Half-year Report

Strengthened product portfolio, enhanced commercial footprint and strategic acquisition

Creo Medical Group plc (AIM: CREO), a medical device company focused on the emerging field of surgical endoscopy, announces its unaudited results for the six-month period ended 30 June 2020, in line with management expectations.

Operational and Recent Highlights
  • Strengthened product portfolio with CE marking for five new GI devices
  • US FDA 510k clearance for SlypSeal Flex (previously referred to as HS1)
  • Commercial footprint enhanced despite COVID-19 restrictions worldwide:
    • Initial commercial orders of Speedboat Inject in-line with expectations on pricing and volume at early stages of commercialisation
    • Continued focus on establishing clinical education centres in all key markets (US, Europe, South Africa, and APAC) with remote clinician training and mentoring undertaken via online workshops to continue clinician engagement across the world
  • Rapid adjustment to day to day operations to ensure employee safety; focus on strengthening product portfolio with furlough of a small number of staff
  • Pressure on health systems and the redeployment of medical staff in response to COVID-19 has delayed the short-term expansion of Creo’s clinical education programme and revenue. Management expectation is that long term impact should be mitigated by a demand for cost and time saving healthcare solutions
  • ESG supporting our community with Creo and its team delivering valuable charitable support for the COVID-19 response: sourcing ventilators for NHS hospitals, providing bikes for medical staff and acquiring 3D printers for PPE manufacture by Creo employees
Post-period end highlights
  • Acquisition of Albyn Medical S.L. (24 July 2020) for an equity value of €24.8m plus up to €2.7m of performance related payments, adding a highly complementary product range and a direct commercial, operational and logistic presence in four key European markets: Spain, France, Germany and the UK
  • Appointment of David Woods (ex-PENTAX Medical and previously Non-Executive Director of Creo) as Chief Commercial Officer, supported by further strengthening Creo’s Senior Management Team with key hires in the USA and Asia
  • Funding received from the Cardiff Capital Region to assist with the development of Creo’s cool plasma sterilisation product for potential use in wound care, medical device sterilisation and COVID-19 inactivation and decontamination
Financial Highlights
  • Operating loss of £10.6m for H1 2020 (H1 2019: £9.4m) including £0.5m share based payments (H1 2019: £0.5m), in line with management expectations
  • Net cash outflow from operating activities of £10.4m for H1 2020 (H1 2019: £5.9m)
  • Strong Balance Sheet with cash and cash equivalents of £70.6m at 30 June 2020 (H1 2019: £38.7m)

Craig Gulliford, Chief Executive Officer, commented:

We continue to make progress against strategic objectives, executing on our education led commercialisation plan by targeting selected clinicians and key opinion leaders to drive clinical adoption.

“Like all businesses, we have been impacted by COVID-19 but we have adapted and grown during the period. The team has focused on strengthening our product portfolio by CE marking five new products and gaining FDA 510(k) clearance for our SlypSeal Flex device. We are ready for success as the world opens back up and routine diagnostics and therapeutic treatment utilising our products begins to normalise. We have grown our talent during the period, most notably in the US and engineering and innovation.

“In line with the strategy set during the 2019 funding round, we were delighted to complete the strategic acquisition of Albyn Medical S.L., a European specialist in the supply and manufacturer of Gastroenterology, Urology and Endoscopy products that is highly synergistic with Creo’s products. With a sales and marketing team of 40 people and an operational footprint in Spain, France, Germany and the UK, this establishes a commercial and distribution platform to accelerate our business in Europe, adding revenue, profits and experienced talent into the business.

Posted 23/09/2020

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