Company, which included downstream costs associated with recurrence of lesions and procedure-related complications commonly associated with surgical alternatives to SSD. During 2023 we continued to launch in the USA some of our endotherapy accessories, which sit alongside the core Creo GI products. We aim to replicate this into APAC during 2024, building on the successes of our European model and growing the Creo brand.

Encouraging Outlook

Over the next six to 12 months, we expect to see an increasing rate of progress with the Speedboat UltraSlim device following the limited market release in late 2023. After carefully launching the product into the field, we have received fantastic feedback from our clinicians. At one centre, 15 cases were performed in two days to really evaluate and extend the capabilities of the device. All feedback so far has been extremely positive.

We are actively obtaining the regulatory clearances in our APAC regions and others to allow us even greater commercial and global reach. We'll be submitting and expecting clearance for the SpydrBlade product to come through during the course of 2024 which will be going into the GI space.

We continue to develop our relationship with our Kamaptive partners such as Intuitive and CMR as well as the Khalifa Strategic Partnership to help utilise our IP and ensure future development continues through funded projects including integration of the SpydrBlade into robotic laparoscopic tools.

The most challenging period for any company is the transition from development to commercial profitability. The strides we have made during the year keep us on the right path. We look forward to another year of strong growth in our core technology from both existing and new users, helping drive us towards our goal of self-sustaining cashflows.

It is testament to the dedication and tenacity of the Creo team, many of whom have been here since IPO, that we have been able to achieve such significant milestones and I would like to extend my utmost thanks to the current and past employees who have made Creo what it is today.

Building Creo into a company that can compete with well established, multi-billion pound MedTech giants both in terms of the quality of technology and the quality of the service it facilitates, is not the work of a moment. It takes time. During 2023, I feel we have taken great strides towards this. From the NHS Supply Chain data to first cases in the lung with Intuitive Surgical and from the Cleveland Clinic to our partnership with Khalifa University, we are seeing the realisation of our R&D and its growing impact across the medical devices market. We know that 2024 will bring with it more cases, more data and more partnership progress and it's exciting to know that we are in the very best global company when it comes to tackling unmet needs for patients across the globe.

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 succeed. 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

14 May 2024

Chair's statement

Creo's sights remain set on maturing as an international MedTech group focused on the clinical and commercial adoption of a full suite of electrosurgical products. 2023 had already delivered another positive year of progress when, in November, we received 510(k) clearance from the US FDA for our Speedboat UltraSlim device. This was pivotal because it is the ultimate version of Speedboat, the culmination of substantial shareholder investment and a long programme of work to miniaturise the technology to cover all foreseeable market applications. Its reduced size makes it compatible with all endoscopes with a 2.8mm (or larger) working channel. This accesses most GI endoscopic procedures and therefore expands the universe of clinicians and patients who can benefit from Creo's innovative technology.

The US clearance followed guidance from our notified body of an EU regulatory pathway that accelerated the European UltraSlim launch by around eighteen months. It has now been used successfully in the UK, USA, LATAM and APAC to treat precancerous lesions in the colon, oesophagus and stomach, as well as in oesophageal and gastric POEM procedures (to address swallowing disorders and gastroparesis).

Following that late-in-the-year milestone, we achieved record sales in the last quarter of 2023. More widely, we can report growth in all key parts of the business, strong progress in our robotics partnerships, improved overall gross margins, and reduced expenses given tight cost control - all contributing to a reduced operating loss for the year. In March 2023, against the backdrop of economic and geopolitical uncertainty, we completed an oversubscribed equity raise with gross proceeds of approximately £33.7 million. This gave us the financial resources and wider confidence to execute the vital next steps in our strategy. We remain immensely grateful to our existing and new shareholders who supported the raise and welcome those newcomers to the register.

Notwithstanding this technological, clinical, commercial and corporate progress, like most companies, we faced continued global and local challenges. The delay in FDA approval for UltraSlim by just over a quarter limited its contribution to Group revenues during the year but has set a positive basis for 2024. The short notice legislative changes around the UK's R&D tax regime resulted in a materially unhelpful reduction in our R&D tax credit. Therefore, our operating loss, while still reduced, was higher than it would otherwise have been. And, of course, as our shareholders are well aware, the continued volatility in the smaller cap stock market impacted the otherwise encouraging recovery of our share price since the equity raise.

Management and Employees

Creo invests in talented and experienced individuals across the full range of business functions needed for success. Given the intensity of our R&D investment since our IPO, our headcount peaked during the second half of 2022. But, since then, we have gradually reduced that headcount, wherever possible by taking advantage of natural attrition. The Remuneration Committee, chaired by Ivonne Cantu, aims to implement a remuneration policy that promotes long-term success and aligned with the interests of our shareholders and other stakeholders. As flagged in last year's report, our LTIP awards had historically been based on pre-grant performance conditions on the same basis as the annual bonus. Following feedback from shareholders, the committee is now incorporating forward-looking performance targets as conditions for vesting as the Company enters a full commercial phase.

The Board thanks all our employees for their hard work, commitment and patience during the year which, most critically, laid the foundations for the UltraSlim launch.

Sustainability

Creo's mission to improve lives sits at the heart of our wider ESG responsibilities. We continue to be committed to best practice in our environmental and social policies under the umbrella term of 'sustainability' which emphasises our core social impact of improving clinical outcomes for patients. Our strategy focuses on three key areas: healthcare impacts; people and our communities; and, of course, our planet.

As we continue to gather clinical data, such as the NHS study showing reduced inpatient stay time, it is clear that not only do our devices provide monetary benefits but they also lead to a reduction in environmental impact that the procedure has. We look forward to exploring the beneficial environmental impact of using our devices as opposed to traditional surgical pathways during the next few years.

Governance

The Company has in place a strengthened governance framework with energetic engagement by the non-executive Directors at Board level, through the committees, and in discussion with shareholders and advisers. The Group continues to adopt the QCA Code of Conduct with its ten principles to deliver growth, maintain a dynamic management framework, and build trust. 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. The Committee also monitors the relationship with our auditors to ensure independence and objectivity.

In addition to the regular communications and meetings with shareholders, in November we held a gratifyingly well-attended Capital Markets Event at the offices of Deutsche Numis, where the team provided greater detail on the commercial and clinical progress of our products and leading NHS clinicians gave presentations explaining their experiences in using Creo's products in clinical practice.

As announced on 13 May 2024, and further to the 2023 AGM Statement & Succession Planning announcement, which set out the Company's plan to evolve its Board of Directors as it enters a new phase of commercial growth, Kevin Crofton and Brent Boucher have been appointed as independent Non-Executive Directors. Both Kevin and Brent are expected to join the Board with effect from 1 July 2024, with Kevin succeeding me as Chair. It has been a privilege to serve as Creo's Chair and work alongside my fellow directors and our dedicated staff since our IPO in 2016. I welcome Kevin and Brent, with their invaluable skillsets and experience, to the Board and wish them and Creo the best of luck as they accelerate our clinical and commercial progress around the world.

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. We thank all those advisers for their valuable support and enthusiasm for Creo's mission.

Charles Spicer
Non-Executive Chair

14 May 2024

Financial Review

This year has seen significant growth in Creo core product revenues, with our Speedboat UltraSlim device being cleared in November 2023 helping us achieve record revenues for Q4 2024. These revenues along with cost savings and operational efficiencies have reduced the underlying EBITDA loss year on year as anticipated. Our oversubscribed fund raise of £33.7m (before expenses) in Q1 2023 provides us with the platform to drive towards our goal of achieving self-sustaining cashflows.

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 and associated revenues. Our European operations have continued to be cash generative with our broader direct and indirect sales channels for Creo across our large portfolio of products helping us to grow sales by 9% (2022: 8%) during the year. Revenues billed in the year in relation to Speedboat and CROMA increased almost 2.5 times to £2.3m (2022: £0.9m), with Kamaptive licensing revenues from our strategic partners of £1.7m (2022: £1.4m). £26.8m (2022: £24.9m) was generated through consumable sales in Creo Europe. This 7.6% growth (2022: 4%) shows the continued success of this business with further growth expected as we expand into the USA, LATAM and APAC in 2024. Other operating income of £0.4m in the 12-month period to 31 December 2023 (2022: £0.1m) relates to the Welsh government grant.

Gross Margin

Gross margin improved from 48.5% in 2022 to 49.6% in 2023 driven by strong margins in our Creo core products and Kamaptive revenues along with stable margin from our consumable products. As we mature as a business it is expected that margins will continue to improve with increased sales of the core Creo products.

Operating loss

The operating loss for the year decreased to £24.8m (2022: £30.7m). This 19.2% reduction is a result of a focus to reduce overall administrative costs (in particular R&D spend), including baseline headcount costs throughout the year, coupled with increasing revenue and margin. This decrease in costs started in H2-22 and is expected to continue into 2024. The underlying operating loss for the year was £16.4m (2022: £20.8m). This 21% fall represents a significant reduction and includes c.£2.0m less than expected R&D tax credit due to legislative changes following the budget in March 2023. On a like-for-like basis this would have reduced the underlying operating loss for the year to £14.4m (2022: £20.8m), a 31% reduction. The underlying EBITDA loss for the year was £17.6m (2022: £22.1m).

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), individual items outside of business control, 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 expenses which are non-cash.

Tax

The tax credits recognised in the current and previous financial year relate mainly to R&D tax credit claims. As already noted above, this was c.£2.0m less than expected due to legislative changes following the budget in March 2023. This has a direct detrimental impact on cash and P&L for a company such as Creo. 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 will utilise through Group relief of the future profits in Creo Medical UK Limited as in 2022. No further tax assets in relation to these losses have been recognised due to the uncertainty over the timing of future recoverability.

Expenses

Underlying administrative expenses totalled £32.1m for the year (2022: £34.0m). This 5.6% fall (2022: 6.2% increase) represents a significant reduction and includes c.£2.0m less than expected R&D tax credit due to legislative changes following the budget in March 2023. On a like-for-like basis this would have reduced the underlying administrative expenses for the year to £30.1m (2022: £34.0m), a 11.5% reduction. The decrease was largely driven by savings in R&D including headcount costs which decreased to £22.2m for the year from £22.9m in following completion of certain R&D projects. Non employment R&D costs were £3.5m in the year (2022: £6.9m) representing our move towards funded R&D projects such as the Intuitive agreement and our revised patent strategy. This decrease was despite an average 6.1% rise in salaries. Total administrative expenses totalled £40.5m for the year (2022: £43.9m). Sales and marketing costs were £4.2m (2022: £3.8m) driven by increased travel compared to 2022 as well as costs associated with growing our core technology sales. General and Administrative expenses were £5.4m (2022: £5.1m) with our facility and utility costs all increased due to inflationary pressures. Non-cash expenses comprising of SIP charge, earnout expenses, settlement costs, share based payments and depreciation and amortisation were £5.2m (2022: £5.2m).

Loss Per Share

Loss per share was 7 pence (2022: 15 pence) with reduction driven by reduced EBITDA loss as well as an increased issued share capital following the fund raise earlier in the year.

Dividend

No dividend has been proposed for the year to 31 December 2023 (2022: £nil).

Cash Flow and Balance Sheet

With the support from our shareholders, we were able to execute on a significantly over subscribed fundraise in early 2023. This was secured against a backdrop of economic pressures and difficult market conditions and represents a significant achievement for the Company, providing us with the financial platform to deliver future growth. Net cash used in operating activities was £21.6m (2022: £24.9m), driven by the 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 £18.3m (2022: £6.0m) with the increase driven by the £15m cash placed on deposit, final payments for the acquisition of Creo Europe subsidiaries and investment in Creo HQ offset by interest received. Cash generated from financing activities was £29.8m during the year with £31.7m (net of expenses) raised from the fund raise. Total assets at the end of the year increased to £76.7m (31 December 2022: £75.3m), a 2% increase, reflecting the increase in cash from the fund raise offset by cash spent in operations for the year and reduced R&D debtor. Cash and cash equivalents at 31 December 2023 was £18.5m including cash on deposit (31 December 2022: £13.1m). Net assets were £59.8m (31 December 2022: £49.3m), a 21% increase due to the equity raise offset by operating loss and share based payment expense. We began renewing debt facilities in Europe at the end of 2023 and received £6.4m in cash post year-end from long term loans. We have a clear strategy to ensure sufficient cash resources to get us to profitability, however as a high growth MedTech company future revenues and future investment are not committed and this represents a material uncertainty resulting in significant doubt in respect of going concern as disclosed in the 2023 annual report and accounts. However, we believe that the current revenue trajectory, future licensing deals and operating cost flexibility provide a clear strategy to ensure sufficient cash resources to get us to profitability.

Accounting Policies

The Group's financial statements prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The Group's accounting policies have been applied consistently throughout the year.

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 and monitored. 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, ESG metrics such as carbon emissions, diversity ratios and employee engagement. 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 2023 Annual Report and Accounts.

Directors

Details of the Directors who served during the year ended 31 December 2023 are set out in the 2023 Annual Report and Accounts. Six of the Directors serving on the Board at the year-end were male with one female.

Conflicts of Interest

To address the provisions of section 175 of the Companies Act 2006 relating to conflicts of interest, the Company's Articles of Association allow the Board to authorise situations in which a director has, or may have, a conflict of interest. Directors are required to give notice of any potential situations or transactional conflicts that are to be considered at the next Board meeting and, if considered appropriate, conflicts are authorised. Directors are not permitted to participate in such considerations or to vote regarding their own conflicts.

Richard Rees

Chief Financial Officer

14 May 2024

Consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2023

Total cash including fixed term deposits at 31 December 2023 was £18.5m