2023
Annual Report
Creo Medical is a medical
device company focused
on the development and
commercialisation of minimally
invasive electrosurgical
devices, bringing advanced
energy to endoscopy.
02
Corporate
Governance
Chair’s Statement
Board of Directors
Corporate Governance Report
Statement of Directors’
Responsibilities
Engaging with Stakeholders
Audit Committee Report
Directors’ Report
Directors’ Remuneration Report
68
70
72
77
78
82
84
86
03
Financial
Statements
Independent auditors’ report
Consolidated statement
of profit or loss and other
comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement of
cash flows
Notes to the financial statements
Parent Company statement
of financial position
Parent Company statement
of changes in equity
Parent Company notes to
the financial statements
01
Strategic
Report
Our Achievements
About Creo
CEO’s Review
Global Footprint
CCO Report
Our Business Model
Investment Case
Market Review
Kamaptive Technology
CTO’s Statement
Core Technology
Our Portfolio
Product Vision
Transforming Healthcare
Transforming Lives
Transforming Surgery
Case by Case
CFO’s Review
Risk Management
Sustainability Strategy
Healthcare Impacts
Our People and Communities
Our Planet
4
6
8
12
14
18
20
21
22
26
28
30
32
34
36
39
40
42
46
52
56
58
62
100
107
108
109
110
111
145
146
147
1
Creo Medical Group plc2023 Annual Report & Accounts 01
Strategic
Report
Our Achievements
About Creo
CEO’s Review
Global Footprint
CCO Report
Our Business Model
Investment Case
Market Review
Kamaptive Technology
CTO’s Statement
Core Technology
Our Portfolio
Product Vision
Transforming Healthcare
Transforming Lives
Transforming Surgery
Case by Case
CFO’s Review
Risk Management
Sustainability Strategy
Healthcare Impacts
Our People and Communities
Our Planet
4
6
8
12
14
18
20
21
22
26
28
30
32
34
36
39
40
42
46
52
56
58
62
3
CLINICAL CASE STUDIES
Learn how
Speedboat
is improving lives
SCAN THE QR CODE
TO READ OUR
CASE STUDIES
2
Our Achievements
8
Operational and
Commercial Highlights
Financial Highlights as
of 31st December 2023
Continued commercial growth and strict
cost control helped us to achieve a 13%
increase in revenues and an underlying
operating loss reduction of £4.4m
▶ 2.5x increase in Creo Core Product sales vs 2022
▶ Increased consumable sales vs 2022
▶ FDA clearance for Speedboat UltraSlim
▶ EU launch of Speedboat UltraSlim accelerated by
18 months - First sales and growing orderbook
▶ Reduced administrative expenses and lower
EBITDA loss
▶ Significant progress in roll-out of Creo’s Core
technology:
▶ 32% increase in the volume of procedures
performed using Speedboat
▶ 119% increase in user base
▶ Over 25% increase in the number of trained
clinicians now able to train others
Regulatory & operational highlights
▶ Speedboat Inject selected by the National
Institute for Health and Care Excellence ("NICE")
to be scoped and routed for guidance
▶ 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
▶ Medical Device Regulation ("MDR") CE
clearance for Speedboat Inject, adding upper
gastrointestinal ("GI") indications (e.g. swallowing
disorders, oesophageal and stomach cancers) in
the UK and mainland Europe
▶ Multiple upper GI Speedboat procedures
performed in Europe
4
▶ 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
▶ SSD service at Royal Oldham is taking the lead with
multiple cases completed in record time, resulting in
immediate benefits for both patients and waiting lists
(See more on page 36)
▶ Collaboration with Khalifa University of Science &
Technology, Abu Dhabi announced post year end
▶ Increased global reach, with first use of Speedboat in
Croatia, Slovenia, Malaysia and UAE
Revenue
£30.8m
(2022: £27.2m)
Operating Loss
£24.8m
25.2
27.2
30.8
(2022: £30.7m)
9.4
2020
2021
2022
2023
Underlying operating
loss*
£16.4m
(2022: £20.8m)
2020
2021
2022
2023
(18.0)
(20.0)
(20.8)
(16.4)
Gross Margin
49.6%
(2022: 48.5%)
2020
2021
2022
2023
(23.5)
(29.9)
(30.7)
(24.8)
43% 46%
49%
50%
2020
2021
2022
2023
Net Assets
£59.8m
(2022: £49.3m)
Cash Raised From Fundraise
£33.7m
73.3
62.8
59.8
49.3
(Oversubscribed Fundraise - March 2023)
2020
2021
2022
2023
Loss Per Share
7.0p
Creo Core Revenues
2020
2021
2022
2023
(0.13)
(0.15)
(0.15)
(0.07)
£2.3m
(2022: £0.9m)
* Underlying operating loss is defined on page 43.
2.3
0.1
2020
0.3
2021
0.9
2022
2023
5
Creo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial StatementsCreo Medical Group plc2023 Annual Report & Accounts About Creo
Transforming Energy,
Transforming Surgery,
Transforming Lives
Creo Medical is a UK-based medical device and
advanced energy company, transforming lives by
delivering pioneering solutions to healthcare providers
across the world.
The Company was founded in 2003 by Professor Chris
Hancock, initially to target the treatment of cancers
through the use of high frequency microwave energy.
One in two1 people will develop some form of cancer in
their lifetime. We will all likely know someone who will be
or has been impacted in some way. These diseases can
be treated using advanced energy, with potentially huge
benefits for both patients and their loved ones. Chris was
driven to apply advanced energy technology to make a
difference and improve lives; this is the foundation on
which Creo is built.
Our products
Creo Medical has developed a suite of unique endoscopic
devices (see pages 28 and 29). Our CROMA advanced
energy platform powered by our Kamaptive Technology
enables a broad spectrum of energies to be utilised by
our devices. It is this unique combination that puts us at
the forefront of a paradigm shift in the treatment of an
increasing number of indications, particularly in the GI
tract, pancreas, liver and lung. Creo is able to complement
these devices with a broader range of endotherapy
products, which are available to our customers worldwide.
In addition to endoscopic products manufactured by Creo,
we collaborate with leaders from other sectors (particularly
robotic surgery) through our Kamaptive Licensing
Programme to ensure that the benefits of our advanced
energy technology are maximised, both in aiding the
treatment of more patients and indications worldwide and
in generating income from multiple high-growth markets.
Our Kamaptive Licensing Programme has had a successful
year through our collaborative approach with our partners
whilst also continuing to generate income.
Our stakeholders
In pursuing our mission ‘to improve patient outcomes’,
multiple stakeholders, directly or indirectly, benefit from
our products:
Patients
▶ Improved patient outcomes
▶ Shorter procedure times
▶ Low recurrence risk (rate less than 1%2)
▶ Organ preservation
▶ Reduced risk
Healthcare Professionals
▶ Minimally invasive treatment
▶ Reduced risks associated with surgical procedures
▶ Removal of lesions en-bloc (in one) for improved
histology and lower recurrence rates
▶ Streamlined training curve
Hospitals
▶ Reduced procedure costs3
▶ Reduced procedure time and fewer follow
up appointments3
▶ Reduced waiting times3
▶ Improved patient pathways3
▶ QALY (“Quality Adjusted Life Years”) value added3
Milestones and Financial Achievements
Total revenue
Core Creo Technology
2017 – 2019
▶ First regulatory clearances
▶ CE Mark and FDA
clearance for CROMA and
Speedboat Inject
▶ First patient treated with
Speedboat Inject
▶ Initial of roll out of clinical
use via distributors
2021
▶ Additional CE and FDA
clearances
▶ Opening of APAC Hub in
Singapore
▶ Core product revenues
recovered to pre-pandemic
levels
2020
▶ Acquisitions of Albyn
Medical and Boucart
Medical
▶ Opening of US HQ
in Danbury, CT
▶ COVID-19 pandemic
restricted sales channels
and markets
2022
▶ Global commercialisation
expanding in USA, EMEA
and APAC
▶ Kamaptive robotic licensing
deal with Intuitive in May
with first revenues
2023
▶ Speedboat UltraSlim
£30.8m
released November 2023
▶ Continued Kamaptive
revenues
�27.2m
£4.0m
�25.2m
�2.3m
�9.4m
�26k
�0.1m
�0.1m
�0.3m
We employ a wide range of experts spanning all
Company departments:
▶ Engineering and R&D
▶ Enhanced manufacturing capabilities
optimised for growth
▶ Experienced sales teams with bespoke direct and
indirect distribution networks across territories
▶ A world-class Pioneer Clinical Education Programme
tailored to the needs of our customers and their patients
▶ Global business support functions to continue to build
the Creo brand globally
Transforming lives, case by case
Creo’s products are in everyday use by some of the world’s
leading physicians and healthcare institutions. In particular,
Speedboat is providing excellent outcomes and we have
a growing pipeline of physicians globally interested in the
technology. The launch of the new Speedboat UltraSlim
device in November 2023 led to an increased number
of these leading experts using Speedboat, owing to its
compatibility with a wider range of endoscopes and
improved access to the gastrointestinal tract.
References
1. https://www.nhs.uk/conditions/cancer/
2. Cost-effectiveness analysis of Speedboat submucosal dissection in the management of large nonpedunculated colorectal polyps.
Authors: Amir Ansaripour, Mehdi Javanbakht, Adam Reynolds and Zacharias Tsiamoulos
3. https://www.creomedical.com/en/healthcare-professionals/improving-patient-pathways-with-ssd
6
7
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements CEO’s Review
2023 was a pivotal
year for Creo
“ Considerable strides made by
all areas of the business with the
focus on the commercialisation
of Core Technology.”
Craig Gulliford, Chief Executive
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 macro economic
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 can enter 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 Q1 sales in 2024.
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 move has led to some overall headcount
reductions where the phase of the programme is less
resource intensive. Despite this exercise, we were also able
to deliver 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
more doctors and provide better patient outcomes – our
core aim.
FDA clearance for this device came in November 2023.
Whilst this was just over a quarter behind our original goal,
the significant additional work required to achieve this
means 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 our 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 MicroblateFlex. I have had the privilege of observing
one of these cases, where our technology, in conjunction
with our partner 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 fills us all with 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
day, at which several of our clinical users presented
their perspective not just on the technology but, more
importantly, the significant benefits our technology brings
Annual Revenues (£m)
25.2
27.2
30.8
2.3
0.3
2021
0.9
2022
2023
9.4
0.1
2020
0.1
2019
Creo Core Product Turnover
Total Turnover
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 3 years
to manage strictures. However, utilising Speedboat and
Creo’s advanced energy the clinician has seen significantly
reduced need, and in some cases there is 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 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 focused 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
8
9
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements CEO’s Review continued
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 multi-
faceted 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.
Speedboat Submucosal Dissection (SSD) using speedboat vs alternative surgery:
Per Procedure Metrics:
Total Cost or 62%
£5.2k
6.6 days
Total Cost or 87%
Procedure or 25%
49 mins
£1.7k
Theatre or 38%
SURGERY
£8.2k
SSD
£3.1k
SURGERY
8.39 days
SSD
1.07 days
SURGERY
SSD
3h 18mins
2h 28mins
SURGERY
£4.5k
SSD
£2.8k
£1.3k
Critical Care or 99%
SURGERY
£1.3k
SSD
£0
We have also recently announced our strategic partnership
with Khalifa University which will enable us to utilise
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, not to mention the potential benefits
to robotic surgical programmes.
Third party validation
During 2023, Royal Oldham Hospital acquired the CROMA
system 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 Speedboat Submucosal Dissection
(“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
30 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%. The results are shown to the left. 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 in APAC during 2024, building on
the successes of our European model and growing the
Creo brand.
Encouraging outlook
Over the next 6 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 2 days to really evaluate
and extend the capabilities of the device. All feedback so
far has been extremely positive, with some notable quotes
included within the CCO Report on page 15.
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.
10
11
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Global Footprint
The Foundations for
Sustained Growth
Creo Medical’s global activities
span Clinical and Regulatory,
Manufacturing, Training and
Education, Market Development
and Direct and Indirect Sales.
US
EMEA
APAC
287
people worldwide
Technology,
Research and
Development
Domain expertise
in advanced energy
and devices
Full R&D and support
engineering capabilities
Medical energy
(RF, MW and more),
electronics, device,
materials, expertise
Clinical and
Regulatory
Training
and Mentoring
Manufacturing
Procurement
and Logistics
Sales and
Commercial
Service
and Support
Experienced Regulatory
and Quality team
UK, EU and USA
based personnel
Creo products are
cleared in CE, FDA
and elsewhere
Clinical education
team covering Europe,
USA and APAC, with
dedicated nurse
endoscopist employees
assisting training labs
and procedures, 25+
trained trainers (doctors),
for peer to peer training,
with courses run globally
Creo manufactures/
assembles advanced
energy generators,
devices, a range of
additional equipment
and some dedicated
electronics in-house
in the UK, Spain and
Germany, with clean
room facilities
Full procurement and
logistics function with key
hubs in the UK, France,
Belgium, Germany, Spain
and the USA shipping own
and third-party products
from and to a wide range
of countries
Experienced market
development and sales
team with deep industry
experience and strong
relationships with doctors
and hospitals. Local teams
in local healthcare systems,
augmented by selected
country distributors
Dedicated service and
support function based
across seven countries to
support Creo equipment
from installation, through
maintenance and repair.
Close working relationship
with engineering teams
granted patents
377
408
patents pending
CE, FDA and other
clearances on
core technology 25+
trainers and
c.650 qualified
target users
4
assembly/
manufacturing
locations
in Europe
6
key logistic sites
moving products
in country &
worldwide
90+
sales and market
development
workforce
10
direct countries
service centres
8
14
offices
12
* All figures as at 31 December 2023
13
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements CCO Report
A Year of Strong
Commercial Progress
“ Premier institutions want to use
Speedboat and are getting great
results for their patients.”
David Woods, Chief Commercial Officer
We began 2023 with the following
principal aims in relation to our
core products:
of Speedboat to the market
1 To launch the UltraSlim version
2 To continue to build our user
base, enter new markets,
train more people and expand
the number of cases using
Speedboat
3 To introduce a wider range of
complementary products and
develop strategic partnerships
supporting better outcomes for
advanced procedures
4 To build the Creo brand with key
opinion leaders and community
leaders bringing innovation to
their patients and robust data
sets that further validate our
technology
1. Early Launch of Speedboat UltraSlim:
Creo Medical has experienced a highly successful rollout
of its revolutionary Speedboat UltraSlim device. FDA
clearance was achieved in November 2023, which was one
quarter later than originally hoped. However, clearance in
the EU was expedited by approximately 18 months, allowing
for an early adopter programme to be scheduled in the
EU for early 2024, surpassing the initially planned mid-
2025 launch. This compact and versatile addition to our
surgical endoscopy technology, the second brand in Creo’s
Speedboat family, significantly expands accessibility and
advances minimally invasive surgical procedures.
Speedboat UltraSlim has been utilised in procedures across
the UK, USA, LATAM, and APAC, treating precancerous
lesions in the colon, oesophagus, and stomach, as well
as in oesophageal and gastric POEM (peroral endoscopic
myotomy) procedures. Within weeks of its release, the
device had been embraced by 16 doctors across 12 sites,
with enthusiastic feedback emphasising its improvements
in size, energy delivery, and handling. Clinicians foresee
faster procedures, streamlined workflows, and enhanced
capabilities, making the UltraSlim a game-changer in the
field. Notable quotes from key doctors are highlighted on
the right.
2. User Base:
Creo Medical’s commitment to expanding its user base
has yielded remarkable results. The Speedboat Inject
device has been successfully adopted by The Royal
Oldham Hospital, becoming a high-volume site for
advanced endoscopic procedures, particularly Speedboat
Submucosal Dissection (“SSD”) cases. The hospital’s
swift implementation and treatment of over 40 patients
underscore the positive impact of Creo’s technology on
gastrointestinal healthcare practices.
Globally, Creo’s presence was highlighted at Digestive
Disease Week (“DDW”) in Chicago, where our products
and technologies attracted clinicians, researchers, and
industry experts from 28 different countries. The 262%
year-on-year increase in sales leads at DDW indicates the
growing international interest in Creo’s innovative solutions.
Moreover, our Pioneer clinical education and mentoring
programme played a pivotal role in advancing medical
education. The programme facilitated simultaneous training
for multiple doctors, ensuring the seamless integration of
Creo’s technologies into healthcare institutions.
The regulatory clearance for Speedboat Inject throughout
the entire gastrointestinal (“GI”) tract has expanded our
potential user base, solidifying Creo Medical’s impact in
endoscopic applications.
Premier medical institutions and physicians around the
world now use Speedboat and CROMA platform to deliver
SSD for these expanded indications.
Whether it’s Baylor College of Medicine in the US,
Asian Institute of Gastroenterology in Hyderabad India
or University College Hospital in the UK, it is clear that
premier institutions want to use Speedboat and are
getting great results for their patients. The combination
of our technology, our Pioneer training programme and
our clinical team has made the adoption of our devices a
smooth and localised process that will allow us to continue
to increase our regular users, trainers, and mentors.
Early adopters at academic institutions are now training
their colleagues and the next generation of physicians or
fellows as well as community-based doctors interested
in learning these procedures faster and more safely than
possible previously.
Speedboat UltraSlim is changing the endoscopic landscape:
“ This is a safer technology
and allows much deeper
submucosal dissection. We
are now moving on to use
this as our preferred and
only device for endoscopic
dissection.”
Dr Regi George, Gastroenterologist at
The Royal Oldham Hospital, UK
“ The technology allows the
endoscopist to complete
an F-POEM procedure with
a single device, whereas
previously it required three
different devices.”
Dr Michel Kahaleh, Clinical Director of
Gastroenterology and Chief of Endoscopy at
Robert Wood Johnson Medical Center, USA
“ The excitement around the
device was noticeable, and
we eagerly anticipate the
positive impact it will have
on enhancing our patient
pathways.”
Dr Carlos Robles-Medranda, Head of the
Endoscopy Service, IECED, Ecuador
See more about Fundoplication and other pathways on page 32.
14
15
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
CCO Report continued
With direct commercial teams in the US, the larger markets
in Europe and distributors in the rest of EMEA and APAC
targeted leads are continuing to increase and turning
into users.
The number of users has witnessed substantial growth,
reaching 175 confirmed users by the end of 2023, marking
a 120% increase over 2022. We anticipate this growth
trajectory to continue in 2024, supported by exceptional
clinical feedback, a backlog of trained clinicians, and a
growing pipeline of future users. With an established
presence across EMEA, the US and APAC we will continue
to expand globally, quickly taking countries from being
introduced to our technology to having multiple users.
3. Third-Party Validation:
The Royal Oldham Hospital stands as a testament to the
successful integration of Creo Medical’s technologies,
particularly Speedboat Inject. The hospital’s commitment
to adopting and utilising our advanced energy solutions for
SSD procedures reflects a rapid and effective transition,
showcasing the potential for cost-effective, life-changing
interventions in gastrointestinal procedures. The success
at Royal Oldham Hospital contributes to the broader
adoption of SSD procedures across NHS England
healthcare settings.
Looking ahead to 2024, SSD is poised to become Royal
Oldham’s treatment of choice for high-risk lesions
suspected of containing early cancer, benefiting hundreds
of patients annually. Plans to expand the service
and increase the number of conditions treated using
our equipment are underway, supported by training
programmes and a dedicated multidisciplinary team.
See page 11, where Craig Gulliford details of how Creo is
working with the National Institute for Health and Care
Excellence (“NICE”) and NHS Supply Chain to gain further
validation for Speedboat and SSD.
Our revenue streams continue to diversify, with c.72% now
being driven by products where Creo is the responsible
manufacturer. The bundling of advanced energy products
with complementary devices, such as Speedboat Inject
with haemostasis clips and injection needles, strengthens
our value proposition. This approach extends to other
specialities like urology and interventional pulmonology,
providing additional bundling opportunities and revenue
streams within the same institutions.
Benefits of a wider portfolio of products include: a steady
and established revenue stream; sales access to hospitals
and clinicians to better package the sale of our core range;
and a strong value proposition for our customers by cross
selling products. This approach will continue into APAC,
subject to regulatory clearances. Creo’s other core products
at various stages of optimisation and adoption offer other
bundling opportunities in multiple specialities.
Strategic collaborations with robotics partnerships
remain a significant focus, generating revenues for the
Group. The milestone achievement at the Royal Brompton
Hospital, where our MicroBlate Flex device was used in a
groundbreaking robotic-guided microwave ablation of lung
tissue, marks progress towards full commercialisation with
our strategic partners.
In conclusion, Creo continues to lead in the field of surgical
endoscopy, driven by innovation, strategic collaborations,
and a commitment to advancing healthcare. The successful
integration of Speedboat devices, expanding user
base, third-party validation, and collaborative working
positions Creo at the forefront of transformative medical
technologies. As we venture into the future, we remain
dedicated to delivering cutting-edge solutions and shaping
the landscape of minimally invasive surgical procedures.
4. KOLs and Data:
Many of the world’s top healthcare institutions and
premier interventional gastroenterologists and surgeons
have adopted Creo’s advanced energy technology.
These leading caregivers, educators, and researchers
have validated our innovative technology, promote the
minimally invasive procedures we support, and back our
commitment to education. Many are faculty members at
our Pioneer training programmes and mentor other doctors
with case observations, case reviews and shoulder to
shoulder case support.
Several of these opinion leaders are also involved in
technology review, product development and product
validation. These physicians highlight our technology at
society meetings, webinars and live endoscopy events
around the world and are committed to research data
collection and publishing. We are already seeing an uptick
in clinical data gathered over the past 12 months being
submitted for presentation at large society meetings like
Digestive Disease Week in the US, EMEA and APAC and
in some of the world’s foremost medical journals in 2023
and 2024. With case numbers now supporting more robust,
statistically significant data, we anticipate a substantial
increase in comprehensive data sets, both clinical and
economic, to be made public soon.
In addition, two registries, one in the US and one in UK,
are gathering data on Speedboat submucosal dissection
to support data analytics, journal submissions and clinical
and economic outcome enhancement. We are working
closely with renowned certification bodies and societies
such as NHS, ESGE, ASGE, and JSGE to maximise the
impact of the results in independent clinical papers and to
recognise SSD as a gold standard of treatment. This will
provide a platform from which to increase our user base
across our core technology product range, shift patient care
away from invasive procedures towards minimally invasive
procedures and the life changing treatment options we can
provide to patients.
16
17
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Our Business Model
Generating value
for all stakeholders
Our business model focuses on using our
innovative technology through 3 core revenue streams
to generate shareholder and stakeholder value.
CORE REVENUE STREAMS:
Creo Core Product
Kamaptive Licensing Agreements
Consumable Products
Kamaptive is our patented
advanced energy technology
which allows us to be at the
forefront of the industry and
drive innovation within the
medical device sector. The
patented technology allows us
to remain ahead of competitors
and opens up additional revenue
streams through developing our
own devices or licensing our
technology to third parties.
See more on pages 22 to 23.
Core Products
Our internally developed products sold
either directly to the customer or through
distributors. Our products are single use in
conjunction with our CROMA platform.
▶ Speedboat Devices
▶ MicroBlate Flex
▶ MicroBlate Fine
▶ SpydrBlade Flex
See more on pages 28 to 29.
Kamaptive Licensing
Programme
By licensing our patented technology with
third parties we can ensure our technology is
used to treat as many patients as possible.
▶ Current partnerships
▶ Future partnerships
▶ Intuitive
▶ CMR
▶ Third party developers
▶ Khalifa University
Collaboration
See more on pages 24 to 25.
Stakeholder Value
Benefits to our core stakeholders
which will drive revenue growth:
Clinician
▶ Increased flexibility
▶ Increased precision
▶ Controlled surgical
solutions
▶ Removal of lesions en-bloc
Patient
▶ Reduced procedural time
▶ Reduced recurrence risk
▶ Organ preservation
▶ Reduced follow-up time
Healthcare
Provider
▶ Reduced waiting lists
▶ Reduced procedure time
& follow up
▶ QALY value add
▶ Improved patient
pathways
Shareholder
Value
▶ Every Case =
Revenue
▶ Large Target
Markets
▶ High Margin
Products
▶ Royalty
Revenues
Consumable
Products
Our range of OBL/OEL
endotherapy products allows
us to provide clinicians and
healthcare providers with a
complete solution for their
healthcare needs and allows
us to maximise our revenue
potential in these and
other markets.
▶ Snares
▶ Hemoclips
▶ Catheters
18
19
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Investment Case
Market Review
Harnessing
advanced energy
to treat indications
endoscopically
Market potential
Resection
Ablation
Robotics
ROW
USA
1
2
3
20
~20m4
Soft Tissue Surgery Procedures
~6m4
Line of Sight
Procedures
Intelligent Technology
▶ The development of a suite of cutting-edge, miniaturised Creo manufactured devices
▶ Combining engineering experience with the latest advancements in science and technology
▶ Continued investment in R&D, both in house and through our Kamaptive partners,
to expand and enhance the treatment options open to healthcare providers
▶ A broad intellectual property (“IP”) portfolio potential
c.$1.1bn2
c.$1bn3
(est. 2031)
APAC
Read more on our intelligent technology from our CTO and founder Chris Hancock, pages 26 to 27.
Lower GI Addressable Market
Lung Ablation
Soft Tissue Procedures
Multi-tiered Revenue Stream
▶ Core advanced energy devices at various stages of commercialisation, with Speedboat
UltraSlim yielding an increase in orders
▶ Complementary products providing opportunity to maximise revenue per procedure
▶ Additional product portfolio in areas such as urology, pulmonology and
device hygiene providing consistent revenue stream
▶ Kamaptive Licensing Partnerships progressing well, providing revenue and
milestone payments with excellent potential for future royalties
Read more on our enhanced revenue streams in our CEO and CCO statements, pages 8 to 11 and 14 to 17.
Addressing Global Needs
▶ Entering new and established markets where there are significant unmet needs
in the treatment options available
▶ Bringing advanced energy, until now synonymous with surgery, to endoscopic procedures
▶ Significant potential in robotics partnerships
▶ Working with some of the world’s leading healthcare providers and physicians to
ensure clinical excellence when introducing minimally invasive alternatives to surgery
for patients across the globe
▶ Single NHS Trust experience
▶ Based on estimated
based on c.13,800
colonoscopies
▶ 5.5% complex polyps, of which
c.49% required therapeutic
intervention1 (c.2.6%)
procedures3 and expected
device cost for lung ablation
in 2031
▶ 25+ cases completed to date
using MicroBlate Fine
▶ Applying to the US based on
▶ Similar c.$1bn market
16m colonoscopies p.a.2 implies
a c.$425m US and $1.1bn overall
total addressable market
(“TAM”) for lower GI
developing in lung ablation
by 2031
▶ With continued shipments of
MicroBlate Flex within 2023
▶ Doctor interviews place Creo
target market c.$100m US and
EMEA within 5 to 7 years —
lower GI only
▶ Additional market potential
for Speedboat for upper
GI procedures
▶ 1.8 million Intuitive procedures
in 2022 (Intuitive have significant
majority robotics market share)4
▶ c.6 million pa Intuitive line of sight4
▶ c.20 million soft-tissue surgery
procedures total market4
▶ Significant growth potential in Soft
Tissue Robotic surgery market
▶ Surgical Robotics market growing
at a 14-20%+ CAGR
▶ Hospitals experience a shift from
<2% to >15% of general surgery
procedures via robotic-assisted
surgery over 6 years
1 Based on individual account experience (not published)
2 US surgical procedure volumes 2010, Millennium Research, RPUS43SV10, February 2010 / idata Research 2019
Read more about how healthcare providers and patients are already benefiting from our technology on pages 32 to 41.
3 Internal information on evolution of lung ablation 2023-2031
4 Intuitive Surgical JPM presentation January 2023 (Line of sight: Estimated robotically addressable portion
of targeted procedures in targeted geographies with existing products and clearances. Excludes Ion)
21
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Kamaptive Technology
Kamaptive™—
Creo’s Proprietary
Platform: Intelligent
Energy with
Safety at Heart
CROMA
Kamaptive Technology’s architecture allows multiple
Creo development teams to design, test and build
innovative devices independently whilst functioning
with the CROMA platform without complex software
changes or menu options for users.
Miniaturised
Creo Medical has been working to adapt Kamaptive
Technology to miniaturised hand-held devices for
heightened accuracy and control. The intuitive
intelligence of the interface allows for the platform
to be versatile and resilient in scale and function.
What is Kamaptive Technology?
Kamaptive is Creo Medical’s proprietary intelligent energy
technology, found at the heart of all Kamaptive enabled
advanced energy platforms and devices.
Kamaptive represents seamless and empowering access
to next level, game-changing patient outcomes, through
use of full spectrum energy in surgical, medical and
therapeutic applications.
New Possibilities
Kamaptive’s full spectrum adaptive technology allows
for partnership opportunities in new and innovative
fields from robotics to laparoscopy. Kamaptive
Technology intuitively adapts to the specific tool in
use, self provisioning and intelligently enhancing the
settings of the CROMA platform for the purpose of
the device being used.
22
23
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Kamaptive Technology continued
Kamaptive
Partnerships
Creo’s Kamaptive Licensing Programme sees the
Company partner with selected industry leaders in
lucrative, growing markets.
It provides Creo with a path to high margin, long term and
repeat revenue, maximising the potential of our technology
where it exists and where partners add significant value e.g.
by partnering with robotics giants.
The Kamaptive Licensing Programme will look to partners
to fund the development, optimisation or customisation
of technology in relation to their needs and that of their
industry. This reduces the R&D burden on Creo Medical
going forward whilst allowing us to continue to innovate.
“ Technological advancements
are facilitating a paradigm
shift in the way many surgical
procedures are delivered.”
Craig Gulliford, CEO Creo Medical
KAMAPTIVE COLLABORATION AGREEMENTS
Creo technology to be
adapted for use with
robotic-assisted
surgical platforms
Intuitive
Kahlifa
CMR Surgical
▶ Multi-year collaboration
agreement with Intuitive – a global
technology leader in minimally
invasive care and the pioneer of
robotic-assisted surgery.
▶ Optimisation of certain Creo
products to be compatible
with Intuitive’s state of the art
robotic technology.
▶ First in-man procedure
performed in conjuncture with
the ION platform.
▶ Collaboration agreement signed to
enable Khalifa University to deliver
2 research programmes, firstly to
develop greater knowledge and
research in our tissue sensing
capability. Secondly to deliver final
validation of our Plasma IP.
▶ This agreement allows us to
leverage our existing IP and
develop this without incurring
development costs and
increasing headcount.
▶ CMR’s next-generation
surgical robot, Versius®,
is a significant new
entrant into the robotic
surgery space, performing
laparoscopic procedures
worldwide across a range
of specialities.
24
25
Source: https://cmrsurgical.com/press-kit
Creo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial StatementsCreo Medical Group plc2023 Annual Report & Accounts CTO’s Statement
Technology Development
and Highlights of 2023
“ I founded Creo to harness advances
in microwave semiconductor power
technology and apply innovative
thinking to offer a better alternative to
treat cancer and other diseases - we
are now doing this!”
Professor Christopher Hancock, Chief Technology Officer
Creo Medical continues to harness latest advances in
microwave and RF semiconductor power generation,
advances in material science and plenty of innovative thinking
to develop intelligent energy delivery systems and a range
of novel applicators to address unmet or poorly met clinical
needs and produce better patient outcomes all over the world.
Creo founder and CTO Professor Chris Hancock shares the
highlights of 2023 from a technology perspective and gives
a run through of what makes Creo’s devices and energy
system so unique.
Highlights of 2023
Two personal highlights of 2023 were the first use of
MicroBlate Flex as part of the clinical trial to treat multiple
patients suffering from lung cancer and the launch of
Speedboat UltraSlim, that will work in the majority of
commercially used endoscopes, and so can be used by all
endoscopists throughout the world.
Advances in Technology as a Key Enabler
Our CROMA advanced energy platform and associated
range of novel miniature flexible instruments bring together
the latest advances in material science, semiconductor
microwave power generation in miniature packages, high
voltage fast switching RF transistors, low loss microwave
transmission lines and over 500 years of know-how from
our engineering team.
Our CROMA advanced energy generator which powers
Speedboat, enables precise tissue cutting with minimal thermal
margin and the performance of a scalpel blade - essentially a
miniature scalpel blade that cuts on demand.
It is really satisfying for the whole team and myself to
see how our technology is benefiting both patients and
clinicians daily across the world. We are seeing an increase
in clinical data and published clinical evidence following
the use of our devices; this underpins the value of our
unique advanced energy proposition. A great example
of this is detailed on page 33 where we are dramatically
reducing repeat endoscopies in the oesophagus where
patients currently have to go back for repeat procedures
almost monthly for up to 3 years. After the first 15 cases
with Speedboat in this one site, patients are not requiring
repeat endoscopies. Imagine the benefit to all the patients
in these clinics where we have reduced the demand for
endoscopy so dramatically. This outcome is entirely down
to our unique technology where doctors can apply energy
almost at will, safe in the knowledge that the surgical effect
is limited by our technology to tiny margins.
Our CROMA generator also delivers energy at the
highest microwave frequency ever used in endoscopic
electrosurgery. It delivers energy at a frequency within
the Super-High Frequency (“SHF”) band which is made
possible through advances in Gallium Nitride (“GaN”)
power semiconductor technology. This enables fine focus
and control of energy delivery. The use of these power GaN
devices in electrosurgery has been made affordable through
the demand for higher bandwidth telecommunications
systems, e.g. 5G, for streaming video and large file transfers.
At this frequency, energy is deposited into the tissue mass in
a precise and controllable manner due to the limited depth of
penetration of the electric field and the size of the applicator.
This is another example of our unique, focused and controlled
delivery of therapy which is now also in the field and benefiting
patients with lung cancer. This year we announced our first lung
cancer patients benefiting from our controlled margin made
possible through applying many years of knowledge
and ‘out of the box’ thinking from our engineering team.
Cancerous lesions in the lung have also now been treated
using our MicroBlate Flex in conjunction with the Ion
robot from Intuitive, where clinicians are clearly seeing the
advantage of placing the MicroBlate Flex into the tumour
with robotically controlled stability and precision, combined
with the precision of MicroBlate Flex making for great
potential for the ultimate ‘see and treat’ programme for
diagnosing and treating small, early stage lesions that will
be found during screening. This is also a great example of
our partnership programme really coming to life in 2023.
A telephone call from our lead clinician, whom we have
worked closely with over the years to develop our MicroBlate
Flex really brought home the value of what we are doing
in Creo – about an hour after the first lung tumour case,
Professor Pallav Shah called to say how impressed he was
with the performance of MicroBlate Flex to treat his first
patient – he was particularly impressed by the control of the
energy delivery, in particular the ability to controllably ablate
a safe margin of healthy tissue around the lesion to reduce
the risk of seeding due to any residual cancerous cells.
Intellectual Property
During 2023, we filed 10 new patent applications to protect
new innovative ideas and technological developments
on our new platform generator and instruments. These
new inventions were focused on robotic/laparoscopic
vessel sealers that combined bipolar RF and microwave
energy, enhancements to our tumor ablation devices,
enhancements to the Speedboat product range, and
recent developments in the new generator architecture
to be used in the next stage CROMA.
Thanks to a combination of technology, engineering,
clinical and commercial talent within the business, together
with our tried and tested patenting strategy, we are treating
more and more patients all over the world for multiple
conditions, including cancer and other diseased states.
During 2023 we further optimised our Speedboat and
SpydrBlade product ranges, opening up additional
clinical uses.
Research and Development
During 2023, our development team were focused on
the development of our future platform generator with
additional energy sources and further tissue sensing/
measurement capability.
In terms of new devices, good progress was made on
extending our heavily patented SpydrBlade technology to
create the best-in-class device for robotic surgery.
Our know-how and understanding of advanced energy,
together with the patent protection we have in place
enables Creo to put laparoscopic capability that
transformed surgery into robotics and opens up a number
of very exciting opportunities. During 2023 we have now
demonstrated that we can technically deliver our unique
advanced energy beyond the wrist of a robot with potential
for best-in-class surgical dissection using a unique
combination of energy modalities and our proprietary
control system. Leading robotic and laparoscopic clinicians
from all over the world evaluated our prototype vessel
sealers in pre-clinical settings in 2023 with excellent
feedback which we were able to relay directly to our
investors during our capital markets day, with surgeons
providing their perspective directly.
Packing the optimal capability, functionality and effectiveness
into miniature devices is not easy, but we are doing it and are
very excited by the patient benefits we are seeing.
Our vessel sealing technology is now at the stage
where the prototype units have been tested by leading
laparoscopic and robotic users and the feedback from
in-vivo pre-clinical work is extremely positive – I am very
excited about the potential use of this device, particularly
to perform robotic-assisted surgery.
26
27
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements ▶ Key areas for Creo are Upper and
Lower Gastrointestinal (oesophageal,
colorectal), Lung and Soft Tissue
(Pancreas, Liver) surgeries
▶ Creo’s products also address needs in
wider (non-cancer) surgery
▶ All devices enabled by CROMA, powered
by Kamaptive Technology. See pages
22 to 23.
Core Technology
Creo Medical
Core Technology
Creo is focused on minimally invasive
endoscopic and robotic-assisted surgery, in
particular for pre-cancer and cancer surgery.
n
o
i
t
c
e
s
e
R
n
o
i
t
a
b
A
l
Speedboat™
Range
Speedboat is our flagship advanced energy
device product with over 2,000 procedures
performed using the device.
SpydrBlade™
Flex
Surgical device combining Speedboat
blade and precise microwave coagulation
in a unique multi-modal jaw design.
Foundation of partnership programme and
GI commercial cases expected in 24/25.
SlypSeal™
Flex
Haemostasis device leveraging our unique
‘non-stick’ technology. The only ‘non-
stick’ electrosurgical haemostasis device
technology in the market*.
Tissue microwave ablation devices for
ablation of tumours in a wide range of
tissue types – and the smallest microwave
ablation device we know of*. Ongoing cases
to build post market evidence transitioning
to full commericalisation in 24/25.
Flexible microwave ablation device.
Designed for soft tissue ablation where
flexibility and small diameter is required.
Cases completed ourselves and with our
partnership programme, expect commerical
cases in 24/25.
*Based on management’s expert knowledge.
TARGET APPLICATION
▶ Bowel
▶ Oesophagus
▶ Stomach
▶ Bowel
▶ Oesophagus
▶ Stomach
▶ Vessel sealing
▶ Kamaptive partnerships
▶ Stomach
▶ Upper GI
▶ Anywhere accessible
through the GI tract
▶ Same size as FNA
needle and adjunct to
diagnostic procedure
▶ Lung, stomach,
oesophagus
and bowel
▶ Kamaptive partnerships
28
29
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Our Portfolio
Beyond the integration of staff, networks and processes,
our regional hubs in Spain, Germany, France and
Belgium provided Creo Medical with the opportunity to
manufacture, sell and distribute a wider range of products
in the fields of Endoscopy, Surgery and Urology.
The continued optimisation of the product portfolio forms part of Creo’s ongoing wider product strategy, namely to develop
and migrate products from being delivered through strategic distribution partnerships to increasing our ability to research
and develop these products—maximising revenue in the process.
This process has already begun and proven to be fruitful, particularly in the GI space, during 2023 (see CCO statement
on pages 14 to 17). By making more products compatible with our Core Product Range and our CROMA platform we will
continue to build on what we can offer our customers, providing a suite of complete ‘Creo-manufactured’ solutions for a
wide range of indications and procedures in multiple markets.
1 Core Product Range
Designed to provide the highest level of patient benefits, deliver cost savings and
the latest technology to healthcare providers. The Creo Medical business is built
around these products and they deliver a high margin return for Creo Medical.
2 Complementary Products
Our ancillary devices have been strategically chosen to extend the reach of the Creo Medical brand,
and work alongside our core technology to increase the Creo product portfolio across therapy,
diagnostics and cleaning. We have partnerships for the R&D and Manufacturing of these devices.
Strategic Distribution Partnerships
Can be bundled together with the Creo branded core technology and accessories to deliver a
full suite of solutions to our customer base. The partnerships with these manufacturers also
provide market insight and awareness of the state-of-the-art technology. When increased
volumes are reached, these products have the potential to be elevated to Creo branded products.
3
30
GASTROENTEROLOGY
UROLOGY
PULMONOLOGY
SURGERY
Powered by
▶ CROMA
▶ Speedboat
▶ MicroBlate Fine
▶ Capital Equipment
for Device Hygiene
▶ Endotherapy
Accessories
▶ Hygiene
Accessories
▶ Manometry
Catheters
▶ Endoscopic
Capsules
▶ Sonoscape
Endoscopy Tower
▶ Urodynamics
capital equipment
▶ CROMA (not yet
available)
▶ CROMA
▶ MicroBlate Flex
▶ CROMA
▶ SpydrBlade
Robotics
▶ Urodynamic
Catheters and
Accessories
▶ Endotherapy
Accessories
▶ Single use
▶ Single Use
Steriscopes and
Cystoscopes
Bronchoscopes,
needles and stents
▶ ENT equipment,
Piezosurgery
Technology
31
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Product Vision
Revolutionising
the use of energy
At Creo Medical, our vision is to revolutionise the use of
all energy modalities in minimally invasive procedures
through our platforms integrated with Kamaptive
Technology. Central to our mission is the goal to eliminate
monopolar energy from endoscopy suites, starting with
gastroenterology, where our products offer immediate
health economic value through technological fit and
market readiness.
In adjacent market segments, our partnerships with
Intuitive Surgical, CMR Surgical, and others are advancing
the use of advanced energy solutions in the expanding
arenas of robotic surgery, robotic bronchoscopy, and
robotic endoscopy.
Technology Roadmap
The globally unmatched expertise at Creo Medical is
the reason key opinion-leading clinicians and major
corporations with multi-billion market caps seek
partnerships with our development house. We have honed
our strategic plan to achieve our vision via a Technology
Roadmap, designed to propel Creo Medical’s next growth
phase. This roadmap fosters coordination, enhances
both internal and external collaboration, and guarantees
thoroughness across our product development, product
management, and clinical programmes.
Early Market Successes
The real-world evidence of Creo’s innovation across each
technology stream is expanding as these technologies
reach an increasing number of doctors and their patients:
▶ CROMA: Creo Medical is the only company to
endoscopically deliver bipolar radiofrequency
energy that adapts to the live tissue environment
while simultaneously offering super-high-frequency
microwave for controlled depth of effect in tissues.
These modalities are only made feasible by the magic in
the box: our proprietary Kamaptive Energy.
CROMA’s inbuilt features mean that clinicians can
plug instruments into the platform and use the system
with security and confidence knowing that their
patients won’t be harmed. The system reacts to the live
tissue and provides an intelligent automatic cut-off in
circumstances in which traditional modalities such as
monopolar energy could otherwise cause harm.
Fundoplication is a surgery to treat acid reflux, a
condition where stomach acid flows back into the
oesophagus and causes irritation and damage. One
common complication of the procedure is piercing of the
lining or walls in your oesophagus, stomach, or tissues
around your lungs. Within hours of having hands on
experience of SpeedBoat UltraSlim in combination with
CROMA at our launch event in November, surgeons
were able to appreciate the safeguards of the system,
using it almost straight out of the box in complex
procedures, such as fundoplication.
▶ Speedboat and SpydrBlade: Our earliest market
successes have come from our resection and dissection
instrument families with which we continue to monetise
our unique ability to miniaturise surgical instruments
that offer advanced energy for endoscopic use in the
gastrointestinal tract.
At our Capital Markets Day in November, Dr. Sal
Khalid from the Northern Care Alliance shared that the
Speedboat technology offers “immeasurable benefits” by
enabling “safer techniques with lower risks of morbidity
and mortality.” Furthermore, SpeedBoat’s efficiency and
safety have allowed Dr. Khalid to expand his clinical
practice. As you will read elsewhere in this report, this
expansion includes establishing a new regional referral
centre for complex therapeutic endoscopy in the north
of England.
▶ MicroBlate and Slypseal: Through our ablation and
hemostasis programmes, we are achieving world-firsts
for the clinical community.
In 2023, Creo Medical launched a controlled clinical trial
with world-renowned consultant respiratory physician,
Professor Pallav Shah of the UK’s Royal Brompton
Hospital. From this collaboration, a groundbreaking
advance occurred when doctors used Creo’s microwave
lung technology to remove a cancerous nodule.
Professor Shah and Dr. Christopher Orton have also
announced that they performed a robotic-guided
ablation of lung tissue and a diagnostic procedure
in a single session using the MicroBlate Flex device.
They have also announced that they ablated a 27mm
cancerous nodule in just 3 minutes, potentially setting a
new benchmark in lung cancer treatment with minimally
invasive methods. “The potential to combine the
diagnosis, staging and treatment of lung cancer in one
procedure offers significant benefit to patients,” stated
Dr. Orton.
▶ Clinical Evidence: Creo Medical’s commitment to raising
the bar of clinical evidence to support our products
is clear: we are conducting not 1, but 2 post-market
controlled clinical trials for our ablation technologies,
providing the highest level of evidence available for
this setting.
Changing the way in which clinicians treat their patients
doesn’t only rely on such well-controlled clinical
trials, but also on the growing number of individual
case-experience that create a ground swell of clinical
support for our technologies, which is why Creo’s
strategy is to fill the funnel of data at both ends of the
evidence spectrum.
A potent example of initial case experience that led to
an instant and measurable change in mindset of one
of our customers is that of Dr Adolfo Parra-Blanco who
discovered in a small group of his patients, that they
required substantially less follow-up treatment with a
procedure known as balloon-dilation after being treated
with Speedboat compared with patients he previously
treated with monopolar devices.
A normal and expected complication of full
circumferential dissection of the oesophagus, the
procedure Dr. Parra-Blanco performs, is that the tissue
in the oesophagus becomes scarred after treatment with
monopolar devices. This leads to a condition known as
stricturing, a narrowing of the oesophagus, which in
up to 71% of patients can mean they can’t eat normally.
Worst still, relief for the patients from this side-effect is
normally achieved by having repeat (up to 30) balloon
dilations, a procedure which is uncomfortable and
means yet more treatment at the clinic and disruption
to normal daily life for the patient. The emotional effects
on patient and family are considerable. The healthcare
costs for follow up care considerable, too.
As a result of his initial experience with SpeedBoat, Dr
Parra-Blanco has switched his practice to exclusively
use Creo Medical’s products in these patients. Data
has been submitted and accepted by DDW, and a
follow up clinical case series is planned to provide even
more evidence to drive this change in practice in other
clinical centres.
As experience of our devices increases in the medical
community, real-world evidence of their clinical benefits
will exponentially grow.
32
33
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Transforming Healthcare
NHS
Supply Chain
NHS Supply Chain real-world data demonstrates
substantial cash savings and operational benefits from
Speedboat Submucosal Dissection (SSD) procedures
NHS Supply Chain data demonstrates one year net savings
of £687k from 130 bowel SSD (Speedboat Submucosal
Dissection) procedures at East Kent University Hospitals
Foundation Trust (“EKHUFT”) when compared to
surgical alternatives, in addition to patient and healthcare
provider benefits.
What did they say?
Working with EKHUFT, NHS Supply Chain’s data
shows that “the use of SSD, when compared to surgical
alternatives, results in a less invasive procedure for patients
whilst maintaining an en-bloc resection with clear margins.
The endoscopic nature of the procedure and Speedboat’s
advanced energy modalities makes this procedure both
safe and effective whilst simultaneously reducing time
spent in hospital and providing cost benefits in terms
of the material and resourcing costs associated with
each procedure.”
It continued:
“Using financial modelling on the data EKHUFT have been
able to evidence that the adoption of this novel technology
and its implementation as part of a new service has
resulted in significant savings for the Trust. The detailed
dataset will also enable statistical analysis and health
economics evaluations to be successfully undertaken
with confidence.”
NHS Supply Chain manages the sourcing,
delivery and supply of healthcare products,
services and food for NHS trusts and healthcare
organisations across England and Wales. The
Speedboat device is one of very few in the UK
to have been selected for an NHS Supply Chain
Value Based Procurement Exercise, with the
organisation now keen to accelerate the use of
Speedboat in NHS Hospitals given the results
seen at EKHUFT.
34
“ The introduction of this
service at East Kent and
the pathway it facilitates
have immediately had
a positive impact not
only in terms of patient
outcomes but also from
a value perspective. With
over 200 Speedboat
Submucosal Dissection
cases now completed at
East Kent, our in-depth
costing work clearly shows
tangible and consistent
financial benefits largely
stemming from a reduction
in the time patients are
spending in hospital as
a result of our ability to
re-direct patients from
surgical waiting lists to our
excellent endoscopy unit”
Elisa Llewellyn, Director of Commissioning,
Contracting and Costing
IN NUMBERS
East Kent University Hospitals
SSD Savings
vs Surgery
1 YEAR PERIOD
LENGTH OF STAY
Between 2010 and 2015, Creo received a
series of awards from the National Institute for
Health and Care Research (“NIHR”) Invention
for Innovation (“i4i”) Programme to support
certain development projects, including the
development of Speedboat Inject. This latest
published data from NHS Supply Chain not
only reinforces NIHR’s investment decision
to support Creo in the development of its
Speedboat technology, but clearly illustrates
how such investment benefits patients,
healthcare providers and the NHS by enabling
the development of solutions to address existing
and/or emerging health or social care needs.
59% 87%
Reduction
in cost
(£8.8k surgery vs
£3.6k SSD)
Reduction in
length of stay
(8.39 days surgery vs
1.07 days SSD)
THEATRE TIME
25% 38%
Reduction
in procedure
time
(198 mins surgery
vs 148 mins SSD)
Reduction
in cost
(£4.5k surgery vs
£2.8k SSD)
ADMISSIONS
ACCOMMODATION
62% 91%
Reduction
in cost
(£8.2k surgery vs
£3.1k SSD)
Reduction
in cost
(£3.4k surgery vs
£0.3k SSD)
The data is the first like-for-like, real world comparative
health economic data provided on the service facilitated
by Creo’s Speedboat technology. It has been calculated
using official NHS data with the analysis conducted using
NHS England ‘Approved Costing Guidance’, recognised by
all NHS trusts in addition to industry bodies and includes
a breakdown of all comparators, from theatre time to
accommodation cost. The data and associated benefits
have been captured as part of an official NHS Supply Chain
case study promoting innovative technology and how
technology can drive NHS savings.
What does it mean for Speedboat?
The full study and a breakdown of results will be published
on the NHS Supply Chain website, and NHS Supply Chain
will actively work to promote the value proposition of Creo’s
Speedboat technology by engaging directly with financial
controllers and decision makers at NHS Trusts around
the country. The case study is also being shared with the
Department of Health and Social Care, NICE and others
in order to illustrate the scope and speed of impact Creo’s
Speedboat technology can have, not only on patients and
clinicians but on healthcare providers.
EKHUFT is not the only NHS trust generating significant
data to demonstrate the value of Speedboat. At UEG
Week in October 2023, held by United European
Gastroenterology, the leading non-profit organisation for
excellence in digestive health in Europe and beyond, Dr
Roser Vega from University College London Hospitals NHS
Foundation Trust presented a paper demonstrating that,
aided by Creo’s technology, she delivered outstanding
advanced endoscopic results in fewer than half the number
of cases usually required to reach that level of proficiency.
Sandra Owen, Clinical Engagement & Implementation
Manager at NHS Supply Chain, said: “NHS Supply
Chain is working on a project designed to consider the
potential benefits and practical application of Value Based
Procurement (“VBP”). Here, there is a shift in emphasis
from a reduction in product costs to working with industry
to consider technologies that can influence a reduction in
total costs within the patient pathway, and Speedboat is a
good example of this.”
35
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Transforming Lives
Royal Oldham Hospital
In support of The Royal Oldham Hospital’s goal to prevent
and treat bowel cancer, it became the first NHS hospital
in England to implement CROMA and Speedboat across
multiple endoscopy rooms.
Having completed simultaneous training of multiple
doctors through Creo’s Pioneer Clinical Education and
Mentoring Programme, The Royal Oldham Hospital quickly
ordered and took delivery of several CROMA Advanced
Energy platforms, Speedboat Inject devices and associated
endotherapy products, before putting in place weekly lists
for multiple SSD (Speedboat Submucosal Dissection)
cases and the associated routine ordering of equipment to
support these services.
As part of Creo’s Pioneer Clinical Education Programme,
3 doctors at The Royal Oldham each performed their
first in-hospital SSD procedures using Speedboat, with
a total of 5 cases successfully completed during a single
afternoon. The Royal Oldham’s CEO and Managing Director
of Surgery were present to witness Creo’s technology and
the hospital’s endoscopy team successfully performed over
40 cases in the following 3 months, with nearly 100 cases
completed to date. The service has been supported by
high quality mentoring from Creo Medical, enabling new
trainees to transition easily into regular users.
Currently conducting 5 lists per week, the hospital is
addressing a backlog of 360 patients, with referrals
extending from Liverpool to Manchester and beyond.
Projections indicate that this approach could dramatically
reduce the likelihood of recurrence from 15% to a mere 1%.
Moreover, Royal Oldham has already begun to observe
a tangible reduction in waiting lists, both in endoscopy
and surgery, showcasing the efficiency and efficacy of
its operations.
The Northern Care Alliance – rapid adoption
benefiting patients and reducing waiting lists
Collaborating with esteemed institutions like Salford Royal
Hospital and Manchester Royal Infirmary, Royal Oldham
Hospital plays a pivotal role within the Northern Care
Alliance. Through its enhanced patient outcomes and
the consequent liberation of surgical operating capacity,
Royal Oldham has significantly broadened its SSD service.
It has evolved into a regional hub covering the entirety
“ The best part about the new
service is being able to call
a patient a few days later
and tell them that they have
had a curative outcome –
that the lesion has been
removed with the necessary
margins not to have to
worry about it anymore.”
Dr Sal Khalid, Consultant Gastroenterologist
at Northern Care Alliance
of North East England. Specialising in both upper and
lower gastrointestinal SSD procedures, this collaboration
underscores Royal Oldham’s commitment to delivering
high-quality care and advancing medical practices across
the region. This partnership ensures the provision of upper
and lower gastrointestinal SSD procedures, solidifying
Royal Oldham’s position as a center of excellence and a
beacon of advanced medical care in the region.
Next steps?
▶ The Northern Care Alliance (“NCA”) has aspirations of
being a regional centre for high-risk lesions in the bowel
suspected of containing early cancer
▶ The NCA plans to expand the service and increase the
number of conditions it can treat using this equipment,
including in the upper GI tract
▶ Royal Oldham will also aim to offer training
opportunities to help teach SSD techniques to a wider
pool of doctors, including the establishment of training
posts of Endoscopy Fellows
▶ There are currently 23 NHS England healthcare settings
performing SSD. Creo has identified over 350 NHS
hospitals where SSD could be introduced to great effect
“ I am delighted that we will
be able to provide this state
of the art, safe and effective
treatment for our patients
at their local hospital. This
is a great step forward in
the treatment we provide
with the technique reducing
the chances of recurrence
following the removal of a
lesion from 15 percent to
1 percent. This procedure
will help us with our goal
towards prevention, early
detection and treatment of
bowel cancer.”
Dr Sal Khalid, Consultant Gastroenterologist
at Northern Care Alliance
“ I have been doing
advanced procedures
over many years and
have used most of the
current monopolar knives
available in the market
both in the upper and
lower GI tract. However,
the Speedboat device
is a game changer. This
is a safer technology
and allows much deeper
submucosal dissection.
We are now moving on to
use this as our preferred
and only device for
endoscopic dissection.”
Dr Regi George, Gastroenterologist at
The Royal Oldham Hospital
CASE STUDY
Mary’s Story
Mary was given a diagnosis following a
colonoscopy as an outpatient and was
given a choice of two treatments for her
condition, of which she chose Speedboat
Submucosal Dissection. Following
treatment she experienced no pain
and was successfully discharged from
hospital the same day.
“I would absolutely recommend this
procedure, 100% yes. It doesn’t impact
you or your life, and once its done and you
have your recovery, you can actually just
carry on”.
SCAN THE QR CODE
TO WATCH THE VIDEO HTTPS://
WWW.CREOMEDICAL.COM/EN/
PATIENTS/PATIENT-CASE-STORIES
36
37
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Transforming Surgery
Speedboat cleared for upper GI use in Europe
Having been initially designed for use in the bowel and
lower GI tract, in 2023 Europe followed the US and APAC
in receiving clearances for the Speedboat family of devices
to be used in the upper GI tract. Initial results have shown
Speedboat to be highly effective in the treatment of a range
of indications, including:
▶ Oesophagus per-oral endoscopic myotomy (“POEM”) to
treat achalasia (a swallowing disorder), where typically
a heller myotomy (surgery) would be required;
▶ Gastric per-oral endoscopic myotomy (“G-POEM”) to
treat delayed gastric emptying (gastroparesis);
▶ Z-POEM to treat Zenkers diverticulum, where a pouch or
pocket that forms in the wall of the oesophagus, affecting
the throat and swallowing process, and is a prominent
procedure for ear, nose, throat (“ENT”) and foregut
surgeons;
▶ F-POEM, a derivative of Oesophagus POEM, to reduce
reflux – typically this requires a highly invasive surgical
procedure called fundoplication;
▶ Speedboat Submucosal Dissections (“SSD”) in the
stomach and oesophagus, to endoscopically resect
certain cancerous and pre-cancerous lesions.
Performing gastric ESD with monopolar devices can be
challenging as damage to the underlying muscle wall
can cause both immediate and delayed perforation.
For circumferential oesophageal treatment, the risk of
scar tissue leading to narrowing is extremely high, with
occurrence in up to 84% of cases, where the vast majority
require repeat secondary treatment such as balloon
dilation. Each dilation comes with risk of death. As a result,
in European case-series performed using monopolar
energy, 1.2% died because of complications.
In FDA regions, upper GI cases account for over 40%
of global Speedboat procedures to date. Creo Medical
already has a healthy pipeline of clinicians ready to use
the device for upper GI procedures across Europe, with
demonstrations, training and procedures now taking place.
“ Whilst it’s still early days in
understanding the extent of
the benefits of Speedboat
for tackling oesophageal
cancer, my experience
is that the advanced
energy does appear to
significantly minimise the
risks associated with both
perforation and narrowing –
two of the primary concerns
when using monopolar
devices for the same
procedure."
Dr Adolfo Parra-Blanco, Consultant
Gastroenterologist & Interventional
Endoscopist, Nottingham University Hospitals
NHS Trust
“ I feel it’s quite safe because of the bipolar energy it delivers
instead of monopolar. It is the only device in the west for
ESD which uses bipolar energy, which possibly leads
to a lesser degree of injury of deeper planes, mainly the
muscle layer.”
Dr Adolfo Parra-Blanco, Consultant Gastroenterologist & Interventional Endoscopist,
Nottingham University Hospitals NHS Trust.
“From the very first time I
saw the device, and I said it
out loud and clear; this was
born to do POEM. Why?
Because it allows to you
glide over the muscularis
when you’re doing the
tunnel. ”
Dr Michel Kahaleh, Clinical Director of
Gastroenterology and Chief of Endoscopy at
Robert Wood Johnson Medical Center, USA
38
39
Creo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial StatementsCreo Medical Group plc2023 Annual Report & Accounts Case by Case
Device usage has
grown quickly to
multiple cases per
day being performed
globally
40
41
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements CFO’s Review
Continued significant
financial progress
“ Breakthrough revenue growth
for core technology coupled
with cost reduction provides
us with the platform to drive
towards our goal of achieving
self sustaining cashflows.”
Richard Rees, Chief Financial Officer
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 c.£14.4m (2022:
£20.8m), a 31% reduction. The underlying EBITDA loss for
the year was £17.6m (2022: £22.1m).
I am pleased to announce our seventh Annual Report
and accounts since our IPO on AIM in 2016. This year has
seen significant growth in Creo Core 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.
42
ALL FIGURES �m
Revenue
Cost of Sales
Gross Profit
Other Operating Income
Administrative Expenses
OPERATING LOSS*
SIP Charge
PPE & Other Settlements
Earnout
Depreciation & Amortisation
R&D expenditure recovered via tax credit scheme
UNDERLYING EBITDA**
Share-based payments
Underlying operating loss (non-statutory measure)
Underlying Administration expenses (non-statutory measure)
* statutory measure
** non-statutory measure
12 MONTHS TO
31 DECEMBER 2023
12 MONTHS TO
31 DECEMBER 2022
30.8
(15.5)
15.3
49.6%
0.4
(40.5)
(24.8)
0.2
0.3
0.5
3.4
2.8
(17.6)
1.2
(16.4)
(32.1)
27.2
(14.0)
13.2
48.5%
0.1
(43.9)
(30.7)
0.1
-
0.9
3.1
4.5
(22.1)
1.3
(20.8)
(34.0)
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.
43
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements CFO’s Review continued
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 2022 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 as noted on page 89 in the Remuneration Report.
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 securing against a back drop 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) including £15m cash placed on deposit, contingent
payments of £2.4m relating to previous acquisitions and
investment in Creo headquarters. 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 £76.6m
(31 December 2022: £75.2m), a 2% increase, reflecting the
increase cash from the fund raise offset by cash spent in
operations for the year and reduced R&D debtor.
44
Cash and cash equivalents at 31 December 2023 was
£18.5m including cash on deposit with a further £6.4m
received from loans post year end giving available cash
of £24.9m (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
yearend from long term loans. We have a clear strategy to
ensure sufficient cash resources to get us to profitability,
however as future revenues and future investment are
not committed this represents a material uncertainty
resulting in significant doubt in respect of going concern as
disclosed on page 112.
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 and are described on pages 111 to 120.
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, integration of acquired entities, ESG metrics
such as carbon emissions, diversity ratios and employee
engagement (see Directors’ Remuneration Report on pages
86 to 97). 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 on pages 46 to 50.
Directors
Details of the Directors who served during the year ended
31 December 2023 are set out on pages 70 to 71. 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.
On behalf of the Board
Richard Rees
Director
45
Creo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial StatementsCreo Medical Group plc2023 Annual Report & Accounts Risk Management
Principal Risks
and Uncertainties
Risk Management Process
The ability to identify, manage and mitigate risks is integral
to any business achieving its objectives and fulfilling its
strategy. Creo’s risk management process adopts a bottom-
up approach to identifying risks and reporting them to both
the Audit Committee and ultimately, the Board. The Board
then reviews and assesses the risks identified and the risk
appetite for the Group, which in turn, provides department
heads feedback and guidance on those key risks to focus
on and address as a priority.
Risk Committee
Creo’s Risk Committee is a non-Board committee made
up of department heads. The Risk Committee meets
formally each quarter. Each member is responsible for the
identification, monitoring and mitigation of the risks within
their respective departments with guidance provided by
the Board. Risks are reviewed by the Risk Committee and
challenged by other heads of department as to the impact
and probability ratings.
Our Risk Appetite
The Board is responsible for determining the Group’s risk
appetite alongside its business and sustainability strategy.
This includes identifying risks and opportunities across the
Group. The risk appetite helps to determine those salient
risks requiring the most attention and effort to mitigate or to
which additional resource is allocated. We have determined
the following risk appetites for the current period:
During the reporting period, we have added a specific risk
around environmental risks which we have identified as an
emerging risk to the business with a clear need to align to
our stakeholders objectives in this area.
We recognise that the risks are different when achieving
commercial traction in Europe, the US and APAC and each
bring their own challenges and risk profiles. We therefore
have input from the commercial heads in each region to
ensure we have appropriately identified, recognised and
mitigated the key risks.
As we continue to scale operations towards profitability the
risks will change and the business will continue to evaluate
these to ensure new risks which have not previously been
identified are captured alongside any risks, likelihood
and impacts which might have become significant. Our
new Chief Product Officer heads up the identification and
mitigation of commercial risks across the Group.
Risk Reporting Process
Risk Tolerance
Principal Risks
Appetite Rationale
Review of key risks to the business and progress against risk appetite.
Communicate risk appetite to rest of business
Board
RISK
APPETITE
Review of central risk register, process and
progress against risk appetite targets
Audit Committee
Identification of risks recorded in risk register, mitigations
and update of impact/probability of risk
Risk Committee
REPORTING
LOW
MODERATE
Barriers to Market,
Business Disruption
Risks, Geopolitical Risks
As a medical device company, we develop solutions that
tackle unsolved problems, often by applying new technology.
The technology risk we assume takes into consideration
our stakeholders’ interests and is commensurate with the
potential returns from our product pipeline and intellectual
property’s assets.
The Group has a measured approach to projects and
acquisitions and will take an appropriate level of risk
commensurate with the potential returns and availability
of capital.
Operational Risks,
Executive and Personnel
Risks, Financial and
Going Concern, IT
and Cyber Security,
Environmental
The nature of our business means that we are exposed to
operational and climatic risks that are beyond our influence
but where possible, we take steps to mitigate the impact of
these risks on the business.
The Group recognises the importance of its supply chain and
seeks to minimise risks within its supply chain which would
compromise quality and service for our customers.
Breach of Legal
and Regulatory
Requirements, Product
Liability Risks
Creo operates in the healthcare sector which is highly
regulated, where patient welfare is paramount. The Company
has a very low tolerance to risks of breaching legal, regulatory
or ethical standards or towards anything that could negatively
impact on our people’s health, safety and wellbeing, the
communities where we are present, our reputation or that of
our customers.
46
47
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Risk Management continued
Change in Risk
No Change
Decrease
Increase
The table below sets out those principal risks and uncertainties which, in the Directors’ opinion, are most relevant to the
Group. We have shown the movement of impact and probability of each risk against the risk reported in the previous year.
Whilst the business puts in place mitigations to reduce the probability of any risk arising and the impacts of any such risks,
it is not possible to remove all risk. Further, additional factors could affect the likelihood or impact of risks as the business
progresses on its commercialisation journey; for example an increase in revenue may increase impact; or increased
product sales may result in product liability risks become inherently more probable and thus having a greater impact on
the business.
PROBABILITY
MOVEMENT
IMPACT
MOVEMENT
¹
PRINCIPAL RISK AND IMPACT
HOW WE MANAGE THE RISK
Barriers to the market
Risk our products do not meet
the necessary regulatory
requirements for the market, are
not competitively priced, do not
provide value over competitor
products.
Risk that our technology
becomes outdated or
superseded by a competitor.
Breach of legal and regulatory
requirements
Risk that the Group breaches
legal or regulatory requirements
in local jurisdictions which could
result in fines, penalties and
damage to the Creo brand.
Operational Risks
Risk that Creo is impacted
by supply chain issues,
manufacturing delays or lack of
manufacturing capacity, product
defects, supplier dependence.
▶ Engagement with KOLs and clinicians through
local industry and through our Clinical Education
Programmes
▶ Benchmarking prices of products in local markets
▶ Extensive IP portfolio to protect our core technology in
the market
▶ Clear marketing strategy targeting individual markets.
▶ Development of our Kamaptive Technology, our suite
of compatible devices and our Kamaptive Licensing
Programme
▶ Our Quality Assurance and Regulatory Assurance
Team is focused on the regulatory needs for product
development and develops quality documentation to
support all regulatory applications
▶ We have CE marking for six of our devices as well as our
CROMA platform, and FDA clearance for Speedboat
Inject, MicroBlate Fine, MicroBlate Flex and SlypSeal
Flex devices in addition to the CROMA platform
▶ Work with local advisors to keep abreast of the
development of regulations and requirements
▶ Preventative maintenance plan to ensure our products
are calibrated and maintained, both before and once
they enter the market
▶ Strategic purchasing of key components and careful
monitoring of resource requirements
▶ Review of at risk suppliers and alternatives identified to
ensure minimal disruption if supply chain issues arise
▶ We have an outsourcing partner ready if demand
requires additional manufacturing capacity
1 Creo has brought to market multiple versions of the Speedboat device and is on track to bring its other devices to market in 24/25 having already
achieved regulatory clearances. This means Creo is better set up to introduce new devices to the market with fewer barriers than a new entrant to
the market and therefore we have reduced the probability.
PRINCIPAL RISK AND IMPACT
HOW WE MANAGE THE RISK
PROBABILITY
MOVEMENT
IMPACT
MOVEMENT
IT and Cyber Security Risks
In the event of industrial hacking,
IT failure or a data breach, the
Group is subject to operational
disruption unless appropriate
safeguards are in place.
In the event of a data breach the
Group may be liable to be fined
for a breach of relevant data
protection legislation.
Executive and Personnel Risks
Risk of over-dependence on key
staff and executives.
Risk that we cannot recruit the
right talent necessary for the
Group to achieve its objectives.
Product Liability Risks
Criminal or civil proceedings
might be filed against the Group
by study subjects, patients, the
regulatory authorities, other
companies and any other
third party using or marketing
our products.
▶ Remote servers across multiple sites reduce reliance on
a single site
▶ VPN across the business
▶ Key applications being migrated to the Cloud
▶ Cyber security awareness training implemented across
all entities
▶ Appraisal process set up to maximise employees’
potential and aid their development
▶ HR Director overseeing the Group and implementing
processes and policies
▶ Leadership and management training to empower
management and enhance performance
▶ Benchmark benefits package across industry roles to
ensure competitive
▶ Identify points of failure (“PoF”) within the business if
someone were to leave and mitigate these PoF
▶ By capturing IPR through patent applications, we are
able to ensure ownership of knowledge and create
foundations for our product pipeline
▶ A number of our products have obtained approvals/
clearance from third-party regulatory bodies in the EU
and US
▶ Our design process seeks to mitigate issues
by including preclinical and clinical trials in the
development of our products
▶ We invite input from Key Opinion Leaders on product
development and their needs
▶ Our QMS system is designed to comply with ISO 13485
▶ Third party and OEM/OBL products manufactured to
ISO standards with audits undertaken
Business Disruption Risks
Macro economic factors may
cause issues with supply chain,
increase export and import
prices, cause delays in selling/
purchasing goods.
COVID-19 or similar pandemic
disruption to business stopping
us manufacture, sell and operate
as usual.
▶ The Company property is well secured and we have
taken reasonable steps to protect the contents
▶ A disaster recovery plan has been developed
▶ We monitor developments on an ongoing basis to allow
the business to react when necessary
▶ The business is continually monitoring local and
global developments, including COVID-19, the war in
Ukraine as well as the cost of living crisis and assessing
the potential disruption impacts this could have and
mitigating these where possible
48
49
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Risk Management continued
Change in Risk
No Change
Decrease
Increase
PRINCIPAL RISK AND IMPACT
HOW WE MANAGE THE RISK
PROBABILITY
MOVEMENT
IMPACT
MOVEMENT
Financial and Going Concern
Risks
Risk that the Company does not
have sufficient cashflow to meet
its liabilities and is no longer a
going concern.
Risk that we do not have
sufficient cashflow to seize
opportunities and projects when
they arise.
Safety and Efficacy of our
Products is Questioned
Safety concerns relating to our
products may lead to recalls,
seizures, interruption of supply
and loss of product approvals,
which could adversely affect
patient access, our reputation
and our revenues. Significant
product liability claims could
also arise, which may be costly,
divert management attention,
reduce demand for our products
and damage our reputation.
Environmental Risks
Climate change, or legal,
regulatory or market measures
to address climate change
may materially adversely affect
our financial condition and
business operations.
▶ On track with budgeted initial cash requirements,
sources of further funding identified but nothing
yet secured
▶ We work closely with a number of agencies and bodies
to maximise the amount of grant funding that is available
to assist with our technological development while
minimising our spend
▶ Creo Europe is profitable and generates cash for the
business and the Group EBITDA loss has been reducing
year on year
▶ We are constantly talking to current and new investors
about our commercial plan and opportunities and the
funds those opportunities would require
▶ Local and Group budgets are reviewed each month
with a five year forecast every six months to ensure
sufficient cashflow
▶ Incident management process allows us to react to any
potential adverse event and limit any damage
▶ Preventative maintenance plan to ensure our products
are calibrated and maintained, both before and once
they enter the market
▶ Our QMS system is designed to comply with ISO 13485
NEW RISK
NEW RISK
▶ Sustainability Committee oversees environmental
risks as well as other ESG risks throughout the Group
ensuring we are aware of any new legal regulatory or
market changes
▶ We report regularly to the Board on our carbon footprint
as well as the actions taken to reduce our waste
▶ Ensuring we meet the requirements for the NHS
prodcurement providers through disclosure of Scope 1, 2
and selected Scope 3 emissions
▶ We ensure our key suppliers have their own
sustainability commitments and are able to demonstrate
these before we engage them
The Strategic Report was approved by the Board of Directors on 14 May 2024 and was signed on its behalf by
Richard Rees
Chief Financial Officer
14 May 2024
50
51
Creo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial StatementsCreo Medical Group plc2023 Annual Report & Accounts Sustainability Strategy
Our Mission: To Improve
Patient Outcomes
Creo’s sustainability strategy focuses on
three key areas where we believe we can
make the greatest impact, underpinned
by our strong governance framework
and aligned with our overall mission to
‘Improve Patient Outcomes’.
Healthcare Impacts:
Ensuring what we do has a positive impact on our
patients, clinicians and the healthcare industry through
championing innovation and ensuring quality outcomes
Our People and Communities:
Ensuring what we do has a positive impact on our people
and communities through promoting diversity, equality
and enhancing opportunities within the business and
wider communities
Our Planet:
Ensuring that the actions we take as a business mitigate
our environmental impact and work towards and
contribute to global targets
Supporting the following United
Nations Sustainable Development
Goals (“UN SDGs”)
Healthcare Impacts
Our People and Communities Our Planet
KEY FOCUS
▶ Advancing technology in the
▶ Create a safe, diverse workplace
▶ Achieve net-zero across our
field of therapeutic endoscopy
▶ Helping to tackle waiting times
and rising healthcare costs
▶ Enhancing clinician education
and skills
where innovation and
collaboration can thrive
Scope 1 & Scope 2 emissions
by 2027
▶ Supporting our communities
▶ Achieve net-zero over
and local schools to
further education
Scope 3 emissions by 2045
▶ Enhanced sustainability
reporting and communication
OUR PROGRESS
▶ First SSD clinic at Royal
▶ Leadership and manager
Oldham resulting in reduced
waiting list times during
the year
training for 35 managers across
the business
▶ Reduction in CO2 output
against a backdrop
of expansion
▶ Talent assessments and
▶ Implementation of data
▶ Launch of Speedboat UltraSlim,
our smallest device opening up
new treatment pathways
appraisals for all staff across the
business ensuring we maximise
employee potential
capture and reporting system
to ensure accurate, timely and
efficient data capture
▶ Quality training which goes
above and beyond the
industry standard
▶ Work with local schools and
colleges to host career days
▶ Study being undertaken to
understand environmental
footprint of our product vs
alternative treatments
See more on our goals and progress on
pages 56 to 57.
See more on our goals and progress on
pages 58 to 61.
See more on our goals and progress on
pages 62 to 65.
GOVERNANCE
▶ Healthcare compliance
▶ ISO 13485 compliance
▶ Patient follow up
▶ Anti-bribery, anti-slavery, money
laundering policies and training
▶ SECR compliance
▶ ISO 14001 compliance
▶ Diversity metrics & monitoring
▶ UN Sustainable Development
Goals
▶ Strong Governance Framework — See our Corporate Governance Report on pages 72 to 76.
▶ Sustainability Committee set up to guide, monitor and report on progress against strategy.
▶ Continuous stakeholder engagement — See our s.172 statement on pages 78 to 81.
52
53
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Sustainability Statement Explanation
How we develop and monitor our strategy
In order to create and execute a successful Sustainability
Strategy it is important to identify those issues that are
most important to Creo, its business and its stakeholders.
In turn, this allows us to focus on those matters where
we have the greatest opportunity to make an impact and
ensure an appropriate governance framework is in place to
achieve the strategy.
To gather insights, we engaged with our key stakeholders
to gain their insight on the issues of greatest importance for
our business and society. These included:
▶ External stakeholders — we sought insight from our
patients, clinicians, healthcare providers (including
the NHS), suppliers and partners to understand their
views of our biggest risks and the opportunities to drive
greater value.
▶ Our people — we engaged internal experts from
across the business to understand the issues which
have the greatest impact on the delivery of our
strategy and those which are the highest concern for
our stakeholders.
▶ Our Sustainability Committee meets throughout the
year to monitor progress against its goals and
objectives. The Committee recognise the need to
set clear KPIs based on data where appropriate and
have made the capture of that data a key priority. Our
progress is also monitored against the wider SDGs.
Materiality Assessment
We carry out a materiality assessment annually using
the Global Reporting Initiative (“GRI”) recommendations
on materiality to ensure that our process was conducted
according to best-practice reporting standards.
Through this process we identified 21 material issues.
We also combined the results of the materiality exercise
alongside the prioritised issues identified by the UN
Sustainable Development Goals (“SDGs”) to guide the
development and focus of our materiality assessment.
Key Material Issue Changes
Our key material issue movements were sustainable
logistics and product distribution, responsible and
transparent sourcing and product life cycle. Our
assessment showed these increased in importance to both
our stakeholders such as the NHS as well as Creo as we
continue to increase volume of sales and manufacturing.
54
NO. MATERIAL ISSUES
SUSTAINABILIT Y PILLARS
1
2
3
4
5
6
7
8
9
Supply Chain Management
Governance, Ethics and Compliance
Data Protection and Cyber Security
Responsible and Transparent Sourcing
Risk Management and Mitigation
Hazardous Materials
Sustainable Logistics and Product Distribution
Ethical Animal Trials
Diversity, Inclusion and Equal Opportunities
10
Employee Engagement, Attraction and
Development
11
Occupational Health, Safety and Wellbeing
12
Community Engagement
13
Accessibility of Products
14
Clinician Experience and Development
15
Patient Outcomes
16
Innovation, Research and Development
17
Collaboration and Partnerships
18
Climate Change and Energy Use
19
Recycling and Waste
20
Product Life Cycle
21 Water Use and Efficiency
Healthcare Impacts
Our People and Communities
Our Planet
Governance
S
R
E
D
L
O
H
E
K
A
T
S
O
T
E
C
N
A
T
R
O
P
M
I
15
14
16
9
18
4
2
19
11
3
20
5
13
1
10
7
17
8
21
6
12
IMPORTANCE TO CREO GROUP
Area of focus
55
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Healthcare Impacts
Healthcare
Impacts
Our focus on healthcare impact aligns
with the following UN Sustainable
Development Goals (“SDGs”)
Ensuring what we do has a positive impact on our patients,
clinicians and healthcare industry through championing
innovation and ensuring quality outcomes. This was
recognised as an area of specific focus due to the unique
opportunity Creo has to make a positive impact in the
following ways:
Advancing Technology
Everything Creo does has one main aim, to improve patient
outcomes. In order to achieve this, current treatment
pathways will need to adapt through continued innovation,
challenge and collaboration. We address this in the
following ways:
Creo was recognised as a leader in innovation within the
industry, when we won the Outstanding Achievement
award at the Medilink UK National Healthcare Business
Awards in June 2023.
Tackling Waiting Lists and Rising
Healthcare Costs
Whilst our mission is to improve patient outcomes, our
technology has been proven to have the potential to reduce
procedure times and remove the need for long hospital
stays. Our SSD clinic at Royal Oldham Hospital has done
just this by reducing waiting times. See further details on
SSD benefits on pages 34-35.
Our products – this year we launched our smallest ever
device, the Speedboat UltraSlim. This device will now
work with almost any endoscope in the world and opens
up our technology to new markets, new regions and new
treatment indications.
We are not limiting our benefits to just the NHS or first
world countries, but are actively looking to help ease
healthcare pressures and improve patient outcomes
globally. We want as many people to have access to our
technology as possible.
Collaborating with others in the industry – sharing our
knowledge and technology with partners allows innovation
within the industry and will help lead to new products
and pathways not yet available. As well as partnering with
CMR, Intuitive and IQ Endoscopes we have also partnered
with Khalifa University to develop some of our Plasma
technology. We believe that by collaborating with the likes
of Khalifa University we can continue to be at the forefront
of innovation within the industry.
To achieve this we have supported clinicians to perform
procedures and introduced our technology in a number of
countries including Indonesia, Slovakia and the UAE. With
a focus not just on the markets we have a direct presence
in but all across the world, we believe we can make a
significant impact on the pressures faced by healthcare
providers across the globe and help to tackle healthcare
inequality between regions.
Training that goes beyond expectations
Quality is of paramount importance to Creo and the
products and training we provide. As well as complying
with ISO 13485 Medical Devices certification and relevant
healthcare compliance, we strive to provide training and
education long after the clinicians pass the required level
of proficiency.
Our Pioneer Clinical Education Programme champions this
quality and follows users through multiple cases to ensure
the patients receive the best care and we prevent any
avoidable adverse impacts. Follow ups with patients and
clinicians allow us to obtain valuable feedback to enhance
future patient experience and clinician training.
How We Govern
▶ Healthcare compliance
▶ ISO 13485 compliance
▶ Clinical Training Policy
▶ Technology Patents
▶ Patient and Clinician Feedback
▶ Monitoring of clinical data
Scan the QR code
to see more on our
health economics
What’s next?
treatments through market penetration
in developing countries
1 Develop global accessibility to
2 Continue to invest in new treatment
3 Continue growth in our professional
education programme
pathways
56
57
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Our People and Communities
Our People and
Communities
Our focus on our people and communities
aligns with the following UN SDGs
Our people are the lifeblood of our business and the
driving force behind the innovative work we do within
the healthcare sector. We are committed to ensuring our
recruitment, talent assessment and development processes
can identify the best people for the roles, irrespective of any
personal characteristics.
Creating a safe and inclusive environment
which fosters innovation
We recognise the importance of providing state of the art
facilities and space for our people to collaborate face to
face, share ideas and meet other members of the team.
To ensure a safe and inclusive environment we have the
following policies and workshops in place:
▶ Diversity & Ethical Behaviour Training
▶ Menopause Awareness Workshops
▶ Employee team building days
▶ Equality, Diversity & Inclusion Policy (including respect
for human rights)
▶ Whistleblowing Policy
▶ All hands meetings
We have continued our investment in our HQ office
with state-of-the-art training labs as well as expanded
manufacturing capacity to ensure we can meet the growing
demand for our products. We have also moved offices in
Spain to allow for greater collaboration and warehouse
space as our consumables business continues to grow.
We are committed to creating a diverse workforce and
working towards gender parity in senior positions within
the business. We are committed to ensuring that all
disabled persons whether newly hired or who have become
disabled during employment, have appropriate support,
training, career development and promotion opportunities.
Online workshops and meetings are held with our
international colleagues on a regular basis to ensure
everyone feels part of the Creo family and that we are all
working towards the same goals.
10%
Payrise for those most impacted
by the cost of living crisis
Employee wellbeing
Employee wellbeing is of paramount importance to Creo,
whether it is physical or mental health we recognise that
happy and healthy people perform at their best. To support
this we have implemented a range of tools to help support
our employees.
▶ Mental Health First Aiders – trained individuals provide
a channel of confidential and non-judgemental support
to employees who may require some assistance or
simply need to chat.
▶ Employee Assistance Programme – employees have
access to our free and confidential online and telephone
support service (Unum LifeWorks). Support topics
include bereavement support, financial wellbeing,
mindfulness, elder care and more.
▶ Beam Development and Training and Awaken Wellbeing
Services – Creo has engaged with a professional
wellbeing coach in order to provide one to one
telephone and online support to employees to help
promote positive wellbeing and avoid burn out.
▶ Understand your Pension Sessions – Creo has run
pension sessions to allow our employees to understand
which pension works best for them as well as increasing
our matched Employee Pension Contribution to 6%.
As well as the above programmes we have also introduced
Aviva Digicare and Unum Help@hand alongside our
current health services provided. This provides our UK
employees with:
▶ Digital GP – a private doctor service offering our
employees quick access to clinical advice and guidance,
through up to 3 sessions a year.
▶ Nutritional Consultations – our employees can have
up to 6 consultations a year with a nutritional expert,
including advice and guidance on delicious healthy
eating plans.
▶ Mental Health Consultations – tailored advice from
mental health professionals if there’s any issue - home
or work related - our employees need to talk over,
including bereavement support. Employees get access
to 6 Mental Health Consultations a year, with an
additional 6 bereavement consultations.
▶ Physiotherapy – our employees and their partners
can have up to 8 sessions a year between them with a
physiotherapist who will give them bespoke exercises
normally via video consultation.
These programmes help to keep our staff in the best
condition and help to reduce sickness within the workplace.
Gender Distribution within the Workforce
Board of Directors
Employee split
FEMALE
1
FEMALE
107
MALE
6
MALE
177
58
59
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Our People and Communities continued
Health & Safety
Physical health is also key to ensuring we provide our
colleagues a safe place to work. During the year we have:
▶ Introduced a red tagging exercise
▶ Additional sharps bins for disposals
▶ DSE homeworking assessments
▶ New near miss reporting portal
▶ RoSPA Award
0.24
Accidents per 100,000 hours
(2022 0.33)
Challenging & Rewarding Careers
We always strive to get the best out of our employees and
ensure they are reaching their full potential. This year we
have introduced our Appraisal process. Every employee
within the business will have an appraisal where their
strengths and development areas are identified and goals
are set to help them achieve their potential. We have run
appraisal workshops to ensure employees understand
how to get the most out of their appraisals and managers
understand how to set SMART goals.
We keep our employees aware of our success stories with
patients through regular communication to help remind
them of the purpose of the business and difference they are
making to people’s lives.
Retaining and attracting the best talent is key to
achieving our strategic goals. We offer various employee
benefits including:
▶ Share Incentive Plan
▶ Cycle to work scheme
▶ Income protection
▶ Critical illness cover
▶ Time off for volunteering
▶ Flexible working
▶ Healthcare support
▶ Life Insurance
Supporting staff through the cost of
living crisis
The cost of living crisis has impacted people and business
across the world, particularly those on lower incomes.
To support our staff we ensured employees received a
payrise of up to 10% for those most impacted by the crisis.
We also shared energy saving tips as well as offering to
speak to financial advisors to help manage their finances.
19%
Employee Voluntary Turnover Ratios
18% in 2022
Employees are encouraged to
complete 2 days volunteering
each year
Community Engagement
We actively encourage our employees to get involved in
local community projects, volunteering and raising money
for good causes. Some of the projects we have been
involved in this year include:
▶ Sponsored the Bowel Cancer Dinner in Cardiff
– the dinner helped to raise awareness of bowel
cancer issues as well as raising funds for bowel
cancer research.
▶ Our colleagues took place in our ‘Get Active this April’
to raise funds for Bowel Cancer UK as part of Bowel
Cancer Awareness Month.
▶ Creo Medical Europe Charity Dinner—Our European
colleagues joined a Charity Dinner to raise funds for a
local cancer centre based in Spain.
▶ Our Global HR Director and HR team attended a
number of schools to offer students mock interviews.
▶ Our Chepstow head office hosted a class of students
from a local comprehensive school to show and inspire
them with the work we do and the careers we offer.
Regular charity events held to raise
money for good causes
How we Govern
▶ Policies and training via our global learning platform:
▶ Anti-Bribery Policy
▶ Whistle Blowing Policy
▶ Money Laundering & Anti Bribery
▶ Equality & Diversity Policy
▶ Benchmarking pay and benefits to industry standard
▶ Diversity & behaviour in workplace training
▶ Appraisal process
▶ Exit interviews
▶ Analysis of key workforce data including sickness,
leavers, hires, promotions and pay parity
value proposition
What’s next?
1 Examining ways to improve employee
2 Undertake employee surveys to track
3 Continued community engagement &
increased volunteering participation
scores and measure progress
60
61
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Our Planet
Our Planet
Our focus on the environment
aligns with the following UN SDGs
It is key that we all minimise our impact on the
environment, including Creo and its employees. As a
business we want to ensure that the actions we take
minimise our environmental impact and work towards
and contribute to global targets. We recognise that as our
business grows so will our impact on the planet, however
we also recognise that we have an opportunity to reduce or
mitigate the negative impacts and an opportunity to create
positive impacts along the way.
Using Data to set meaningful targets
As an evolving business we recognise the challenge in
setting internal targets and want to ensure that any targets
we set we can reliably measure, report on and actually
have a positive impact. During this year we have started
the process to implement a new data capture system which
will allow us to track all of our Scope 1, Scope 2 and Scope
3 emissions from all entities across the Group. Accurate
and timely data will provide us with the insight to take
significant actions to further reduce our footprint and help
us achieve a net-zero emissions strategy.
Our Net Zero Targets
We have realigned our targets to our external stakeholders
both short-term and long-term. Our targets are as follows:
2024
Scope 1, 2 & 3 monthly emissions data from all
sites globally
2025
Set specific targets for ‘hot spot’ areas,
departments, and sites
2039 Achieve an 80% reduction in baseline figures
2045 Achieve net-zero
Scope 1, 2 & 3 Emissions
In 2023 we successfully reported Scope 1 & 2 worldwide
and Scope 3 emissions in the UK enabling us to create a
UK Carbon Reduction Plan (“CRP”). We have implemented
a plan to complete Scope 1, 2 & 3 emission reporting in
2024, providing every country with their own CRP and data
to support all environmental regulations worldwide.
Although we are not required to disclose Scope 3 data
under current regulations, in line with best practice and
TCFD and SECR guidance we have chosen to disclose the
2023 Scope 3 emissions for our Business Air and Land
Travel from our UK and Global sites.
4.95%
reduction in GHG against
a backdrop of expansion
62
Emissions¹
SCOPE 1
Emissions from facilities²
Emissions from vehicles³
SCOPE 2
Purchased Electricity and Heating (Gas)⁴
Intensity Metric5
SCOPE 3
Emissions from business air travel6
Emissions from business land travel7
Intensity Metric5
Kwh Consumption
Purchased electricity8
Purchased gas9
Total
Intensity Metric5
Metric
UK
2023
UK
2022
Global
2023
Global
2022
Tonnes / CO2e
Tonnes / CO2e
Tonnes / CO2e
Tonnes CO2e /
Revenue £m
Tonnes / CO2e
Tonnes / CO2e
Tonnes CO2e /
Revenue £m
0
46.5
26.5
2.6
508.7
24.3
0
1.3
23.6
2.9
411.9
22.2
51.7
216.0
0
239.5
111.7
5.5
1003.1
38.5
50.8
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Kwh
Kwh
Kwh
289,482
252,839
414,936
n/a
86,601
83,642
382,533
n/a
376,082
336,481
797,468
n/a
Kwh / Revenue £m 36,448
41,753
25,882
n/a
1 CO2 per units for 2023 were calculated using the metrics provide by the suppliers directly where applicable and using the GHG conversion
factors from the Government GHG Conversion Factors for Company Reporting 2023.
2 Facilities in 2023 and 2022 include all UK facilities. Global includes all entities including UK. Note in the prior year the CO2 for purchased gas
was included within the Scope 1 metric. This has been moved to Scope 2 and the prior year restated.
3 The 2023 emissions include vehicles owned by UK all UK entities, the 2022 emissions include only vehicles owned by Chepstow and Bath sites.
4 Purchased gas & electricity for 2022 and 2023 includes all UK sites, purchased electricity for Global sites for 2022 was not available.
5 Intensity metric is based on revenues. We believe this to be an appropriate metric as it will help us monitor our progress as the Company
continues to grow. The revenues for the UK relate to all UK sites, the Global metric is revenues for the Group.
6 Scope 3 emissions data for all UK sites. Global data was not available for 2022.
7 CO2/Mile was calculated using direct data from travel provider and the CO2 per mile from Department for Transport 2020. Global data for 2022
was not available.
8 Purchased electricity for 2022 and 2023 includes all UK sites, purchased electricity for Global sites for 2022 was not available.
9 Purchased electricity for 2022 and 2023 includes all UK sites, purchased electricity for Global sites for 2022 was not available. It has been
converted using the Energy and Carbon Conversions 2022 Update by Carbon Trust UK.
2024 Targets
Alongside our targets we commit to disclosing our progress annually. We will keep abreast of all emerging technological
improvements to accelerate our pathway to net-zero emissions. As part of this we have set ourselves a target to reduce our
emissions by 7% in 2024. If we can achieve a 7% year on year reduction we will have reduced our emissions by 80% by 2039.
2024 Proposed CO2 Emissions Reductions (CO2e T)
Diverted from Landfill
1231t
Processes
Transportation
403t
Hybrid Vehicle
Utilities
31t
Car Sharing
5t
1t
1t
Paper to Electronic
26t
Packaging
0.5t
Shipping
6t
63
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Our Planet continued
Action to Reduce Our Impact
Despite our strategy and wider industry progress being in
its infancy, we have already made great strides in reducing
our impact on the planet through the following:
▶ Maintained ISO: 14001 in Chepstow and Bath offices
▶ Installed electric vehicle charging points for electric
vehicles at our Creo HQ site
▶ Installed a bike shed with electric charging point for
electric bikes at our Creo HQ site in Chepstow
▶ Smart travel campaign to raise awareness of types of
business travel and the CO2 each produces
▶ Supply chain analysis of supplier impacts
▶ Identified platform for data capture and implementation
of this platform started in 2024
▶ Bike to work scheme
Water & Waste
Although we do not use a significant amount of water, we
still track the amount of water usage across the Group
and look for ways to reduce our water usage. We have
undertaken an analysis to ensure that we do not operate in
any water deprived areas and monitor the amount of water
used throughout the business.
ISO 14001 is an internationally
recognised standard for
Environmental Management
Systems and demonstrates
Creo’s commitment to
Environmental Management.
We now segregate all wastes at all our offices including
batteries, WEEE, hazardous materials, sharps, and clinical
waste etc. We have now implemented flexible working
practices and we asked staff to return any waste electrical
items, batteries, etc. to the workplace so they can be
recycled as part of our business waste.
Waste Electrical and Electronic Equipment
(“WEEE”)
As a producer we place electrical items onto the UK market
which will eventually become waste. We understand our
obligations to manage this, both morally and legally. We
have joined a producer compliance scheme (“PCS”) to
support and assist our efforts. Under the relevant laws,
we are considered a small producer as we place less than
five tonnes of electrical product onto the market annually.
This allows us to register with the European Agency direct.
However, we have chosen a PCS to handle our registration
so that we receive timely and effective guidance as our
business develops and additional obligations come
into force.
Regulatory Requirements and Frameworks
We keep abreast of the rapidly evolving regulatory
environment, particularly around climate change and
disclosures. Although we are not required to report on Task
Force on Climate-Related Financial Disclosures (“TCFD”)
we have made significant progress on our disclosures of
Scope 1 & 2 emissions and have a clear plan to understand
and disclose more detail about our Scope 3 emissions in
the next few years.
Our Sustainability Committee alongside our Risk
Committee allows us to set a clear climate impact strategy
along with appropriate scenario testing, identification of
opportunities and threats and resilience testing.
We are aware that the IFRS Sustainability Standards Board
are planning on issuing the IFRS Sustainability Standards
Disclosures which are likely to come into force in 2024. The
current plans and strategy mean we are on the front foot in
this ever-changing environment to be able to meet future
and current regulatory requirements as they arise.
How we Govern
▶ SECR compliance
▶ ISO: 14001
▶ Data capture
▶ Sustainability Committee
▶ Producer compliance scheme
Environmental Impact of
Surgery Vs. Endoscopy Study
As well as saving money and time for patients we
believe using our product generates less emissions
than alternative treatment pathways.
To investigate this and to generate insightful data
we have commissioned a study to assess the
carbon environmental impact of two key facets
of gastroenterological care: traditional surgical
interventions and endoscopic procedures.
The study will focus on the life-cycle of each
therapeutic option to calculate approximate carbon
footprints, considering:
1. Manufacturing processes
2. Energy consumption
3. Waste generation
4. Post-procedural patient care
We aim to complete this study by the end of 2024
and will use the findings to help further improve
the environmental impact of our products.
downstream emissions globally
What’s next?
1 Data capture of all upstream and
2 Using sea freight as an alternative to
3 Benchmarking of KPIs to industry
4 Continue to save energy in our
air freight to help reduce emissions
current business practices
and competitors
64
65
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements 02
Corporate
Governance
Chair’s Statement
Board of Directors
Corporate Governance Report
Statement of Directors’
Responsibilities
Engaging with Stakeholders
Audit Committee Report
Directors’ Report
Directors’ Remuneration Report
68
70
72
77
78
82
84
86
CLINICAL CASE STUDIES
Learn how
Speedboat Inject
is improving lives
SCAN THE QR CODE
TO READ OUR
CASE STUDIES
66
67
Chair’s Statement
Another positive year
of progress
“ Creo Medical’s sights remain set
on maturing as an international
medtech group...”
Charles Spicer, Chair
Overview
Creo Medical’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 (as Craig explains in
his report on pages 8 to 11) 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 18 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 fellow shareholders are well aware, the continued
volatility in the smaller cap stockmarket 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 is 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 Remuneration Report on pages 86 to 97 includes
further details.
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.
Ivonne Cantu is our non-exec champion on sustainability,
and our Sustainability Report on pages 52 to 65 updates
shareholders on progress.
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. As set
out in the 2023 Compliance Statement on pages 72
to 76, the Group continues to adopt the QCA Code of
Conduct with its 10 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 as
detailed in our Audit Committee Report on pages 82 to
83. 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 day 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 at last year’s AGM, the Board has developed
a comprehensive succession plan to ensure that Creo’s
Executive and Non-Executive Directors include an
appropriate mix of skills and experience to continue to build
a world class medtech company. The process of appointing
one or more additional independent Non-Executive
Directors and identifying a candidate suitable to succeed
me as Chair is progressing well and we look forward to
updating shareholders.
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.
68
69
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Board of Directors
Board of Directors
Charles
Spicer
Chair
John
Bradshaw
Senior Independent
Non-Executive Director
Ivonne
Cantu
Independent
Non-Executive Director
Craig
Gulliford
Chief Executive Officer
Professor
Christopher Hancock
Chief Technology Officer
Richard
Rees
Chief Financial Officer
David
Woods
Chief Commercial Officer
John is a chartered
accountant with more than
25 years’ experience as a
Chief Financial Officer with
venture capital backed and
listed companies. Prior to his
retirement in July 2021, John
was Chief Financial Officer
of Syncona Investment
Management Limited, the
Investment Manager of
Syncona Limited, a FTSE 250
listed life sciences investment
company. John served as a
non-executive director and
chair of the audit committee
of AIM listed IXICO plc from
October 2013 until April 2022.
John chairs Creo’s Audit
Committee and is a member
of the Remuneration
Committee.
He currently chairs
NetScientific PLC, Korn
Wall Limited (KwickScreen)
and the UK Department
of Health’s Product
Development Awards
Selection Panel B for
Invention for Innovation (i4i).
Charles was previously chair
of IXICO plc and served as a
director of Aircraft Medical
(acquired by Medtronic Inc. in
2015) and Stanmore Implants
(acquired by Stryker Inc.
in 2016).
Prior to that he was Chief
Executive of MDY Healthcare
plc, a strategic healthcare
investor and, prior to that,
Head of Healthcare Corporate
Finance at both Numis
Securities and Nomura
International. Charles has a
PhD in History from London
University and an MA in
History from Cambridge
University.
Charles is a member of Creo’s
Audit Committee.
Ivonne joined Creo’s Board
on 1 February 2020 and
has extensive experience in
corporate finance, having
acted as a corporate
finance adviser to UK and
international companies for
more than 20 years at Cenkos
Securities plc and previously
at Merrill Lynch.
Ivonne is currently director
of Investor Relations and
Sustainability at Benchmark
Holdings plc, an AIM listed
aquaculture biotechnology
company and a non-executive
director and chair of the
remuneration committee at
Primary Health Properties plc.
In addition, Ivonne is a
trustee of La Vida, a UK
registered charity which
supports grassroots projects
in the fields of education,
environment and health
throughout Latin America.
Ivonne holds a BSc in
Engineering from Universidad
Panamericana in Mexico and
an MBA from the Wharton
School of Business.
Ivonne chairs Creo’s
Remuneration Committee
and is a member of the Audit
Committee.
Non-Executive Directors
Executive Directors
70
Richard joined Creo
Medical as CFO in July
2016. Prior to joining Creo,
Richard was CFO of SPTS
Technologies, a UK-based,
global manufacturer of
semiconductor capital
equipment. In 2011, Richard
was part of the SPTS
Technologies’ management
team that, together with
Bridgepoint Capital, acquired
SPTS Technologies for $200m
from Sumitomo Precision
Products. In 2014, SPTS
Technologies was acquired
by Orbotech Ltd for more
than $350m.
Prior to joining SPTS
Technologies, Richard spent
seven years at KPMG in audit.
Craig was a founding angel
investor in Creo Medical and
became CEO in 2012.
Craig qualified with an MSc
in Electronic Engineering
from the University College
of North Wales. Craig’s early
career developed in the
Middle East, working with
large corporates delivering
complex commercial
projects. Craig has over 25
years’ experience in building
international businesses
from early stage through
to significant scale. In
January 1999, Craig joined
a start-up software and
hardware business where,
as COO, he was part of a
small team that grew the
company both organically
and through acquisition, from
a loss-making start-up to a
profitable business delivering
significant shareholder
returns and an exit in 2007.
Craig is a non-executive
director of I.Q. Endoscopes
Limited.
Chris is the founder of Creo
Medical and has over 25
years’ experience in medical
device innovation, design and
development.
Chris holds a personal chair
in the Medical Microwave
Systems Research Group at
Bangor University. Chris is a
Fellow of the Royal Academy
of Engineering, a Fellow of
the Learned Society of Wales,
a Fellow of the Institute of
Physics, and a Fellow of
the Institute of Engineering
and Technology. He is also a
Chartered Engineer, a
Chartered Physicist and
a Senior Member of the
Institute of Electrical and
Electronics Engineers.
Chris is a Royal Academy
of Engineering Visiting
Professor at UCL, and
an Honorary Professor in
the School of Medicine at
Cardiff University.
Chris was awarded the
Institute of Physics Katherine
Burr Blodgett Gold Medal
and Prize in 2019 for work on
Creo’s CROMA Advanced
Energy Platform technology
and the Inaugural Junkosha
Technology Innovator of the
Year prize and award in 2022.
Chris is a named inventor
and lead author on over
1,200 worldwide granted
patents, pending patents
and international journal
publications in the use of
electromagnetic energy for
medical applications.
David joined Creo as CCO
in August 2020, having
previously sat on Creo’s
Board as a Non-Executive
Director. David provides
leadership and strategic
direction for Creo’s
commercial divisions,
overseeing all strategic global
commercial activities.
David is an industry veteran
within the MedTech sector.
His experience encompasses
Gastroenterology, General
and Orthopaedic Surgery,
Pulmonology and Ear, Nose
and Throat.
Prior to joining Creo, David
was the President and CEO of
PENTAX Americas and M&A
Director of Hoya Corporation,
Pentax Life Care Division.
David brings significant
operating and commercial
experience, market
understanding and a proven
track record of achievement
to Creo. He has also
previously sat on multiple
MedTech boards over the
years. He was awarded
the American Society for
Gastrointestinal Endoscopy
President’s Award in 2010,
recognising exceptional
contributions to the society
and its mission.
71
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Corporate Governance Report
2023 Compliance
Statement
Introduction
In accordance with the London Stock Exchange’s
requirement for all AIM-quoted companies to adopt
a recognised corporate governance code, the board of
directors (Board) of Creo Medical Group plc (Creo, the
Company, we or us) adopted the Quoted Companies
Alliance (QCA) 2018 Corporate Governance Code (Code).
This statement provides a summary of how Creo
endeavours to comply with the 10 principles of the Code
taking into account Creo’s stage of development and its
available resources. In addition to the Code, Creo seeks
guidance from its professional advisors including its
solicitors, auditors, remuneration consultants and NOMAD
on recommended best practice for AIM companies at a
similar stage of development.
The QCA published an updated Corporate Governance
Code during 2023 (2023 Code). The 2023 Code will apply
to financial years beginning on or after 1 April 2024.
During 2024 we will review the 2023 Code to ensure that
Creo is best positioned to meet the revised guidance.
Creo’s mission is to improve patient outcomes by applying
advanced energy to the emerging field of surgical
endoscopy. We aim to deliver value to all stakeholders,
including:
▶ shareholders, by deploying capital against a well
thought through and measured business plan to
achieve long-term, sustainable growth;
▶ patients, by improving patient outcomes by bringing
advanced energy to flexible medical devices;
▶ customers, by developing products with the aim of
reducing procedure times and costs;
▶ business partners, by interacting in an ethical and
equitable manner; and
▶ employees, by offering rewarding careers with
support and encouragement to allow everyone to
fulfil their potential.
The Board’s role is to ensure that Creo is managed for
the long-term benefit of all shareholders. Our corporate
governance processes are designed to ensure control,
reduce risk, enhance long-term value generation and
underpin Creo’s long-term objectives.
The Code is constructed around 10 principles, taking
key elements of good governance and applying them in
a manner which is workable for the needs of a growing
company in pursuit of medium to long-term value creation
for shareholders.
Each principle is set out below along with a commentary
of Creo’s compliance. To the extent an explanation of
Creo’s compliance for one principle is relevant against
another principle, the explanation is deemed to apply to all
relevant principles.
Deliver Growth
1. Establish a strategy and business model which
promote long-term value for shareholders
Creo is an advanced energy medical device company
focused on the development and commercialisation of
minimally invasive medical 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 and powered by Creo’s proprietary
adaptive technology.
Creo’s strategy and business model is set out on pages
18 to 19 and includes details on how we aim to promote
long-term shareholder value. Creo continues to focus on
increasing the number of clinicians trained on the safe
use of its core technology and converting those clinicians
into regular users. In addition, as part of Creo’s Kamaptive
licensing programme, Creo has entered into agreements
with a number of partners under which it is adapting its
technology for use on third party robotic platforms with the
aim of creating additional income streams and enabling
third party products to benefit from Creo’s technology
and expertise. Our overall goal is for as many patients as
possible to have the opportunity to benefit from Creo’s
technology which, in turn, we expect to drive maximum
returns for shareholders.
Any new initiatives, partnerships or variations to Creo’s
core strategy are communicated in a timely manner
to shareholders via the RNS through ad-hoc releases,
trading updates and/or interim results announcements.
72
2. Seek to understand and meet shareholder needs
and expectations
Creo is committed to open communication with all
shareholders to ensure that its strategy, business model
and performance are clearly understood. Understanding
what shareholders and analysts think about Creo and,
in turn, helping shareholders and analysts understand
our business and addressing any specific concerns that
they may have, best places the Board to drive Creo’s
business forward.
Creo primarily communicates to its shareholders through
the RNS, shareholder presentations and via the Annual
Report and interim reporting process.
Institutional shareholders
The Directors engage with our institutional shareholders
regularly. The Directors meet with institutional and other
significant shareholders at least twice annually through the
results roadshow processes. This allows members of the
Board to understand their views and concerns and provides
a forum for the Executive Directors to update shareholders
on strategy, the Company’s performance and the evolution
of its business.
The Chair also meets with institutional shareholders
separately from the Executive Directors. In addition, our
Senior Independent Director and committee Chairs are also
available to meet with shareholders on request to discuss
specific areas of concern.
Private Shareholders
Creo’s AGM is the principal in-person forum for dialogue
between private shareholders and the Board. All
shareholders are invited to attend Creo’s Annual General
Meeting where they can meet with the Directors and
understand and exchange opinions on the direction of
the Company. The Executive Directors, Chair of the Board
and all other Directors routinely attend the AGM and are
available to answer questions raised by shareholders.
Copies of our Annual Report and the notice of AGM are
sent to all shareholders at least 21 days before the AGM.
Copies of these documents, along with other information
for shareholders, are also provided on our website.
The results of the AGM are released via the RNS as
soon as practicable after the conclusion of the meeting.
This announcement also provides, for information, details
of the total number of votes in favour of each resolution.
At our 2023 AGM all resolutions put to shareholders were
duly passed.
Along with broker analysis, Creo retains the services
of Proactive Investors and Edison Research to provide
research and commentary on the business.
3. Take into account wider stakeholder and social
responsibilities and their implications for long-
term success
Creo’s key stakeholders are our patients, customers,
employees and workers, business partners, suppliers,
shareholders and the wider communities in which we
operate. The Board takes into account wider stakeholder
and social responsibilities when making its decisions.
Our Annual Report includes examples of how the business
takes into account the needs of our wider stakeholders
when taking key decisions.
Creo is a socially responsible company with ESG at its core.
Details of our continuing sustainability efforts and the work
we have performed to meet our social responsibilities are
set out on pages 52 to 65.
4. Embed effective risk management, considering
both opportunities and threats, throughout the
organisation
The Board is responsible for maintaining a sound system
of internal financial and operational control and the
ongoing review of its effectiveness. The Board’s measures
are designed to manage, not eliminate, risk and, as such,
provide reasonable, but not absolute, assurance against
material misstatement or loss. Some key features of the
internal control system are:
▶ Management accounts information, budgets, forecasts
and business risk information which are regularly
reviewed by the Board;
▶ A rigorous quality management system which is
compliant with the ISO:13485 standard and which is
externally audited;
▶ Operational, accounting and employment policies which
are regularly reviewed and updated as appropriate;
▶ Clearly defined organisational and reporting structures
within the Company; and
▶ Established financial reporting and control systems
within the Company which are reviewed and challenged
by the Company’s Audit Committee.
Creo reviews its internal controls regularly to ensure that
they give the necessary flexibility to enable growth and the
delivery of long-term shareholder value while having the
correct checks and balances in place.
The Company maintains a risk register which is reviewed
regularly through a working committee within the business
and ultimately by the Board who appraise external and
internal threats and determine the necessary steps
required to be taken to mitigate those risks. Principal risks
and uncertainties that may affect the business are set out
in more detail on pages 46 to 50.
The business is supported by a number of professional
advisors, including its patent agent, solicitors and
legal advisors, product regulatory advisors, auditors,
accountants, NOMAD and its insurance brokers. All
advisors provide relevant advice to the business to allow
it to identify and mitigate risk accordingly.
73
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Corporate Governance Report continued
Maintain a Dynamic Management Framework
5. Maintain the Board as a well-functioning, balanced
share and option holdings to be significant and therefore
consider him to be an independent Non-Executive Director.
team led by the Chair
Creo has a strong and effective leadership team. Creo’s
Board comprises an Independent Non-Executive Chair,
four Executive Directors, and two further Non-Executive
Directors, one of which acts as Creo’s senior independent
Non-Executive Director. Brief biographies for each Board
member can be found on pages 70 to 71.
Executive Board Members
Craig Gulliford Chief Executive Officer
Richard Rees Chief Finance Officer
Prof. Christopher Hancock Chief Technology Officer
David Woods Chief Commercial Officer
Non-Executive Board Members
Charles Spicer Independent Non-Executive Chair
John Bradshaw Senior Independent Non-Executive Director
Ivonne Cantu Non-Executive Director
The Board delegates certain duties to an Audit Committee
and a Remuneration Committee, all of which operate within
clearly defined terms of reference and, where applicable,
in accordance with the Code. Further information on
our Board committees can be found on our website. The
Board does not currently have a Nomination Committee
or Disclosure Committee as matters which would be
considered by these committees are undertaken by the
Board as a whole.
The Company’s Articles of Association require one third
of its Directors to stand for re-election at each AGM, with
each Director to be re-elected at least every 3 years. The
Company’s Articles of Association are available on our
website. At our 2023 AGM, Ivonne Cantu, David Woods and
Richard Rees all stood for re-election. All resolutions were
duly passed.
Charles Spicer is Creo’s Independent Non-Executive Chair.
Charles has a limited shareholding in the Company, via his
SIPP, and a limited pre-IPO interest in the Company’s share
option scheme. The Board does not consider Charles’s
John Bradshaw is Creo’s senior independent Non-Executive
Director. John has a limited shareholding in the Company.
The Board does not consider John’s shareholding to be
significant and consider him to be an independent Non-
Executive Director.
Ivonne Cantu is Creo’s independent Non-Executive
Director. Ivonne has a limited shareholding in the Company.
The Board does not consider Ivonne’s shareholding to be
significant and consider her to be an independent Non-
Executive Director.
All Directors are encouraged to debate and use
independent judgement based on their respective
knowledge and experience on all matters affecting the
business. The Board feels that it has an appropriate balance
between independence, knowledge of the Company’s
technology, sector experience and professional standing to
allow it to discharge its duties and responsibilities well.
Nevertheless, and as reported in the Chair’s 2023
AGM Statement, the Company is actively recruiting
an experienced international medtech executive as an
additional independent Non-Executive Director who would
be suitable to succeed Charles Spicer as Chair.
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 situation or transactional conflict that are to be
considered at the next Board meeting and, if considered
appropriate, conflicts are authorised or Directors do not
attend or participate in such discussions. Directors are not
permitted to participate in such considerations or to vote
regarding their own conflicts.
The time commitment expected of the Directors is
commensurate with the size and complexity of a quoted
company and as necessary to properly perform their
duties. During the 12 months ending 31 December 2023, the
Directors attended the meetings set out in the table below:
Director
Charles Spicer
John Bradshaw
Ivonne Cantu
Craig Gulliford
Richard Rees
Christopher Hancock
David Woods
Scheduled Board Meetings
Ad hoc meetings*
Audit Committee
Remuneration Committee
4/4
4/4
4/4
4/4
4/4
4/4
4/4
9/9
7/9
7/9
9/9
9/9
7/9
7/9
6/6
6/6
6/6
–
1/3 (as an attendee)
3/3
3/3
3/3 (as an attendee)
6/6 (as an attendee)
2/3 (as an attendee)
–
–
–
–
* i.e. other sub-committee meetings or Board meetings where only a quorum is required
6. Ensure that between them the Directors have
the necessary up-to-date experience, skills and
capabilities
The Board considers that it contains an appropriate range
of skills, experience and knowledge, but is mindful of the
need to continuously review the needs of the business to
ensure that this remains true.
Creo’s Board members are of sufficient calibre to bring
independent judgement to issues of strategy, performance,
resources and standards of conduct, which are vital to
the future growth and success. The Board believes that
it operates in an open and constructive manner, working
effectively as a team.
Each Director is aware of the importance of keeping their
skills and capabilities up to date. The Board is kept up
to date on changes to the AIM rules briefings from the
Company’s nominated adviser, as well as other regulatory
and market matters on an ad hoc basis. In addition, the
Board has access to senior employees within the business
and is supported by a number of professionals (both
internal and external), including the Company’s General
Counsel, the CFO (who is a chartered accountant), the
Senior Independent Non-Executive Director (who is a
chartered accountant) and external advisors.
7. Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
The Board seeks to improve the ways in which it interacts
and the manner in which information is presented to it.
Creo’s reporting processes allow a consistent reporting
approach, thus aiding analysis by the Board of all matters
at hand.
While the Company does not currently have any formal
appraisal processes or evaluation criteria for Board
members, the Chairman and Non-Executive Directors
regularly discuss performance with members of the
executive team which, in the Board’s opinion, is sufficient
for the Company’s purposes currently. This will be kept
under review and the Board will consider whether formal
evaluations are appropriate in the future.
8. Promote a corporate culture that is based on ethical
values and behaviours
Ethical values and behaviours are at the heart of what
we do. The Board seeks to enshrine such ethical values
and behaviours throughout the conduct of all of Creo’s
activities. Our values are set out in our policies, our working
practices and our systems.
The Board seeks to treat all persons fairly and equitably,
through clearly defined parameters of operation. This
includes full compliance with safe working practices but
also maintaining and protecting a positive and supportive
working environment.
As part of the induction process, all employees are
provided with details of Creo’s policies and procedures
that promote and support ethical values and behaviours.
Creo’s HR team continually monitor and support employees
on their working practices and provide timely reminders
and updates on policies and procedures, including formal
online training. Breaches of Creo’s policies and procedures
are reported to relevant line managers and ultimately to the
Board to ensure that matters are dealt with in a timely and
fair manner. In addition, Creo has a whistleblowing policy to
allow and encourage all employees to bring matters which
cause them concern to the attention of certain persons
within the Company and, ultimately, to the attention of
the Chair of the Board.
The nature of our products requires a robust quality
management system which is third party audited to the
ISO:13485 standard. Underpinning this quality management
system are processes to ensure that necessary safeguards
are in place to ensure the integrity of this system and
accordingly the quality of the products under development.
9. Maintain governance structures and processes
that are fit for purpose and support good decision-
making by the Board
As Chair, Charles Spicer provides leadership to the Board
and is responsible for agreeing the agenda for Board
meetings, ensuring (with the Company Secretary) that
the Directors receive the information that they need to
participate in Board meetings in a timely fashion, and
that the Board has sufficient time to discuss issues
on the agenda, especially those relating to strategy
and governance.
Craig Gulliford, Creo’s Chief Executive Officer, is
responsible for the day-to-day leadership of Creo,
the management team and its employees. The Chief
Executive Officer is responsible, in conjunction with senior
management, for the execution of the Company’s strategy,
as approved by the Board, and the implementation of
Board decisions.
The Board is collectively responsible for the long-term
success of the Company. Its principal role is to provide
leadership within a framework of prudent and effective
controls, which enables risk to be assessed and managed.
The Board considers the management team’s strategic
proposals and, following a rigorous review, determines
strategy and ensures that the necessary resources are
in place for the management team to execute against
that strategy.
The Board seeks to meet regularly, but in any event holds
Board meetings on a quarterly basis, together with meeting
for an annual strategy event. In addition to the scheduled
meetings, members of the Board regularly hold informal
discussions with both Executive Directors and senior
operational managers of the Company to discuss strategic
business developments and other topics important to the
Company’s progress. Further, Board calls are held when
needed to allow the executives to update the Board on
specific matters and/or to approve specific actions for
which Board approval is required.
74
75
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Corporate Governance Report continued
Statement of Directors’ Responsibilities
The Board delegates certain duties to Board Committees,
all of which operate within clearly defined terms of
reference and, where applicable, in accordance with the
Code. Further information on our Board committees can
be found on our website.
The Board and its committees are provided with information
ahead of meetings to give time for review and analysis. For
each Board meeting an agenda is prepared and approved by
the Chair and followed. The Board maintains an ongoing list
of matters arising from the Board meetings which are then
followed up at subsequent meetings to ensure that matters
and decisions are being implemented.
The Board has adopted a schedule of specific matters
reserved for the Board to consider and, if thought
appropriate, decide upon. These reserved matters relate to:
▶ Strategy and oversight, including the approval of annual
budgets;
▶ Changes to the capital structure of the Company and
the corporate structure of the Group;
▶ Approval of financial statements and reports and any
capital spend above agreed limits;
▶ Approval of contracts outside of the ordinary course
of the business;
▶ Changes to Board and committee membership;
▶ Remuneration of Executive Directors and issues relating
to share options;
▶ Any delegation of authorities;
▶ Governance; and
▶ Approval of policies.
Build Trust
10. Communicate how the Company is governed
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
We seek to maintain dialogue with shareholders and other
relevant stakeholders through a number of channels. Our
Annual Report, full year and half year announcements are
the primary sources of information for shareholders. These
are supplemented by regular and appropriate RNS and
RNS Reach announcements.
The above, together with other relevant information on
the Company, can be obtained from our website.
The Company’s collegiate and open working environment
means that all employees are able to relay concerns to the
executive team directly. The Company has a whistleblowing
policy to allow and encourage all employees to bring
matters which cause them concern to the attention of
certain persons within the Company and, ultimately, to
the attention of the Chair of the Board.
The Company has engaged Walbrook PR to advise
on its communications strategy and to assist in the
drafting and distribution of regular news and regulatory
announcements. If shareholders or interested parties would
like to contact Walbrook regarding any communications,
they can be contacted at creo@walbrookpr.com.
Going Concern
For the year ended 31 December 2023 the Group made a
total comprehensive loss of £22.3m and, as at 31 December
2023, had cash and cash equivalents including cash on
deposit of £18.5 million with net assets of £59.8m. An
amount of £31.7m (after expenses) was raised in February
and March 2023 through a Share Placement and Open
Offer and £6.4m debt financing was raised post year end.
The financial statements have been prepared on a going
concern basis which the Directors believe to be appropriate
for the following reasons:
The Directors have considered the applicability of the going
concern basis in the preparation of the financial statements.
This included the review of financial results, internal budgets,
cash flow forecasts and covenant compliance for the period
of at least 12-months following the date of approval of the
financial statements (“the going concern period”).
The Directors have prepared a base case scenario which
is based on the Board approved forecast and assumes
an increase in revenues particularly from its core revenue
streams and Kamaptive licencing programme for the year to
31 December 2024 compared to the year ended 31 December
2023. In addition, the Directors have modelled a severe
but plausible downside scenario for the going concern
period. This scenario includes sensitivity analysis to delay a
proportion of future expected but not contracted growth in
revenue and assumes no savings in expenditure are made.
This downside scenario indicated that the cash resources
of the Group would be exhausted in around 12 months
from the date of approval of the financial statements, and a
breach of loan covenants will occur within 12 months, before
taking account of mitigating actions. The Directors have
identified several areas where a reduction in expenditure on
the Group’s research and development programmes and in
other areas could be made if such a scenario were to occur
to ensure the Group would be able to meet its liabilities as
they fall due for the going concern period without needing to
obtain waivers on the debt covenants.
The Group continues to make progress towards profitability
as we continue to seek to ramp up commercialisation.
The Directors have identified several potential sources of
funding which could provide sufficient cash to the business
to reach positive cash generation. At present these
sources of funding remain uncommitted and a substantial
proportion of the forecast revenues remains uncommitted
for the going concern period and beyond. The Directors
recognise that if no additional funding is secured during
the next 12 months or if the Group fails to secure additional
revenue contracts as forecast then the Group may breach
debt covenants and may not have sufficient resources to
meet its liquidity requirements and be unable to continue
as a going concern. The Directors recognise that these
conditions indicate the existence of a material uncertainty
which may cast significant doubt about the Group’s and the
Parent Company’s ability to continue as a going concern.
These financial statements do not include the adjustments
that would result if the Group and the Parent Company
were unable to continue as a going concern.
Statement of Directors’
Responsibilities in
respect of the financial
statements
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group financial statements
in accordance with UK-adopted international accounting
standards and the Parent Company financial statements
in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law).
Under company law, Directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group
and Parent Company and of the profit or loss of the Group
for that period. In preparing the financial statements, the
Directors are required to:
▶ select suitable accounting policies and then apply
them consistently;
▶ state whether applicable UK-adopted international
accounting standards have been followed for the Group
financial statements and United Kingdom Accounting
Standards, comprising FRS 101 have been followed for
the Parent Company financial statements, subject to
any material departures disclosed and explained in the
financial statements;
▶ make judgements and accounting estimates that are
reasonable and prudent; and
▶ prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group and Parent Company will continue in business.
The Directors are responsible for safeguarding the assets
of the Group and Parent Company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and Parent Company’s transactions and
disclose with reasonable accuracy at any time the financial
position of the Group and Parent Company and enable
them to ensure that the financial statements comply with
the Companies Act 2006.
The Directors are responsible for the maintenance and
integrity of the Parent Company’s website. Legislation
in the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
In the case of each Director in office at the date the
Directors’ Report is approved:
▶ so far as the Director is aware, there is no relevant audit
information of which the Group’s and Parent Company’s
auditors are unaware; and
▶ they have taken all the steps that they ought to have
taken as a Director in order to make themselves aware
of any relevant audit information and to establish that
the Group’s and Parent Company’s auditors are aware
of that information.
76
77
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Engaging with Stakeholders
Engaging with
Stakeholders
Section 172(1) Statement
The Board of Directors’ statement regarding section
172(1) of the Companies Act 2006 and our commitment
to transparent and constructive dialogue with all
our stakeholders.
The impact on each stakeholder group is carefully
considered by the Board of Directors (the “Board”).
The Board considers, in good faith, that it acts and has
acted at all times, both individually and collectively, in a
way that would be most likely to promote the success of
the Company for the benefit of its members as a whole
having regard to the matters set out in s172(1)(a-f) of the
Companies Act 2006:
(a) The likely consequences of any decision in the
long term:
The long-term success of the Company and the Group
as a whole is key when making strategic decisions.
The Company is developing and commercialising
technology and products to address long-term clinical
needs for which sizeable addressable markets have
been identified. See page 21 for further details of
these markets.
(b) The interests of the Company’s employees:
Creo’s employees are core to our success. As a
significant and critical factor, employee wellbeing and
development has continued as a priority during 2023.
Our People and Communities section on pages 58 to
61 provides further details on the investment that we
continue to make in our employees during the year.
(c) Fostering business relationships with suppliers,
customers and others:
The adoption of Creo’s core technology requires strong
customer relationships which allow Creo to provide
support through ongoing clinical education on the safe
use of our products. By developing these relationships
along with continuing engagement with key opinion
leaders (“KOLs”), we seek to ensure that we release
products to the market in a measured and controlled
manner, reducing the risk of misuse and ensuring our
products are customer sponsored for the long term (i.e.
through clinical education and peer support by KOLs).
Outside of our core technology, the Group is both
a customer and supplier of third party, Original
Equipment Manufacturer (“OEM”) and Own Brand
Labelling (“OBL”) products. It is essential that strong,
collaborative, and fair relationships with third party
partners is built on trust and mutual respect as their
success is our success.
Our Kamaptive licence partners are carefully selected
to ensure alignment of long-term goals are aligned and
that relationships can be built for the mutual benefit of
both parties.
(d) The impact of the Company’s operations on the
community and the environment:
We place a high value on our relationships with our
communities around the globe. We are acutely aware
of the impact our operations and products have on the
environmental and how we can mitigate this.
Our Sustainability Report on pages 52 to 55 provides
further details on the steps that we are taking to
minimise our footprint and to align our objectives with
wider global initiatives.
(e) Maintaining a reputation for high standards of
business conduct:
Creo’s mission is clear: to improve lives. As such,
ethical values and high standards of business
conduct are at the heart of what we do. We expect all
employees and representatives of the Company to
maintain the high standards that we set ourselves.
These values and business conduct requirements are
enshrined in our corporate governance, our policies,
our working practices and our systems (including our
third party audited ISO:13485 quality management
system). Please also see our Governance Report on
pages 72 to 76 for further details.
(f) The need to act fairly between members of
the Company:
The Board recognises that members have different
views and objectives. The Board always seeks to
ensure that its decisions are equitable and fair
as between the members of the Company whilst
balancing the interests of all stakeholders.
Employees
Key concerns
▶ Career development and remuneration
▶ Health & Safety and wellbeing
▶ Diversity
▶ Leadership
How we engage
▶ Our executive team, supported by a number of senior
managers, engage directly with all employees
▶ Team structures and organisation planning to facilitate
effective delegation and reporting
▶ Investment in IT solutions to allow a number of
communication channels, in particular to assist with
home working and cross office communications
▶ Employees are encouraged to take control of their
career development, in line with the longer-term
growth of Creo
▶ During the reporting period we have continued to
support, in many areas increased support, in respect of
the health and safety and wellbeing of all employees
▶ Our performance management processes and the
promotion a culture of continuous improvement
throughout the business
▶ All employees have the ability to raise grievances
and to escalate concerns through our
whistleblowing procedures
Stakeholder engagement
The Board takes into account the concerns of its
stakeholder groups in its discussions and decision making.
In discharging the duty set out in Section 172(1) of the
Companies Act 2006, the Board ensures that the impact
on each stakeholder group is carefully considered by
management when formulating all proposals requiring
Board approval.
Set out below are, in the Board’s view, Creo’s key
stakeholder groups, the key concerns of those groups and
how the Board seeks to engage with them.
Shareholders
Key concerns
▶ Deployment of capital against a clear strategy
▶ The development of our product portfolio and its
commercialisation
▶ Growth
▶ Corporate governance
▶ Sustainability
How we engage
▶ Regular communication with institutional and major
shareholders, not least to ensure that they understand
our strategy and business model
▶ Our Annual General Meeting (“AGM”) and any General
Meetings allow shareholders to meet and directly raise
concerns and have discussion with the Board
▶ Investor roadshows following the release of half and
full-year results
▶ Attendance by Directors and employees at a number
of investor and sector-specific conferences allow
interested parties to have direct dialogue
▶ Timely and appropriate releases of business information
via the RNS and RNS Reach
▶ Social media updates allowing an insight into the day-
to-day activities of the business and its operations
78
79
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Engaging with Stakeholders continued
Customers/end users
Key concerns
Business partners/suppliers
Key concerns
▶ Quality products that meet clinical needs
▶ Strong relationships
▶ Competitive pricing
▶ Clinical education and support
How we engage
▶ Creo engages with KOLs worldwide. Engagement
starts before prototype devices are made to ensure we
develop products that meet customers’ identified needs
and which they will ultimately use
▶ KOLs and clinicians provide feedback on our devices
through design processes, usability studies and
pre- clinical testing and analysis. This input assists
strategic decision making to ensure capital is deployed
on concepts and products that offer the greatest
impact for our customers, their patients and ultimately,
Creo’s business
▶ Creo’s Clinical Education Programme provides
guidance and training on the safe use of products and
also real-time feedback from the initial use of devices
▶ Creo’s expanded direct sales team offers support
to all customers and users, as well as support to
distribution partners
▶ Clear and ongoing dialogue to allow effective business
planning
▶ Financial strength
▶ Regulatory compliance
How we engage
▶ We interact in an ethical and equitable manner with all
business partners and suppliers
▶ We strive to have open, constructive and effective long-
term relationships through open engagement, regular
meetings and dialogue, and recognise that this is
beneficial for the whole supply and product ecosystem
▶ Have dedicated internal resource to ensure we are
able to directly engage with regulators in a timely and
professional manner
Community and the environment
Key concerns
▶ Safety
▶ Sustainability
▶ Community contribution
How we engage
▶ We actively seek to engage with local government
networks, with the intention of making a positive
economic impact on the region
▶ Where possible, we try to source locally to support
our community
▶ Our Pioneer Clinical Education Programme provides
our clinical community the opportunity to further their
practice which, in turn, benefits their patient community
and thus society as a whole
Key decisions
Two example decisions taken during the year together with
a summary of how the Board has taken into account the
factors set out in Section 172 of the Companies Act 2006,
are set out below:
Decision 1: 2023 Fundraising
Actions
▶ Undertook a funding round via a conditional placing
and subscription of new Ordinary Shares to certain
institutional and other investors, together with an open
offer to qualifying shareholders, each at a price of 20
pence per share.
▶ Upon completion, issued new Ordinary Shares in the
capital of the Company.
▶ Utilised internal and external resource to negotiate and
prepare the transaction.
Key stakeholder group considerations
▶ Shareholders – balanced the Company’s need and the
timing to raise funding against the dilutive impact any
such funding.
▶ Employees – considered the impact on continuing
to provide employment opportunities and rewarding
careers for employees.
▶ Customers/End users – consider the overall objective
of Creo to bring advanced energy to endoscopy and the
need to ensure that products can be provided to users
to improve lives.
▶ Partners, Customers and Suppliers – considered the
need to ensure that overall relationships are maintained
and that Creo can meet its obligations thereunder.
Decision 2: Salary review to mitigate cost of
living crisis
Actions
▶ Overall review of salaries of staff and implement
proportionate increases to ensure that those employees
below the median salary range received enhanced
salary increase to mitigate the impact of the UK cost of
living crisis.
Key stakeholder group considerations
▶ Shareholders – correct deployment of capital to
encourage employee retention.
▶ Employees – considered the need to balance employee
expectations of salary increases whilst ensuring that
the cost of living issues for many employees were being
adequately addressed.
▶ Community– reinforced Creo’s commitment to be a
fair employer in the area and mitigated cost of living
impacts in for those employees who reside within the
local community.
On behalf of the Board
Richard Rees
Director
14 May 2024
80
81
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Audit Committee Report
Audit Committee
Report
Introduction
The Audit Committee of Creo Medical Group plc (the
“Audit Committee”) is responsible for monitoring the
effectiveness of Creo’s financial reporting, internal controls
and risk management systems and processes, as well as
the effectiveness and independence of Creo’s external
auditors. This report summarises the Audit Committee’s
activities undertaken during the financial year ended
31 December 2023.
Members of the Audit Committee
John Bradshaw is Chair of the Audit Committee. John is a
chartered accountant with more than 25 years’ experience
as a chief financial officer with venture capital backed and
listed companies. The Board is satisfied that John is the
Audit Committee member with recent and relevant financial
experience to enable him to perform the role of Chair.
Charles Spicer and Ivonne Cantu are the other members
of the Audit Committee. The Board considers that the
Audit Committee members have sufficient experience and
competence to understand, analyse and, when necessary,
challenge the management accounts and public financial
statements of the Company. Further, the Board is also
satisfied that the Audit Committee as a whole, including
invited attendees as necessary, has a relevant mix of
experience and competencies to assess any sector related
issues which the Group may face.
Biographies for each member of the Audit Committee can
be found on page 70.
Role and responsibilities
The Audit Committee has the primary responsibility of:
The role and responsibilities of the Audit Committee are
clearly defined in terms of reference (“ToR”). The ToR
comply with the AIM market admission rules and are
reviewed annually by the Audit Committee and external
advisors to ensure they are reflective of current market
practice and guidance and remain relevant for the
Company. The ToR were last updated on 5 May 2021 and
are available to download from Company’s website. A copy
of the TOR will be made available on request from the
Company Secretary.
The Audit Committee maintains an agenda to ensure that
all matters for which the Audit Committee is responsible
are considered during the year. The Audit Committee met
6 times during 2023 with all 100% attendance from all
members, with the Group’s auditors being present at 4 of
the meetings. The main matters considered by the Audit
Committee during 2023 include:
▶ Financial statements and annual report review
▶ Consideration and review of the external audit report
and management representation letter
▶ Consideration of key accounting judgements and
estimates including Goodwill Impairment
▶ Review of the interim results
▶ Going concern assessment and review
▶ Review of the 2023 audit plan
▶ Risk management and internal control systems review
▶ Auditor engagement and meetings (with and without
executive representation present) to discuss the above
▶ Review of the Audit Committee terms of reference
▶ Review of the Company’s Anti-Bribery and Corruption
▶ Reviewing and monitoring the integrity of the
policy and training procedures
financial statements of the Company (including
annual and interim financial statements and results
announcements) and the underlying accounting
principles and practice;
▶ Reviewing internal controls and risk
management systems;
▶ Reviewing changes (if any) to accounting policies;
▶ Reviewing and monitoring the extent of the non-audit
services undertaken by external auditors; and
▶ Advising on the appointment of and liaising with the
Company’s auditors.
▶ Review of the Company’s whistleblowing policy
▶ Review of the Company’s Sunshine
reporting procedures
All activities of the Audit Committee are reported at
subsequent Board meetings, with the minutes of each
meeting being provided to all Board members.
Risk management and internal controls
The Group has established a framework of risk
management and internal control systems, policies
and procedures. The Audit Committee is responsible
for reviewing the Group’s risk processes along with the
Group’s internal control framework. The Audit Committee
is satisfied that the risk and internal controls framework are
operating effectively.
The Audit Committee is not responsible for the
identification of key risks or the review of the adequacy
of arrangements to mitigate those risks, which remains
the responsibility of the Board. Page 46 sets out further
details on the Group’s approach risk identification
and management.
John Bradshaw
Chair of the Audit Committee
Auditors
The Audit Committee monitors the relationship with the
Group’s auditors to ensure that independence, objectivity
and effectiveness are maintained. The Audit Committee
has oversight of the provision of non-audit services by
the external auditors which is underpinned by a policy
requiring Audit Committee approval for any such services.
No non-audit services were provided to the Group by the
Group’s auditors in 2023.
In the usual course, the Group’s auditors prepare an audit
plan for the full-year financial statements. The plan sets out
the scope of the audit, areas of special focus, materiality
and audit timetable. The audit plan is presented to the
Audit Committee for review and agreement prior to any
audit work commencing. After the audit of the annual
financial statements, the findings of the audit are presented
to the Audit Committee for consideration. This presentation
includes details of all fees paid by the Group to the auditors
during the reporting period along with confirmation of
the auditor’s independence. Time is provided during the
meeting without executive representation present to allow
the auditors to raise any concerns directly with the Audit
Committee. No such concerns were raised in the 2023
audit presentation.
The Group does not currently have an internal audit
function. The need to establish such a function remains
under review, and the Audit Committee is satisfied
that this function is not required at this stage in the
Company’s development.
82
83
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Directors’ Report
Directors’ Report
The Directors present their report together with the audited
consolidated financial statements for the 12 months to
31 December 2023. These will be laid before the shareholders
of the Company at the next Annual General Meeting (“AGM”).
Creo Medical Group plc (admitted to the AIM market of
the London Stock Exchange (LSE: CREO), is incorporated
in England and Wales with registration number 10371794.
The Company’s registered office is at Creo House, Unit 2
Beaufort Park, Beaufort Park Way, Chepstow, Wales, United
Kingdom NP16 5UH.
Principal activity
The principal activity of the Group during the period continued
to be that of research and development and the manufacture
and sale of medical devices and instruments. The principal
activity of the Company is that of a holding company.
Results and dividends
The Group results for the 12 months to 31 December 2023
are set out in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income on page 107.
The Directors do not recommend the payment of a dividend.
Review of the period
A summary of the Group’s progress and development is set
out in:
The Chief Executive’s Statement on pages 8 to 11;
The Chief Technology Officer’s Statement on pages 26 to 27;
The Chief Commercial Officer’s Statement on pages
14 to 17;
The Chair’s Statement on pages 68 to 69; and
The Financial Review on pages 42 to 44.
Each of which form part of the Annual Report. This analysis
includes a commentary on the position of the Group at the
end of the reporting period, an indication of likely future
developments in the business of the Group including steps
being taken in respect of the Group’s overall strategy,
details of the commercial activity undertaken during the
reporting period, details of the Group’s activities in the field
of research and development and the steps being taken to
commercialise the technology being developed.
Directors
The Directors who held office during the year and up to the
date of approval of the financial statements were as follows:
Executive Directors
Craig Jonathan Gulliford
Professor Christopher Paul Hancock
Richard John Rees
David Gerard Woods
Non-Executive Directors
Charles Alexander Evan Spicer
John Bradshaw
Ivonne Maria Gloria Cantu
Directors’ interests and indemnity
arrangements
The Directors’ interests in the shares of the Company are
disclosed in the Remuneration Report on pages 86 to 97.
In accordance with Section 234 of the Companies Act
2006 and as permitted by the Articles of Association of the
Company, the Company maintained insurance throughout
the year for its Directors and officers against the
consequences of actions brought against them in relation
to the execution of their duties for the Company.
No Director had, during or at the end of the year, a material
interest in any contract which was significant in relation
to the Group’s business except in respect of service
agreements and share option awards and as disclosed in
the Directors’ Remuneration Report on pages 86 to 97.
The Company has not granted any indemnities to any of its
Directors against liability in respect of proceedings brought
by third parties.
Share capital
Details of the Company’s issued share capital are shown
in Note 21 to the consolidated financial statements on
page 141.
As at 31 December 2023, 361,251,418 fully paid Ordinary
Shares were in issue. The share capital comprises one class
of Ordinary Shares and these are admitted on the AIM
market of the London Stock Exchange.
All shares are freely transferable and rank pari passu for
voting and dividend rights.
Political contributions
The Company made no political donations or incurred
any political expenditure during the year.
Disclosure of information to auditors
The Directors who held office at the date of approval of
this Directors’ Report confirm that, so far as they are each
aware, there is no relevant audit information of which
the Company’s auditors are unaware; and each Director
has taken all the steps that they ought to have taken as
a Director to make themselves aware of any relevant audit
information and to establish that the Company’s auditors
are aware of that information.
Other information
An indication of likely future developments in the business
can be found in the Strategic Report on page 11.
Significant events which have occurred since the end of
the financial year have been included in Note 27 of the
consolidated financial statements on page 144. Streamlined
Energy & Carbon Reporting (“SECR”) has been disclosed in
the Sustainability Report on page 63.
Auditors
PricewaterhouseCoopers LLP (“PwC”) were reappointed
as auditors at the last Annual General Meeting of the
shareholders, in accordance with Section 489 of the
Companies Act 2006.
On behalf of the Board
Richard Rees
Director
Creo House
Unit 2, Beaufort Park
Beaufort Park Way
Chepstow,
Wales
NP16 5UH
14 May 2024
Substantial holdings
As at 31 December 2023, shareholders holding more than
3% of the share capital of Creo Medical Group plc1 were
as follows:
Name of shareholder
Canaccord Genuity
M&G Investments
Baillie Gifford
Finance Wales Investments
Amati Global Investors
AXA Framlington Investment
Managers
Hargreaves Lansdown,
stockbrokers (EO)
River Global Investors
Number
of shares
46,982,275
33,612,732
23,421,836
19,776,727
16,998,915
16,081,958
15,639,270
14,375,697
Voting
rights
(%)
13.01
9.30
6.48
5.47
4.71
4.45
4.33
3.98
1
Information obtained from an analysis of Creo Medical’s share register
(dated 31 December 2023) undertaken on behalf of Creo Medical by
Equiniti—RD:IR.
Director Shareholdings (excluding options)
as at 31 December 2023
Name of Director
Charles Spicer
John Bradshaw
Ivonne Cantu
Craig Gulliford
Richard Rees
Prof. Chris Hancock
David Woods
Total
Number
of shares
308,530
1,371,082
125,000
1,638,320
2,813,756
4,810,206
440,255
11,507,149
Voting
rights
(%)
0.09
0.38
0.03
0.45
0.78
1.33
0.12
3.18
Save as referred to above, the Directors are not aware of
any persons as at 31 December 2023 who were interested
in 3% or more of the voting rights of the Company or could
directly or indirectly, jointly or severally, exercise control
over the Company.
Financial risk management objectives
and policies
The Company’s financial risk management objectives and
policies are shown in Note 18 to the consolidated financial
statements on pages 135 to 137. The main risks arising from
the Company’s financial instruments are interest rate risk,
exchange rate risk, credit risk, and liquidity risk, which are
continuously monitored by the Board.
84
85
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report
▶ agreeing annual bonus measures and targets for 2023
for the Executive Directors
Further information on the operation of the JSOP is included
in the table below on page 87.
Statement from the Chair
of the Remuneration
Committee
Dear Shareholders
On behalf of the Remuneration Committee (the “Committee”),
I am pleased to provide an overview of our work for the year
ended 31 December 2023, including the key decisions we have
taken. This report covers the activities of the Remuneration
Committee during the year, remuneration decisions and
determination of reward outcomes for 2023, as well as plans
for the application of our remuneration policy in 2024.
Introduction
The Remuneration Committee’s principal objective is to
implement a remuneration policy which promotes the long-
term success of the Company and is aligned to the interests
of the Company’s shareholders and other stakeholders
including customers, patients and employees.
2023 was a year of strong progress towards the Company’s
strategic objectives of increasing commercial adoption of its
core suite of products, developing its robotics partnerships,
and delivering on its financial objectives towards profitability
and cash generation.
Commercial adoption of the Company’s core products
progressed significantly with the number of users reaching
175, a 120% increase over 2022 and the number of users
in the pipeline growing from 450 to 650. Other important
commercial milestones included the adoption of the
Speedboat Inject device by The Royal Oldham Hospital
which has become a high-volume site, the FDA and CE
clearance plus subsequent first use of SpeedBoat Ultra
Slim in late 2023, and the selection of Speedboat Inject
by the National Institute for Health and Care Excellence
(“NICE”) for guidance. In the area of robotics, the Company
successfully delivered against its partnership milestones
with Intuitive and CMR and developed new avenues for
future collaboration. Financially, the Company’s progress
translated into an increase in revenues from Creo’s core
products of c.150%, and an increase in total Group revenues
of 13% which combined with strict cost control reduced the
Company’s operating loss against the prior year by 10%, in
line with the target set.
Activities of the Committee during the year
Aside from the Committee’s regular annual programme of
work, in 2023 the Committee reviewed the operation of the
long-term incentive arrangements and introduced forward-
looking performance criteria in the LTIP as performance
conditions for vesting. Historically, LTIP grants had been
based on pre-grant performance conditions with the
measures and targets consistent with those used for the
annual bonus. In the Remuneration Report for 2022, the
Committee set out its intention to transition to an LTIP which
incorporates forward-looking performance targets. This
represents a natural evolution of the LTIP as the Company
progressed into commercial phase. The move also addresses
feedback received from a number of our main shareholders
during the year.
2023 was a year of transition in the implementation of
the new LTIP with awards made in relation to both (i) the
2022 performance year (the “2022 LTIP”) (based on pre-
grant performance assessment) and (ii) the 2023 grant
incorporating forward-looking performance targets for
the three years commencing 1 January 2023 (the “2023
LTIP”). Performance criteria for the 2023 LTIP grant, which
vests over 3 years and is subject to a 2-year holding period
post vesting, include targets for revenue, cash, and total
shareholder return (“TSR”) relative to the Company’s peer
group. The 2022 award was the final grant to be assessed on
the basis of pre-grant performance conditions and following
this transitional step it is currently intended that all LTIP
awards going forward will be based on forward-looking
performance conditions.
During the year the Committee initiated a further holistic
review of the Company’s share-based incentive programme
including an assessment of historic grants in place to ensure
that the programme is effective in aligning the incentives
of the Executive Directors and senior management with
shareholder interests for the Company’s next phase of
growth. This work is ongoing and the Committee plans to
engage with major shareholders on this matter in the course
of FY24.
Other areas of focus for the Committee in 2023 were:
▶ discussion and approval of the Executive Directors’
remuneration outcomes for 2023
▶ review and benchmarking of the Executive Directors’
remuneration
▶ approval of salary increases for the Executive Directors
alongside the wider workforce
▶ agreeing LTIP targets for the 2023 LTIP grant
▶ review and approval of the 2022 and 2023 LTIP
award levels
▶ review of the remuneration arrangements across
the workforce to ensure they continue to inform our
approach to setting and implementing our Executive
pay policy
The Remuneration Committee is very grateful for the input
we received from shareholders during the year.
Overview of the remuneration policy
The Remuneration Committee determines pay for the
Company’s four Executive Directors. The Committee applies
a remuneration policy including four components: salary,
benefits and pension, an annual bonus subject to annual
performance targets and an annual share-based long-
term incentive award subject to three-year performance
targets. In implementing the policy, the Committee seeks
to ensure a close link between pay outcomes, Group and
individual performance, and shareholder value creation.
In determining pay the Committee seeks input from its
external remuneration adviser and takes into consideration
remuneration for the broader Group and feedback received
from shareholders.
The annual bonus scheme for Executive Directors allows
for up to 100% of salary to be paid based on the successful
delivery against financial, commercial, strategic and ESG
objectives. In 2023 financial objectives included revenue,
cash and cost control; commercial objectives included the
market adoption of Creo Medical’s core products measured
by the number of regular users; and strategic objectives
included delivery against milestones for the Company’s
robotics partnership programme. Further detail on the 2023
measures and targets is presented below.
Creo Medical seeks to promote an entrepreneurial culture
and aligned to this culture, the Company encourages
share ownership including through share-based incentive
arrangements for senior management delivered through
a Long Term Incentive Plan (“LTIP”), and through other
share-based plans across the Group including an all-
employee HMRC approved SIP. Under the remuneration
policy Executive Directors can normally be awarded annual
share-based incentives of up to 100% of salary via the LTIP.
The remuneration policy encourages the Executive Directors
to build and maintain a shareholding equivalent to at least
100% of salary. All four Executive Directors currently meet
this criteria.
The Company’s LTIP is operated through a joint share
ownership plan (“JSOP”) structure implemented in 2020,
whereby the participant and a trustee jointly own the
beneficial interest in the LTIP shares under award.
The participant is entitled to any value above a share price
hurdle set relative to and higher than the share price on the
date of award. The trustee is entitled to the value below the
hurdle. The participant also has a nominal cost option over
the trustee interest. Both elements vest after 3 years and
3 months subject to continuing employment.
Up to 2022, LTIP awards were based on pre-grant
performance conditions on the same basis as the annual
bonus, that is by reference to delivery against certain targets
in the financial year prior to grant with vesting then subject
to continuing employment. The award was priced relative to
the share price on the grant date and was subject to a
3 year and 3 month vesting period incentivising
management to deliver long term share price accretion
and shareholder returns.
In 2023 the Committee made a change to the LTIP policy
by incorporating forward-looking performance criteria as
conditions for vesting and by fixing the normal annual grant
level at a consistent rate as a percentage of salary. Further
details of the LTIP and of the other elements of the Directors’
remuneration policy are set out on pages 89 to 92.
Salary and pension
Salaries for Executive Directors were unchanged between
January 2020 and June 2023 despite the significant rise
in inflation experienced in the last 2 years. During this
period the business has developed materially, moving into
commercial phase, scaling up manufacturing and entering
into new partnerships with world-leading robotic surgery
players. Taking this into consideration, the Committee
conducted a review of the Executive Directors’ pay informed
by a benchmarking exercise facilitated by the Company’s
external remuneration adviser. As a result of the review the
Committee approved salary increases for the Executive
Directors effective 1 July 2023. At the same time adjustments
were made to the Executive Directors’ pension benefits to
align them more closely with the rest of the workforce.
The CEO’s salary was increased from £280,000 to £330,000
(an increase of 17.9%) to take account of a combination of
factors including: his performance in the role, his increased
responsibility due to the growing complexity of the Group,
the absence of any salary increase since 2020, his significant
contribution to the leadership of Creo Medical since the
Company’s IPO in 2016, and taking into account the levels
of pay in companies of a similar size in the company’s peer
group. His pension contribution was reduced from 10%
to 7.5% of salary as a step to align it with the rest of the
workforce. The CFO’s salary was increased by 5% from
£215,000 to £225,750 and his pension contribution reduced
from 10% to 7.5% of salary effective 1 Jan 2024. The salaries
of the CTO and CCO were increased by 3% to £221,450 and
US$288,400 respectively.
Annual bonus for 2023
The Remuneration Committee assessed the performance
outturn against the objectives set at the start of the year
to determine the annual bonus for the Executive Directors.
Details on the performance objectives and outcome are set
out in the table below. The Committee reviewed the outcome
for each of the metrics and agreed that the formulaic
output of 65% of maximum delivery against objectives
was an appropriate reflection of the Executive Directors’
performance and therefore approved a bonus of 65% of
salary. No discretion was applied.
86
87
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Annual Bonus – Metrics Used and Weighting
METRICS
Financial
▶ Total revenue and revenue from Creo core products
▶ Expenditure control
▶ Cash
WEIGHTING
FORMULAIC OUTPUT
60%
Partially met
Commercial adoption of Creo core products
12%
Partially met
▶ Number of regular users
Strategic
▶ Delivery against robotics partnership milestones
▶ FDA Clearance of Ultraslim Speedboat and Spydrblade
ESG
▶ Delivery against ESG programme goals
Total
LTIP
12%
Met in full
5%
Met in full
100%
65%
As set out above, the total LTIP award for Executive Directors in 2023 consisted of an award granted in relation to the
performance in 2022 mirroring the annual bonus scheme, and a second award equivalent to 100% of salary linked to
performance over a 3 year period commencing 1 January 2023. The LTIP award made in relation to the 2022 performance
is equivalent to 95% of salary reflecting delivery against the 2022 KPIs as set out in the table below and previously
disclosed in the 2022 Remuneration Report.
METRICS
Financial
▶ Total revenue and revenue from Creo core products
▶ Expenditure control
WEIGHTING
FORMULAIC OUTPUT
30%
Met in full
Commercial adoption of Creo core products
30%
Nearly met in full
▶ Number of regular users and clinical sites using core Creo technologies
Strategic
30%
Nearly met in full
▶ Signing of robotics partnership agreements and delivery against milestones
▶ Acquisition integration
ESG
▶ Delivery against ESG programme goals
Total
88
10%
Met in full
100%
95%
Alignment of the Executive Directors’
remuneration with wider workforce pay
The performance of the Company during the year would
not have been possible without a skilled and motivated
workforce. Creo Medical We recognises that it is critical
for our employees to be paid fairly and feel incentivised
and valued. The Committee reviewed and discussed the
approach to reward for all employees across the business,
and this informed the Committee’s approach when
reviewing the Executive Director remuneration policy
and how it will be implemented. The alignment with the
Executive Director’s remuneration and with the Company’s
strategy, targets and culture. The Committee seeks to
ensure that measures, targets and remuneration structures
are cascaded through the business as appropriate and
that the culture of pay for performance is reflected across
the organisation.
Due to cash constraints in the business, the Company
did not implement a Company-wide salary increase in
2022, and only targeted increases were implemented to
address the cost-of-living crisis for those most in need.
There was a pressing need to redress this in order to retain
and motivate our team. In 2023 the Company conducted
a salary review across the Group and implemented tiered
salary increases to reflect the inflationary environment
and cost-of-living pressures, providing more support to
those employees on lower salaries and awarding lower
salary increases to those on higher salaries including the
Executive Directors. In addition, adjustments were made to
address increased responsibilities and changes in roles as
normal. The average salary increase across all employees
in the Group was 6.1% (FY2022 3.7%).
The Company has in place a bonus plan for senior
employees. In 2023, 33% of employees received a bonus
based on the achievement of objectives aligned to the
Company’s overall targets. Widespread share ownership
is an objective of the Company as it rewards our team for
the successful execution of our strategy across several
years and aligns their interests more closely with our
shareholders and c.19% of employees participated in share
option plans at 31 December 2023. In addition, 62% of
eligible employees participated in the UK HMRC approved
SIP during the year.
Planned activities for 2024
We set out below the activities which the Committee
expects to undertake next year:
▶ our normal oversight of the annual remuneration cycle
including approving salary increases, approving the
annual bonus and LTIP targets for 2024 and measuring
performance against the bonus targets;
▶ review of the Company’s LTIP scheme and awards
in place to ensure that we attract and retain talent,
aligning incentives with shareholders’ interest for the
next phase in the Company’s growth
▶ review of Executive Directors remuneration
▶ review of wider workforce pay policies and practices
and feedback from workforce engagement; and
▶ review of the Directors’ remuneration policy and
engage with investors as appropriate
Directors’ remuneration policy
The principal objective of the Directors’ remuneration
policy is to promote the long-term success of the Company.
It is guided by the following key principles:
▶ Competitive and fair - remuneration packages should
be competitive but not excessive when compared
with a relevant peer group and should be sufficiently
attractive to recruit, retain and motivate individuals of
the requisite calibre to deliver long-term success;
▶ Simple - remuneration packages should be clear and
communicated transparently
▶ Aligned to performance and stakeholder interests -
a significant proportion of remuneration should be
based on performance-related components with
potential rewards subject to the achievement of
challenging performance targets linked to the Group’s
KPIs and to the best interests of shareholders and
other stakeholders
▶ Strategic alignment - the Company’s remuneration
arrangements are designed to support Creo Medical’s
business objectives and strategy, to align with the
Company’s values and entrepreneurial culture, and to
ensure a close link between pay outcomes and Group
and individual performance.
In designing and implementing the remuneration policy,
the Remuneration Committee adheres to principles of
corporate governance appropriate for an AIM company
of Creo’s size and maturity as set out in the QCA Code.
The Committee also considers the views of shareholders
on pay and the feedback received informs its decision-
making. The current Directors’ remuneration policy is
shown below.
89
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Key Elements of Policy for Executive Directors
COMPONENT
PURPOSE AND
LINK TO STRATEGY
OPERATION
MAXIMUM
OPPORTUNIT Y
LINK TO
PERFORMANCE
COMPONENT
PURPOSE AND
LINK TO STRATEGY
OPERATION
MAXIMUM
OPPORTUNIT Y
LINK TO
PERFORMANCE
Although there
are no formal
performance
conditions,
any increase
in base
salary is only
implemented
after careful
consideration
of individual
contribution
and
performance.
Increases will normally
be broadly in line with
the range awarded (in
percentage of salary terms)
to the wider workforce.
Increases above this
level may apply to take
into account individual
circumstances, e.g. a
change in scope or
responsibilities of the role, a
change in market practice,
a change in the size/
complexity of the business,
or to reflect development
and performance in role.
Internal and external
reference points including
market salaries for
comparable organisations
may also be taken into
account.
Not applicable
None
7.5% of salary
None
Base
Salary
To provide a
competitive
base salary
to attract
and retain
high calibre
executives
Reviewed annually or on a
significant change of responsibilities
and typically takes effect from 1
January.
Salaries are determined by reference
to the skills, role and personal
performance of the individual.
The Committee takes into account
external market data and pay and
employment conditions elsewhere
in the Group when considering
increases to base salary levels.
Other benefits may include car
allowance, health-related life
= cover and death in service
insurance.
For external and internal
appointments or relocations, the
Company may pay relocation costs.
Benefits
Pension
Annual
bonus
To provide
broadly market
competitive
benefits as
part of the total
remuneration
package
To aid
recruitment and
retention by
providing long-
term savings
to support
retirement
planning
To incentivise
the delivery
of annual
objectives
Capped at 100% of salary.
Awards are based on performance
measured over one year.
Pay-out levels are determined by the
Committee after the year end based
on performance against pre-set
targets.
Pay-outs are
based on an
assessment of
performance
against defined
financial,
commercial,
strategic
and ESG
objectives.
Capped at 100% of salary.
Awards are
generally
made annually.
Awards are
set as a fixed
percentage of
salary. Vesting
of awards is
conditional
on delivery
against
performance
conditions over
a 3 year period.
Long-
term
incentive
To drive
superior
performance of
the Company
and delivery
of medium
to long-term
objectives, aid
retention and
align Directors’
interests with
those of the
Company’s
shareholders.
The Creo Medical LTIP is made up
of two elements: (i) a JSOP award
subject to a share price hurdle and
(ii) a nominal cost option over the
trustee interest in the JSOP shares.
Both elements vest after 3 years
and 3 months subject to continued
employment.
The nominal cost option gives
the participant the opportunity to
receive the value of the underlying
shares, e.g. even if the share price
hurdle is not reached.
Following vesting:
▶ JSOP award may be split and
resulting shares sold
▶ Employee may exercise nominal
cost option over remaining
trustee shares
Key features of the JSOP element:
▶ Intended to deliver value to the
participant (on a tax-efficient
basis) if the share price exceeds
a specified hurdle, e.g. £0.90 for
the 2023 awards.
▶ Employee, together with a third
party (the ‘co-owner’ e.g. an
employee trust) jointly acquires
the entire beneficial interest
in shares.
▶ The co-owner and the employee
each sign a ‘joint ownership
agreement’ setting out how the
proceeds of sale will be split
between them when the shares
are eventually sold.
▶ The value below the hurdle is not
tax advantaged and any amount
below this will incur full NI and
PAYE. Any value above the
hurdle will be tax advantaged.
▶ The Company may settle any
upfront PAYE and NIC liabilities
associated with participation
in the JSOP on behalf of the
directors with the cost to the
Company recovered from any
future LTIP option exercises.
90
91
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
Consideration of employment conditions
elsewhere in the Group
In setting remuneration for the Executive Directors, the
Committee takes note of the overall approach to reward for
employees in the Group. The Global HR Director updates
the Remuneration Committee annually on remuneration
arrangements and trends across the Group.
The main principles of remuneration are cascaded through
the Company, taking into account seniority and market
practice. Key features include:
▶ the Company aims to provide market competitive levels
of remuneration across the workforce in order to recruit
and retain high calibre employees at all levels;
▶ the Company aims to sustain and promote a culture
of share ownership. Share-based long-term incentive
awards are made to a significant proportion of
employees. In addition, UK employees have the
opportunity to participate in HMRC-approved employee
share scheme arrangements (with similar plans subject
to local tax and regulatory environments offered to all
employees worldwide); and
▶ senior managers participate in annual bonus
arrangements based on Group and personal
performance. At senior levels, the proportion of
remuneration which is long-term is higher than it is for
other colleagues and more ‘at risk,’ with an increased
emphasis on performance-related pay and share-based
remuneration. Around one-third of employees participate
in an annual discretionary bonus plan with bonus
potential determined based on delivery against Company
and personal objectives.
The Remuneration Committee regards the widespread use
of share-based arrangements as a key component of the
remuneration policy. This ensures employees are offered
the opportunity to participate in the long-term success of
the business while aligning their interests to those of our
shareholders. Since before the Company’s admission to
AIM in 2016 we have had an LTIP for staff. The Creo Medical
LTIP implemented in FY2020 is currently intended to be
the primary vehicle for making long-term incentive awards
using the CSOP scheme for awards to most staff and the
JSOP scheme used for the Executive Directors and other
senior managers.
Service contracts
Executive Directors are employed under contracts which
may be terminated by either party on no more than 12
months’ notice.
Remuneration policy for the Chair and the
Non-Executive Directors
The Chair and the Non-Executive Directors are employed
on letters of appointment which have an initial term of 1
year and then which may be terminated at any time by
either party with 3 months’ notice.
The remuneration of the Chair is set by the Remuneration
Committee and the remuneration of the Non-Executive
Directors is set by the Executive Directors of the Board. No
individual is involved in the determination of their own pay.
Neither the Chair nor the Non-Executive Directors receive
awards under Creo Medical’s incentive schemes. Charles
Spicer and John Bradshaw were awarded share options
prior to the Company’s IPO in 2016 and have not been
awarded share options since.
Annual Report on Remuneration
Remuneration Committee membership and
responsibilities
During the year ended 31 December 2023 the
Remuneration Committee comprised Ivonne Cantu (Chair)
and John Bradshaw. By invitation of the Committee,
meetings are also attended by the CEO, CFO, the Company
Chair, and the Global HR Director, who are consulted on
matters discussed by the Committee, unless those matters
relate to their own remuneration.
The Company continues to seek professional, independent
advice from FIT Remuneration Consultants LLP. FIT has no
connection to the Company or its Directors other than in
relation to advice provided to the Remuneration Committee.
The key responsibilities of the Remuneration Committee
are to set a remuneration policy for the Executive Directors
and the Chair and to review and determine on behalf of
the Board the Chair’s fee and specific remuneration and
incentive packages for each of the Company’s Executive
Directors to ensure that they are fairly rewarded for
their individual contributions to the Company’s overall
performance. The Remuneration Committee assesses the
performance of the Executive Directors in the context of
recommending their annual remuneration to the Board for
final determination, including annual bonus awards and
long-term incentive grants.
The remuneration of the Non-Executive Directors (other
than the Chair) is recommended by the Executive
Directors and takes account of the time spent on Board
and Committee matters. The Board will make the final
determination although no Director will participate in any
discussion about their own remuneration.
Directors’ remuneration for 2022 and 2023 (audited)
The remuneration of the Board of Directors of Creo Medical Group plc during the 12-month period ending 31 December
2022 was:
(ALL FIGURES £)
EXECUTIVE
Professor Christopher
Hancock
Craig Gulliford
Richard Rees
David Woods
SALARY
TAXABLE
BENEFITS
PENSION
ANNUAL
BONUS1
LTIP2
OTHER3
31 DECEMBER
12 MONTHS TO
210,000
22,280
21,000
105,000
153,590
280,000
22,133
28,000
140,000
204,787
210,000
21,910
21,000
105,000
153,590
1,894
2,525
1,894
262,210
36,775
13,111
134,281
164,642
–
2023
513,764
677,445
513,394
611,019
Total Executive
962,210
103,098
83,111
484,281
676,609
6,313
2,315,622
NON-EXECUTIVE
Charles Spicer
John Bradshaw
Ivonne Cantu
86,000
56,000
56,000
Total Non-Executive
198,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
86,000
56,000
56,000
198,000
Total Directors’
Remuneration
1,160,210
103,098
83,111
484,281
910,779
6,313
2,513,622
92
93
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Directors’ Remuneration Report continued
The remuneration of the Board of Directors of Creo Medical Group plc during the 12-month period ending 31 December
2023 was:
Directors’ shareholdings
The interests of the Directors at 31 December 2023 in the shares of the Company, including family interests, were:
(ALL FIGURES £)
31 DECEMBER 2023 NUMBER
31 DECEMBER 2023 %
Executive
Professor Christopher Hancock
Craig Gulliford
Richard Rees
David Woods
Total Executive
Non-Executive
Charles Spicer
John Bradshaw
Ivonne Cantu
Total Non-Executive
Total Directors’ Shareholdings
4,810,206
1,638,320
2,813,756
440,255
9,702,537
308,530
1,371,082
125,000
1,804,612
11,507,149
1.33%
0.45%
0.78%
0.12%
2.68%
0.09%
0.38%
0.03%
0.50%
3.18%
(ALL FIGURES £)
EXECUTIVE
SALARY
TAXABLE
BENEFITS
PENSION
ANNUAL
BONUS1
LTIP2
OTHER3
31 DECEMBER
12 MONTHS TO
2023
Professor Christopher Hancock
215,725
22,252
21,573
140,221
221,934
25,511
647,215
Craig Gulliford
Richard Rees
David Woods
305,000
22,105
26,375
198,250
295,912
34,015
885,782
217,875
21,883
21,788
141,619
221,934
25,511
650,609
262,582
36,827
13,129
165,921
186,297
–
717,086
Total Executive
1,001,182
103,067
82,865
646,011
926,076
85,037
2,844,236
NON-EXECUTIVE
Charles Spicer
John Bradshaw
Ivonne Cantu
Total Non-Executive
86,000
56,000
56,000
198,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
86,000
56,000
56,000
198,000
Total Directors’ Remuneration
1,199,182
103,067
82,865
646,011
926,076
85,037
3,042,236
1 Annual bonus for performance for the year ending 31 December 2023. The payments reflected the Remuneration Committee’s assessment of
performance versus the targets set at the beginning of the year of 65% of maximum. See details on page 90.
2 The charge relates mainly to backwards looking options which have been issued based on past performance as well as a small charge for options
issued where performance conditions have been satisfied during the year.
We have elected to follow the regulations for quoted companies on the Main Market and show the value of shares vested during the period where
performance conditions are present and on date of grant where only a service condition exists.
The charge for 2023 is broken down as follows:
Professor Chris Hancock: £2,821 from performance conditions met during the year relating to tranche 17 options, £219,113 issued based on past
performance relating to tranche 20 and £nil for the remaining shares relating to tranche 20 as the performance conditions are expected to vest at the
end of 2025.
Craig Gulliford: £3,762 from performance conditions met during the year relating to tranche 17 options, £292,150 issued based on past performance
relating to tranche 20 and £nil for the remaining shares relating to tranche 20 as the performance conditions are expected to vest at the end of 2025.
Richard Rees: £2,821 from performance conditions met during the year relating to tranche 17 options, £219,113 issued based on past performance
relating to tranche 20 and £nil for the remaining shares relating to tranche 20 as the performance conditions are expected to vest at the end of 2025.
David Woods: £186,297 issued based on past performance relating to tranche 20 and £nil for the remaining shares relating to tranche 20 as the
performance conditions are expected to vest at the end of 2025.
As the remaining forward looking shares are expected to vest in 2025 we expect a minimal charge to be disclosed for 2024.
The LTIP award is structured as a joint share ownership plan whereby the Participant and the Trustee jointly own the beneficial interest of the LTIP
Shares. The Participant is entitled to any value above the hurdle price of £0.90 per share and the Trustee entitled to all value below the hurdle price.
The Participant has also been granted an option to acquire the Trustee’s beneficial interest in the LTIP Shares, at nominal cost, which is exercisable
3 years and 3 months after the acquisition date (subject to remaining in eligible employment) and followed by a three-month holding period.
3 Value relates to the upfront PAYE and NIC costs associated with participation in the JSOP which were paid by the Company during the year to settle
the liabilities on behalf of the Directors. The cost to the Company will be recovered from any future LTIP option exercises.
94
95
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements NON-EXECUTIVE
Charles Spicer
John Bradshaw
Ivonne Cantu
118,421
–
–
Total Non-Executive
118,421
–
–
–
–
Total Directors’ Shareholdings
14,591,640
6,633,898
–
–
–
–
–
–
–
–
–
–
–
–
–
–
118,421
76.00p
–
–
118,421
–
–
21,225,538
7,922,667
1 Two LTIP awards were issued during the year. The first options awarded related to 2022 performance so the only condition required is to remain in
employment. The second options awarded are for FY2023 and are linked to future performance over FY2023 to FY2025 KPIs as well as continuing
in employment.
Share dilution
The total number of Ordinary Shares issued and issuable in respect of options granted in any 10-year period under the
Company’s discretionary share option is restricted to 10% of the issued Ordinary Shares in any 10-year rolling period. In
the financial year ended 31 December 2023, the Company allocated 12,558,401 options on 07 June and 02 August 2023
(3.5% of issued share capital as at such date of grant) to employees including Executive Directors. The total number of
Ordinary Shares issued and issuable in respect of options granted is 3.3% of the Company’s issued shares.
Ivonne Cantu
Chair of the Remuneration Committee
14 May 2024
Directors’ Remuneration Report continued
Directors’ interests in LTIP awards and share options
Directors’ interests in share options, granted under either the Creo Medical Group plc Enterprise Management Incentive
Share Option Scheme or the Creo Medical Group PLC Unapproved Share Option Scheme, and interests in awards granted
under the Creo Medical Group plc LTIP, at 31 December 2023 were:
31 DECEMBER 2022
GRANTED
FORFEITED
EXERCISED
31 DECEMBER 2023
EXERCISED
NUMBER
DURING YEAR1
DURING YEAR
DURING YEAR
NUMBER
PRICE
(ALL FIGURES £)
EXECUTIVE
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Prof. Christopher Hancock
Craig Gulliford
Craig Gulliford
Craig Gulliford
Craig Gulliford
Craig Gulliford
Craig Gulliford
Craig Gulliford
Craig Gulliford
Craig Gulliford
Craig Gulliford
Craig Gulliford
Craig Gulliford
Richard Rees
Richard Rees
Richard Rees
Richard Rees
Richard Rees
Richard Rees
Richard Rees
Richard Rees
Richard Rees
Richard Rees
Richard Rees
David Woods
David Woods
David Woods
David Woods
417,240
72,000
1,184,210
107,914
268,293
114,035
115,000
210,000
2,348,288
184,645
–
–
–
–
–
–
–
–
–
–
–
–
676,271
750,678
5,021,625
1,426,949
540,000
936,000
1,578,948
143,885
325,203
143,275
140,000
280,000
1,553,658
246,194
–
–
–
–
–
–
–
–
–
–
–
–
901,695
1,118,644
5,887,163
2,020,339
288,000
1,184,210
118,705
268,293
114,035
115,000
210,000
731,519
184,645
–
–
–
–
–
–
–
–
–
–
–
676,271
765,254
3,214,407
1,441,525
130,208
219,816
–
–
–
–
837,288
907,797
350,024
1,745,085
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16.67p
16.67p
76.00p
113.00p
153.75p
171.00p
0.01p
0.01p
0.01p
0.01p
0.01p
0.01p
16.67p
16.67p
76.00p
113.00p
153.75p
171.00p
0.01p
0.01p
0.01p
0.01p
0.01p
0.01p
16.67p
76.00p
113.00p
153.75p
171.00p
0.01p
0.01p
0.01p
0.01p
0.01p
0.01p
1.92p
0.76p
0.01p
0.01p
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
417,240
72,000
1,184,210
107,914
268,293
114,035
115,000
210,000
2,348,288
184,645
676,271
750,678
6,448,574
540,000
936,000
1,578,948
143,885
325,203
143,275
140,000
280,000
1,553,658
246,194
901,695
1,118,644
7,907,502
288,000
1,184,210
118,705
268,293
114,035
115,000
210,000
731,519
184,645
676,271
765,254
4,655,932
130,208
219,816
837,288
907,797
2,095,109
21,107,117
Total Executive
14,473,219
6,633,898
96
97
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
03
Financial
Statements
Independent auditors’ report
Consolidated statement
of profit or loss and other
comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement of
cash flows
Notes to the financial statements
Parent Company statement
of financial position
Parent Company statement
of changes in equity
Parent Company notes to
the financial statements
100
107
108
109
110
111
145
146
147
CLINICAL CASE STUDIES
Learn how
Speedboat Inject
is improving lives
SCAN THE QR CODE
TO READ OUR
CASE STUDIES
98
99
Independent auditors’ report
to the members of Creo Medical Group plc
Report on the audit of the financial statements
Opinion
In our opinion:
▶ Creo Medical Group plc’s group financial statements and parent company financial statements (the “financial
statements”) give a true and fair view of the state of the group’s and of the parent company’s affairs as at
31 December 2023 and of the group’s loss and the group’s cash flows for the year then ended;
▶ the group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards as applied in accordance with the provisions of the Companies Act 2006;
▶ the parent company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework”, and applicable law); and
▶ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated and
Parent Company’s statements of financial position as at 31 December 2023; the Consolidated statement of profit or loss
and other comprehensive income, the Consolidated and Parent Company’s statements of changes in equity and the
Consolidated statement of cashflows for the year then ended; and the notes to the financial statements, which include a
description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to other listed entities of public
interest, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided.
We have provided no non-audit services to the parent company or its controlled undertakings in the period under audit.
Material uncertainty related to going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the
disclosure made in note 1 to the financial statements concerning the group’s and the parent company’s ability to continue
as a going concern. The Directors have considered the applicability of the going concern basis in the preparation of the
financial statements, which included the review of financial results, internal budgets and cash flow forecasts for the period
of at least 12-months following the date of approval of the financial statements. The Directors have modelled a severe
but plausible downside scenario that indicates that the cash resources of the Group would be exhausted in around 12
months from the date of approval of the financial statements, and a breach of loan covenants will occur within 12 months,
before taking account of mitigating actions. The Directors have identified several potential sources of funding which could
provide sufficient cash to the business to reach positive cash generation. At present these sources of funding remain
uncommitted and a substantial proportion of the forecast revenues remains uncommitted for the going concern period
and beyond. These conditions, along with the other matters explained in note 1 to the financial statements, indicate the
existence of a material uncertainty which may cast significant doubt about the group’s and the parent company’s ability to
continue as a going concern. The financial statements do not include the adjustments that would result if the group and
the parent company were unable to continue as a going concern.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the going
concern basis of accounting included:
▶ Verifying the integrity and mathematical accuracy of management’s model as well as agreeing underlying cash flow
projections to board approved forecasts.
▶ Assessing management’s historic forecasting accuracy by obtaining management information for the financial
performance year to date.
▶ Evaluating and challenging the reasonableness of the key assumptions in management’s model and agreeing the data
to supporting information, where available.
▶ Evaluating that management have modelled a severe but plausible downside, challenging the feasibility of mitigating
actions and impact on covenant compliance included in that scenario.
▶ Reviewing the terms of loan facilities to consider whether management have appropriately identified terms.
▶ Reviewing the going concern disclosures included within the financial statements for consistency.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Our audit approach
Overview
Audit scope
▶ The UK Group audit team has performed full scope audit work over the four largest entities whose accounting records
are based in the UK i.e Creo Medical Group Plc, Creo Medical Limited, Creo Medical Inc and Creo Medical UK Limited.
▶ Creo Medical SAS and Creo Medical SRL were audited by local PwC component teams in France and Belgium
respectively.
▶ Specified procedures were performed over Creo Medical S.L by the local PwC component teams in Spain.
▶ Specified procedures were then performed by the UK Group audit team over the remaining reporting units, not
selected for full scope audits.
▶ Further audit procedures were carried out by the UK Group audit team over central functions, the group consolidation
and consolidation journals.
▶ Our scoping resulted in coverage of 98% of the Group’s revenue, 96% of the Group’s net assets and 97% of the
Group’s loss before tax.
Key audit matters
▶ Material uncertainty related to going concern
▶ Goodwill impairment assessment (group)
▶ Recoverability of the parent company investment in subsidiaries and intercompany receivable balance (parent)
Materiality
▶ Overall group materiality: £1,225,000 (2022: £1,549,000) based on 5% of the Group’s loss before tax.
▶ Overall parent company materiality: £1,102,000 (2022: £1,472,000) based on 1% of the parent company’s net assets,
restricted to 90% of Group materiality.
▶ Performance materiality: £918,750 (2022: £1,162,000) (group) and £826,875 (2022: £1,104,000) (parent company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions and considering future events that are inherently
uncertain.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit
of the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to going concern, described in the Material uncertainty related to going concern section above, we determined
the matters described below to be the key audit matters to be communicated in our report. This is not a complete list of all
risks identified by our audit.
100
101
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Independent auditors’ report
to the members of Creo Medical Group plc continued
Our audit approach continued
The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Goodwill impairment assessment (group)
As at 31st December 2023, the Consolidated
statement of financial position includes £19.1m
of goodwill (2022: £19.6m). In accordance with
International Accounting standards, management
have performed an impairment review in relation
to the goodwill held in each of the Group’s cash
generating units (CGUs). In doing so, management
have prepared value in use calculations for each
of the CGUs. The impairment reviews include
significant estimates and judgements in respect of
future growth rates, future cash flows and discount
rates. The sensitivity of these key assumptions is
detailed in note 12, Intangible assets and goodwill.
No impairment was identified by management.
As part of our assessment of the carrying value of goodwill we have:
• Held discussions with management to identify the key
judgements and estimates in relation to the impairment
assessments at the year end.
• Agreed the forecasts included in the value in use calculations to
the FY24 board approved budget and tested the mathematical
accuracy of the calculations.
• Assessed whether the forecast revenues and EBITDA margins
are reasonable by comparing them to historical trends and
by considering the accuracy of management’s forecasting in
the past.
• Challenged the key assumptions identified, including future
growth rates and considered the impact of changes to the
assumptions on headroom under different scenarios, such as
restrictions to future growth levels and changes to discount
rates.
• Reviewed management’s allocation of assets to CGUs and
agreed carrying values to underlying support.
• Understood management’s consideration of wider risks
including climate change.
• Used our in-house valuation experts to consider the
appropriateness of the discount rate used in relation to the wider
market and sector comparatives.
Based on our audit work performed, we accept the results of the
impairment assessment performed by management and that there
is not an impairment. We also consider that disclosures in the
financial statements are appropriate.
Key audit matter
How our audit addressed the key audit matter
Recoverability of the parent company investment in subsidiaries and intercompany receivable balance (parent)
As at 31st December 2023, the Parent Company’s
statement of financial position includes
investments in subsidiaries of £28.0m (2022:
£27.4m) and intercompany receivables of £144.1m
(2022: £118.9m) as detailed in notes 30 and 32
respectively. In accordance with International
Accounting standards, at the end of each reporting
period management are required to assess
whether there have been any impairment triggers
or reversal events occurring in FY23 which may
give rise to the reassessment of estimates made
regarding the carrying value of its investment in
subsidiaries and intercompany receivable balances.
Management have prepared an impairment
assessment. The impairment assessment
compares the carrying value to the recoverable
amount, which is calculated as the higher of the
value in use and the fair value less cost to sell.
Management have performed a value in use
calculation based on the 5-year business plan.
Management have also considered the market
capitalisation of the Parent Company as at 31st
December 2023 since the balance sheet date
and any factors that may not be reflected in it. No
impairment of the Parent Company investment in
subsidiaries and intercompany receivable balances
was identified by management.
Management are also required to calculate an
expected credit loss on the carrying value of
the £144.1m intercompany receivable balance
owed to the Parent Company, in line with IFRS 9.
Management have prepared a probability-weighted
estimate of credit losses and have determined
that the expected credit loss is immaterial for
recognition.
In respect of the carrying value of the investment in Creo Europe,
where there is a track record of revenue, we have obtained
management’s value in use calculations. We:
• Agreed the model to the FY24 board approved budget and
tested the mathematical accuracy of the model.
• Assessed whether the forecast revenues and EBITDA margins
are reasonable by comparing them to historical trends and by
considering the accuracy of management’s forecasting in the
past.
• Challenged the key assumptions identified, including
consideration of the impact of changes to the assumptions on
headroom under different scenarios, such as restrictions to
future growth levels and changes to discount rates.
• Understood management’s consideration of wider risks
including climate change.
• Used our in-house valuation experts to consider the
appropriateness of the discount rate used in relation to the wider
market and sector comparatives.
In respect of the carrying value of the investment in the other
subsidiaries, for which management forecast significant levels
of revenue growth in the future, we focussed our work on
management’s assessment of the fair value less cost to sell, which
is driven by the market capitalisation of the group. We challenged
management in respect of their judgements in respect of matters
not reflected in the underlying share price, for example in relation to
premium for control.
To assess the valuation of the ECL of the intercompany receivable
balance owed to the Parent Company, we have:
• Held discussions with management to understand the scenarios
modelled.
• Challenged the data in the underlying calculations and
managements key assumptions, including the probabilities used.
• Reviewed the terms of the loan and assessed the
reasonableness of the methodology in line with IFRS 9.
• Tested the mathematical accuracy of the model.
Based on our work performed, we consider the carrying value of
investment in subsidiaries and intercompany receivables to be
supportable with no impairment being required. We also consider
that disclosures in the financial statements are appropriate.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the parent company, the accounting processes
and controls, and the industry in which they operate.
Of the Group’s 12 reporting components, 2 are considered to be financially significant to the group. 3 further components
were selected for full scope audit work to ensure appropriate coverage over revenue and loss before tax. The Group
engagement team also audited the parent company, which was scoped in accordance with the company materiality.
102
103
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Independent auditors’ report
to the members of Creo Medical Group plc continued
Our audit approach continued
How we tailored the audit scope continued
Specified procedures were also performed by the UK Group audit team over the remaining reporting units, not selected
for full scope audits.
Further audit procedures were carried out by the UK Group audit team over central functions, the group consolidation
and consolidation journals.
Our scoping resulted in coverage of 98% of the Group’s revenue, 96% of the Group’s net assets and 97% of the Group’s
loss before tax.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on
the group’s and parent company’s financial statements, and we remained alert when performing our audit procedures for
any indicators of the impact of climate risk. Our procedures did not identify any material impact as a result of climate risk
on the group’s and parent company’s financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - group
Financial statements - parent company
Overall materiality
£1,225,000 (2022: £1,549,000).
£1,102,000 (2022: £1,472,000).
How we
determined it
Rationale for
benchmark
applied
5% of the Group’s loss before tax
1% of the parent company’s net assets, restricted to 90%
of Group materiality
Overall materiality is based on loss
before tax. This is a primary measure
used by shareholders and is a generally
accepted auditing benchmark
We determined materiality based on net assets (capped
at 90% as part of group scoping), which is more
applicable than a performance- related measure as the
parent company is primarily a Holding company and
therefore does not have any revenue
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across components was £250,000 to £1,102,000. Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the
scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures,
for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality,
amounting to £918,750 (2022: £1,162,000) for the group financial statements and £826,875 (2022: £1,104,000) for the parent
company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of
our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit
above £61,000 (group audit) (2022: £77,000) and £55,000 (parent company audit) (2022: £74,000) as well as misstatements
below those amounts that, in our view, warranted reporting for qualitative reasons.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement
of the financial statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors’ Report for the year ended 31 December 2023 is consistent with the financial statements and has been prepared
in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and parent company and their environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic report and Directors’ Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the financial statements, the directors
are responsible for the preparation of the financial statements in accordance with the applicable framework and for being
satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with
laws and regulations related to AIM Listing Rules and employment legislation, and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws and regulations
that have a direct impact on the financial statements such as financial reporting regulations, tax legislation and
Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls), and determined that the principal risks were related to
the posting of journal entries designed to increase revenue, decrease expenses or to extract cash, together with the
manipulation of accounting estimates which could be subject to management bias.
104
105
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Independent auditors’ report
to the members of Creo Medical Group plc continued
Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2023
Responsibilities for the financial statements and the audit continued
Auditors’ responsibilities for the audit of the financial statements continued
The group engagement team shared this risk assessment with the component auditors so that they could include
appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group
engagement team and/or component auditors included:
▶ Confirmation and enquiry with management and those charged with governance over compliance with laws and
regulations, including consideration of actual or potential litigation and claims.
▶ Reviewing board minutes for evidence of breaches of regulations or instances of actual or suspected fraud.
▶ Challenging assumptions made by management in its significant accounting estimates, including the recognition
of deferred tax assets, the carrying value of goodwill and the recoverability of the parent company investment in
subsidiaries and intercompany receivable balance.
▶ Identifying and testing the validity of journal entries, in particular any journal entries posted with unusual account
combinations.
▶ Designing audit procedures to incorporate unpredictability around the nature, extent and timing of our testing.
▶ Reviewing financial statement disclosures.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the
financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics.
In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample
is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the parent company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
▶ we have not obtained all the information and explanations we require for our audit; or
▶ adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
▶ certain disclosures of directors’ remuneration specified by law are not made; or
▶ the parent company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Colin Bates (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
14 May 2024
106
(All figures £m)
Revenue
Cost of sales
Gross Profit
Other operating income
Administrative expenses
Operating loss
Finance expenses
Finance income
Loss before tax
Taxation
Loss for the year
Exchange gain/(loss) on foreign subsidiary
Changes to the fair value of equity investments at fair value through other
comprehensive income
Total other comprehensive (loss) / income
12 months to
31 December
2023
12 months to
31 December
2022
Note
2
2
3
9
9
3
10
21
18
30.8
(15.5)
15.3
0.4
(40.5)
(24.8)
(0.4)
0.7
(24.5)
2.8
(21.7)
(0.6)
–
(0.6)
27.2
(14.0)
13.2
0.1
(44.0)
(30.7)
(0.3)
0.1
(30.9)
4.0
(26.9)
1.1
0.4
1.5
Total comprehensive loss for the year
(22.3)
(25.4)
Loss per Share
Basic and diluted (£)
The notes on pages 111 to 144 form part of the financial statements.
11
(0.07)
(0.15)
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
107
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Consolidated statement of financial position
for the year ended 31 December 2023
Consolidated statement of changes in equity
for the year ended 31 December 2023
(All figures £m)
Assets
Non-current assets
Intangible assets
Goodwill
Investments
Property, plant and equipment
Deferred tax
Other assets
Current assets
Inventories
Trade and other receivables
Tax receivable
Fixed term deposits
Cash and cash equivalents
Total assets
Shareholder equity
Called up share capital
Share premium
Merger reserve
Share option reserve
Foreign exchange reserve
Financial Assets at fair value through other comprehensive (expense)/income
Accumulated losses
Total equity
Liabilities
Non-current liabilities
Interest-bearing liabilities
Deferred tax liability
Provisions
Current liabilities
Interest-bearing liabilities
Trade and other payables
Non interest-bearing loans
Other liabilities
Provisions
Total liabilities
Total equity and liabilities
As at
31 December
2023
As at
31 December
2022
Note
12
12
18
13
16
15
14
15
16
21
21
21
21
21
21
21
19
16
20
19
17
17
17
20
7.1
19.1
2.1
9.1
1.1
0.2
38.7
8.1
8.6
2.7
15.5
3.0
37.9
76.6
0.4
180.9
13.6
10.5
(1.8)
0.6
(144.4)
59.8
5.2
1.4
0.3
6.9
3.1
5.7
–
0.9
0.2
9.9
16.8
76.6
8.0
19.6
2.1
10.2
1.5
0.2
41.6
9.3
6.8
4.5
–
13.1
33.7
75.2
0.2
149.5
13.6
9.3
(1.2)
0.6
(122.7)
49.3
6.1
2.0
0.4
8.5
4.0
9.0
1.6
2.6
0.2
17.4
25.9
75.2
These financial statements on pages 107 to 144 were approved by the Board of Directors on 14 May 2024 and were signed
on its behalf by:
(All figures £m)
Note
Balance at 1 January 2022
Total comprehensive loss for
the year
Loss for the financial year
Other comprehensive loss/
income
Total comprehensive loss
Transactions with owners,
recorded directly in equity
Issue of share capital
Equity settled share-based
payment transactions
Balance at 31 December 2022
Total comprehensive loss for
the year
Loss for the financial year
Other comprehensive loss/
income
Total comprehensive loss
Transactions with owners,
recorded directly in equity
Issue of share capital
Equity settled share-based
payment transactions
Balance at 31 December 2023
21
8
21
8
Called
up
share
capital
0.2
–
–
–
0.0
–
0.2
–
–
–
0.2
–
0.4
Changes to the
fair value of
equity
instruments
at fair value
through other
comprehensive
(expense)/
income
Foreign
Exchange
Reserve
Total
equity
Accumulated
losses
Share
premium
Merger
reserve
Share
option
reserve
(95.8)
149.4
13.6
7.9
0.2
(2.3)
73.2
(26.9)
–
(26.9)
–
–
–
–
0.1
–
–
–
–
–
–
–
–
–
(122.7)
–
149.5
–
13.6
1.4
9.3
(21.7)
–
(21.7)
–
–
–
–
31.4
–
–
–
–
–
–
–
–
–
0.4
0.4
–
–
0.6
–
–
–
–
–
1.1
1.1
(26.9)
1.5
(25.4)
–
0.1
–
(1.2)
1.4
49.3
–
(21.7)
(0.6)
(0.6)
(0.6)
(22.3)
–
31.6
–
(144.4)
–
180.9
–
13.6
1.2
10.5
–
0.6
–
(1.8)
1.2
59.8
The notes on pages 111 to 144 form part of the financial statements.
Richard Rees
Director
Company registered number: 10371794
The notes on pages 111 - 144 form part of the financial statements. Where figures are shown “0.0” this means the figure is lower than £50,000. Where
figures show “-” this means the value is nil
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
108
109
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Consolidated statement of cashflows
for the year ended 31 December 2023
Notes to the financial statements
(All figures £m)
Cash flows from operating activities
Loss for the year
Depreciation/amortisation charges
Equity settled share-based payment expenses
Finance expenses
Finance income
Taxation
Increase in inventories
Increase in trade and other receivables
Decrease in trade and other payables
Interest paid
Tax received
Net cash used in operating activities
Cash flows from investing activities
Purchase of intangible fixed assets
Purchase of tangible fixed assets
Acquisition of subsidiary net of cash acquired
Fixed Term Deposits
Interest received
Net cash used in investing activities
Cash flows from financing activities
Capital repaid in respect of loans
Proceeds of new loan
Principal elements of lease repayments
Share issue, net of transaction costs
Net cash generated from financing activities
(Decrease) in cash and cash equivalents
Effect of exchange rates in cash held
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
The notes on pages 111 to 144 form part of the financial statements.
12 months to
31 December
2023
12 months to
31 December
2022
Note
8
9
9
10
9
12
13
17
9
18
18
18
22
(21.7)
3.4
1.2
0.4
(0.7)
(2.8)
(0.4)
(1.4)
(3.7)
(5.5)
(0.4)
4.5
(21.6)
(0.4)
(1.2)
(2.4)
(15.0)
0.7
(18.3)
(1.4)
0.2
(0.7)
31.7
29.8
(10.1)
(0.0)
13.1
3.0
(26.9)
3.1
1.4
0.3
(0.1)
(4.0)
(0.3)
(1.6)
(0.8)
(2.7)
(0.3)
4.3
(24.9)
(0.1)
(3.2)
(2.8)
–
0.1
(6.0)
(1.6)
2.8
(0.8)
0.0
0.4
(30.5)
0.1
43.5
13.1
1. Accounting policies
General information
Creo Medical Group plc is a public company, limited by shares, registered and domiciled in England and Wales in the UK.
The Company’s registered number is 10371794 and the registered office is Creo House, Unit 2, Beaufort Park, Beaufort
Park Way, Chepstow, Wales NP16 5UH.
The Group financial statements consolidate those of the Parent Company and its subsidiaries (together referred to as
the “Group”). The Parent Company financial statements present information about Creo Medical Group plc as a separate
entity and not about its Group. The composition of the Group is shown on page 149.
The Group financial statements have been prepared and approved by the Directors 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 Company has elected to prepare its Parent Company financial statements in
accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”). In preparing these
financial statements, the Company applies the recognition, measurement and disclosure requirements of UK-adopted
international accounting standards (“Adopted IFRSs”), but makes amendments where necessary in order to comply with
Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
Basis of preparation
This is the seventh annual financial report of the Company since the incorporation of Creo Medical Group plc on
12 September 2016 and the subsequent acquisition of Creo Medical Limited via a share for share exchange on
9 November 2016. The financial statements are presented in Sterling and rounded to the nearest hundred thousandth
pound. All accounting policies, other than new policies have been applied consistently throughout the year.
This financial report for the year ended 31 December 2023 (including comparatives for the year ended 31 December 2022)
was approved by the Board of Directors on 14 May 2024.
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:
▶ IFRS 17 Insurance Contracts
▶ Deferred Tax related to Assets and Liabilities arising from a Single Transaction – amendments to IAS 12; and
▶ Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
▶ Definition of Accounting estimates – Amendments to IAS 8
The adoption of these standards, amendments and interpretations has not had a material impact on the financial
statements of the Group or Parent Company.
New standards, amendments and interpretations issued but not effective and not adopted early
The following new standards, amendments to standards and interpretations have been issued but not are yet effective and
therefore have not been applied in preparing these consolidated financial statements:
▶ Classification of Liabilities as Current or Non-current – Amendments to IAS 1 Non-current Liabilities with Covenants –
Amendments to IAS 1
▶ Lease Liability in a Sale and Leaseback – Amendments to IFRS 16
▶ Supplier finance arrangements – Amendments to IAS 7 and IFRS 7
▶ Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10 and
IAS 28
▶ Amendments to IAS 21 to clarify the accounting when there is a lack of exchangeability
The Directors anticipate that none of the new standards, amendments to standards and interpretations is expected to
have a significant effect on the financial statements of the Group or Parent Company.
Measurement convention
The financial statements are prepared on the historical cost basis except that derivative financial instruments and equity
investments are stated at their fair value.
110
111
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
1. Accounting policies continued
Business combinations and basis of consolidation
The Group financial statements for business combinations using the acquisition method when the acquired set of
activities and assets meets the definition of a business and control is transferred to the Group. In determining whether a
particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired
includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets
acquired. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent
consideration is classified as equity, it is not remeasured, and settlement is accounted for within equity. Otherwise,
subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. Any goodwill that
arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
Where non-controlling interests do not still have present access to the returns associated with the underlying ownership
interests, the anticipated-acquisition method will be applied and the acquisition accounted for as though 100% of the
equity had already been acquired. This is the case for the acquisition of Albyn Medical S.L. in 2020.
Accounting policies adopted are consistent across the Group. All intra-Group balances and transactions, including
unrealised income and expenses arising from intra-Group transactions, are eliminated on consolidation.
Going concern
For the year ended 31 December 2023 the Group made a total comprehensive loss of £22.3m and, as at 31 December
2023, had cash and cash equivalents including cash on deposit of £18.5 million with net assets of £59.8m. An amount of
£31.7m (after expenses) was raised in February and March 2023 through a Share Placement and Open Offer and £6.4m
debt financing was raised post year end. The financial statements have been prepared on a going concern basis which the
Directors believe to be appropriate for the following reasons:
The Directors have considered the applicability of the going concern basis in the preparation of the financial statements.
This included the review of financial results, internal budgets, cash flow forecasts and covenant compliance for the period
of at least 12-months following the date of approval of the financial statements (“the going concern period”).
The Directors have prepared a base case scenario which is based on the Board approved forecast and assumes an
increase in revenues particularly from its core revenue streams and Kamaptive licencing programme for the year to 31
December 2024 compared to the year ended 31 December 2023. In addition, the Directors have modelled a severe but
plausible downside scenario for the going concern period. This scenario includes sensitivity analysis to delay a proportion
of future expected but not contracted growth in revenue and assumes no savings in expenditure are made. This downside
scenario indicated that the cash resources of the Group would be exhausted in around 12 months from the date of
approval of the financial statements, and a breach of loan covenants will occur within 12 months, before taking account of
mitigating actions. The Directors have identified several areas where a reduction in expenditure on the Group’s research
and development programme and other areas could be made if such a scenario were to occur to ensure the Group would
be able to meet its liabilities as they fall due for the going concern period, without needing to obtain waivers on the
debt covenants.
The Group continues to make progress towards profitability as we continue to seek to ramp up commercialisation. The
Directors have identified several potential sources of funding which could provide sufficient cash to the business to
reach positive cash generation. At present these sources of funding remain uncommitted and a substantial proportion
of the forecast revenues remains uncommitted for the going concern period and beyond. The Directors recognise that
if no additional funding is secured during the next 12 months or if the Group fails to secure additional revenue contracts
as forecast then the Group may breach debt covenants and may not have sufficient resources to meet its liquidity
requirements and be unable to continue as a going concern. The Directors recognise that these conditions indicate the
existence of a material uncertainty which may cast significant doubt about the Group’s and the Parent Company’s ability
to continue as a going concern.
These financial statements do not include the adjustments that would result if the Group and the Parent Company were
unable to continue as a going concern.
Intangible assets
Intangible assets include the capitalisation of development costs and software for the year ended 31 December 2023.
1. Accounting policies continued
Software which is not an integral part of hardware assets is stated at historic cost, including expenditure that is directly
attributable to the acquired item, less accumulated amortisation and impairment losses.
Expenditure on research activities is recognised as an expense in the year in which it is incurred. Costs are classified
as research expenditure rather than development unless all of the below criteria are met, in which case these costs are
capitalised on the balance sheet.
Development criteria:
a. completion of the intangible asset is technically feasible so that it will be available for use or sale;
b. the Company intends to complete the intangible asset and use or sell it;
c.
d.
the Company has the ability to use or sell the intangible asset and the intangible asset will generate probable future
economic benefits over and above cost;
there are adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
e. the expenditure attributable to the intangible asset during its development can be measured reliably.
Amortisation commences when the project is available for sale or use within the business.
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and
value in use.
Amortisation is charged so as to write off the costs of intangible assets over their estimated useful lives, on the following basis:
Software
Development costs
Trade Name
Supplier Relationships
Customer Relationships
Goodwill
– 3 years straight line
– 5 years straight line
– 10 years straight line
– 10 years straight line
– 10 years straight line
– No amortisation
Property, plant and equipment (“PPE”)
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment losses. Cost includes
the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its
intended use, until the asset is completed they are classified as assets under construction.
Leases are recognised if they meet the criteria in IFRS 16 as a lease. Where low value or short term lease exemptions are
taken the asset is classified as PPE, otherwise it is classified as a right of use asset. Where land and buildings are held under
leases the accounting treatment of the land is considered separately from that of the buildings. Leased assets acquired are
stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception
of the lease, less accumulated depreciation and less accumulated impairment losses. Lease payments are accounted for as
described below.
Depreciation is charged so as to write off the costs of assets over their estimated useful lives, on the following basis:
Assets under construction
Freehold Land
Buildings
Leasehold improvements
Office equipment
Fixtures and fittings
Motor vehicles
Plant and machinery
Demo equipment
- not depreciated
– not depreciated
– 40 years straight line
– 3 or 5 years straight line
– 2, 3 or 4 years straight line
– 3 or 4 years straight line
– 4 years straight line
– 3 years straight line or 4 years reducing balance
– 3 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between sales proceeds and the
carrying amount of the asset and is recognised in income on the transfer of the risks and rewards of ownership.
112
113
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Notes to the financial statements continued
1. Accounting policies continued
Inventories
Inventories are stated at the lower of cost and net realisable value. Raw materials cost is based on the First In, First Out
(“FIFO”) principle using standard costing techniques and includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs in bringing them to their existing location and condition. Finished goods
cost is based on standard cost with variances between actual and standard going through the cost of sales line.
Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a
lease in IFRS 16.
This policy is applied to contracts entered into, on or after 1 January 2019. For leases acquired as part of a business
combination the policy applies from the acquisition date. The Group has taken the practical expedient not to reassess
whether contracts at the date of initial application constituted a lease.
At commencement or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for the
leases of property the Group has elected not to separate non-lease components and account for the lease and non-lease
components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
On transition, the right-of-use assets were recognised at an amount equal to the lease liability, adjusted to the amount of
prepaid lease payments relating to that lease recognised in the statement of financial position immediately before the date
of initial application.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the
end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease
term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-
use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those
of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources
and makes certain adjustments to reflect the terms of the lease, country lease entered into and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
▶ fixed payments, including in-substance fixed payments;
▶ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
▶ amounts expected to be payable under a residual value guarantee; and
▶ the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an
optional renewal if the Group is reasonably certain to exercise an extension option, and penalties for early termination
of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of
the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it
will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and
equipment’ and lease liabilities in ‘loans and borrowings’ in the statement of financial position.
1. Accounting policies continued
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-
term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an
expense on a straight-line basis over the lease term.
Financial instruments
The Group predominantly enters into basic financial instrument transactions that result in the recognition of financial
assets and liabilities like trade and other accounts receivable and payable, loans from other third parties, loans to related
parties and investments in non-puttable financial instruments. The Group is also able to enter into a variety of derivative
financial instruments to manage its exposure to foreign exchange risk, including foreign exchange forward contracts and
cross-currency swaps.
Impairment
The Group recognises loss allowances for expected credit losses (“ECLs“) on financial assets measured at amortised cost,
debt investments measured at FVOCI and contract assets (as defined in IFRS 15).
The Group measures loss allowances at an amount equal to lifetime ECL, except for other debt securities and bank
balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not
increased significantly since initial recognition, which are measured as 12-month ECL.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when
estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue
cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical
experience and informed credit assessment and including forward-looking information.
The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the
Group in full, when demanded.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the
reporting date (or a shorter if the expected life of the instrument is less than 12 months).
The maximum considered when estimating ECLs is the maximum contractual over which the Group is exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows
that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Company assesses whether financial assets carried at amortised cost and debt securities at
FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact
on the estimated future cash flows of the financial asset have occurred.
Write-offs
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic
prospect of recovery.
Provisions under IFRS 9 may still be made to account for the probability of such default events, however such a provision
being made is not indicative that an actual default event will occur.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any impairment losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Investments with maturity of three months or more
from acquisition are classified as Fixed Term Deposits. Bank overdrafts that are repayable on demand and form an integral
part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose only
of the cash flow statement.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method.
114
115
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Notes to the financial statements continued
1. Accounting policies continued
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any
impairment losses.
Derivative financial instruments
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised
immediately in profit or loss. The Group has not applied hedge accounting in the current or comparative year.
Foreign currencies
The functional currency of the Group is Pounds Sterling. Transactions entered into by Group entities in a currency other
than the reporting currency are recorded at the rates ruling when the transaction occurred. Foreign currency monetary
assets and liabilities are translated into Sterling at the rates ruling at the statement of financial position date. Exchange
differences arising on the retranslation of the unsettled monetary assets and liabilities are similarly recognised in the
income statement.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are
translated to the Group’s presentational currency, Sterling, at foreign exchange rates ruling at the balance sheet date. The
revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to
the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive
income and accumulated in the translation reserve or non-controlling interest, as the case may be. When a foreign
operation is disposed of, such that control, joint control or significant influence (as the case may be) is lost, the entire
accumulated amount in the translation reserve, net of amounts previously attributed to non-controlling interests, is
recycled to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a
subsidiary that includes a foreign operation while still retaining control, the relevant proportion of the accumulated amount
is reattributed to non-controlling interests.
When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation
while still retaining significant influence or joint control, the relevant proportion of the cumulative amount is recycled to
profit or loss.
Current and deferred tax
Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules,
using tax rates enacted or substantially enacted by the statement of financial position date.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for:
the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable
profit other than in a business combination; and differences relating to investments in subsidiaries to the extent that
they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date. 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.
The Company incurs research and development expenditure which qualifies for Research and Development (“R&D“) tax
relief and as such, prepares and submits an R&D claim to HMRC in relation to each accounting year. The claims are made
on the basis that the Company and its activities meet the necessary conditions.
As the Company is currently loss making, there is no corporation tax liability arising, therefore it has chosen to convert the
tax relief into payable tax credits instead of carrying forward a loss. This results in the credit being paid in cash directly to
the Company following the submission of a valid claim.
The Company is claiming R&D tax relief predominately under the small or medium-sized enterprises (“SME“) scheme
therefore the credit is accounted for as tax in accordance with IAS 12 Income Taxes. However, where the R&D expenditure
is related to monies received from research grants, the Company is claiming an R&D expenditure credit (“RDEC“)
under the Large Company Scheme and as such the related credit is accounted for ‘above the line’ in accordance with
IAS 20 Accounting for Government Grants, specifically as a reduction from the related expenditure in the statement of
comprehensive income.
1. Accounting policies continued
Employee benefits
Wages, salaries, paid annual leave, bonuses and non-monetary benefits are accrued in the year in which the associated
services are rendered by employees of the Group.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions into
a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions
to defined contribution pension plans are recognised as an expense in the income statement in the year during which
services are rendered by employees.
Share-based payments
Equity-settled share options are granted to certain Directors, employees and certain contractors which have been granted
options to subscribe for Ordinary Shares. Each tranche in an award is considered a separate award with its own vesting
and grant date fair value. Fair value of each tranche is measured at the date of grant using the Black-Scholes option
pricing model or where they are based on market-based performance conditions, the Monte Carlo model. Compensation
expense is recognised over the tranche’s vesting 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, with any forfeitures recognised immediately.
Share-based payment arrangements in which the Group receives goods or services as consideration for its own equity
instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity
instruments are obtained by the Group.
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the
awards. The amount recognised as an expense is adjusted to reflect the actual number of awards for which the related
service, market and non-market vesting conditions are expected to be met, such that the amount ultimately recognised
as an expense is based on the number of awards that do meet the related service, market and non-market performance
conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of
the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected
and actual outcomes.
Where the Company grants options over its own shares to the employees of its subsidiaries it recognises, in its individual
financial statements, an increase in the cost of investment in its subsidiaries equivalent to the equity-settled share-based
payment charge recognised in its consolidated financial statements with the corresponding credit being recognised
directly in equity. Amounts recharged to the subsidiary are recognised as a reduction in the cost of investment in
subsidiary. Where costs recharged match those incurred there is no net impact on the investment in subsidiary.
Financing income and expenses
Financing expenses comprise interest payable, finance charges on shares classified as liabilities and leases recognised
in profit or loss using the effective interest method, unwinding of the discount on provisions, and net foreign exchange
losses that are recognised in the income statement (see foreign currency accounting policy). Financing income comprises
interest receivable on funds invested, dividend income, and net foreign exchange gains.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result
of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each
balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic
benefit will be required to settle the obligation, the provision is reversed. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects risks specific to the liability.
Revenue from contracts with customers
Revenue is recognised when substantially all of the risk and reward of ownership of the goods are transferred to the
customer on despatch, and thus has the ability to direct the use and obtain the benefits from the goods. Revenue is
recognised net of any sales tax.
116
117
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Notes to the financial statements continued
1. Accounting policies continued
Performance obligations and revenue recognition policies
Revenue is recognised in accordance with IFRS 15 at the point at which the Group’s performance obligation has been
satisfied. Below is a summary of the recognition policies for each type of sale:
Type of product/ service
Nature and timing of satisfaction of performance obligations,
including significant payments terms
Direct Sales
of Devices/
Products
Customers obtain control of medical devices or products when the
goods either leave the warehouse or when they physically arrive at
the customer premises based on the shipment terms.
Sales to
Distributors
Service/
Maintenance
Contracts
Invoices are generated at this point with payment required within
30–60 days depending on customer terms.
Distributors obtain control of medical devices or products when the
goods either leave the warehouse or when they physically arrive at
the distributor premises based on the shipment terms. There is no
right of return for the goods.
Invoices are generated at this point with payment required within
30–60 days depending on distributor terms. Equipment may be
provided free of charge to the customer provided they purchase
ancillary products, or it may transfer to them if they purchase a
set volume.
No contract is deemed to exist under IFRS 15 in relation to the
placement of the equipment, due to Creo retaining the significant
element of risks and rewards including future cashflows, a
lack of commercial substance in relation to the equipment and
recoverability of the asset without ability to enforce compensation
for the of use of the equipment. Where the Group retains control of
the equipment it is classified as a fixed asset.
Service & maintenance contracts are for a period of time as
specified with the customer. Our performance obligations are
satisfied over the length of the contract.
Customers are invoiced monthly based on the annual value of the
contract agreed.
Warranty
Products manufactured by the Group have a warranty. Customers
have the right to return the product if it is faulty within this period.
Revenue recognition policies
Revenue is recognised
when the goods leave the
warehouse or are delivered
to the customers’ premises
(depending on shipment
terms).
Revenue is recognised
when the goods leave the
warehouse or are delivered
to the customers’ premises
(depending on shipment
terms). Where the rights to
an asset are retained by the
Group the asset is depreciated
over its useful life.
Revenue is recognised over
the life of the contract on a
straight line basis. We consider
this matches the satisfaction
of our performance obligations
of the contract.
Revenue is only recognised
when we consider it likely
that the product will not
be returned.
We calculate a warranty
provision based on historical
warranty data of comparable
products. The warranty
provision is accounted of
under IAS 37 as a provision
and an expense.
1. Accounting policies continued
Type of product/ service
Nature and timing of satisfaction of performance obligations,
including significant payments terms
Licensing/
Development
Income
Licensing agreements may contain a number of elements and
provide for varying consideration terms, such as initial fees, sales,
development and regulatory milestones together with sales-based
royalties and similar payments.
Such arrangements are within the scope of IFRS 15 and are
assessed under its five-step model to determine revenue recognition.
The distinct performance obligations within the contract and
the arrangement transaction price are identified. The fair value
of the arrangement transaction price is allocated to the different
performance obligations based upon the relative stand-alone selling
price of those obligations together with the performance obligation
activities to which the terms of the payments specifically relate.
The allocated transaction price is recognised over the respective
performance period of each performance obligation.
Creo carries out development for or with a third party. Performance
obligations are recognised at a point in time if considered a
milestone or over time as the development project is completed.
Revenue recognition policies
Income which is related to
ongoing development or
licensing activity is recognised
as the activity is undertaken,
in accordance with the
contract to match the costs
incurred. Matching revenues
against costs is deemed
appropriate as we consider
the costs to be representative
of the completion stage of
the contract.
Development and regulatory
approval milestone payments
are recognised as revenue
when the respective
milestones are achieved.
Critical accounting judgements and significant estimates in applying the Group’s accounting policies
The application of the Group’s accounting policies requires judgements in certain areas and 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. The following are those areas that are
deemed to involve judgements and/or estimation about matters that have the most significant effect on the amounts
recognised in the financial statements.
Capitalisation of 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 clear demonstration that future economic benefit
will flow to the Company.
Our new Speedboat UltraSlim product met the capitalisation criteria in Q3. Between it meeting the capitalisation criteria
and being available for sale £0.1m was spent on development of product. The first sales of the device were made in
December 2023 and therefore we deem the asset to be available for sale. Amortisation in line with the policy will start in
January 2024.
£0.1m was capitalised in relation to development of a Bipolar snare for our endotherapeutics offering. The product is still in
its development stage and we expect further costs in relation to the project to be capitalised in 2024.
No further development of the Speedboat and CROMA products has been undertaken with an emphasis on developing
the later versions of these devices. No further development costs have been capitalised in the year.
The Group’s internal budgets demonstrate that the products will generate probable future economic benefits relating to
Speedboat and CROMA and therefore there is no impairment to capitalised development costs.
Recognition of deferred tax asset
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 of £0.8m in relation to element of profit expected to be earned in that entity.
118
119
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Notes to the financial statements continued
1. Accounting policies continued
Recognition of deferred tax asset continued
Forecasts for Creo Medical Limited continue to show tax losses for at least the medium term (to four 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.
Carrying value of goodwill
Our annual impairment assessment for Goodwill is deemed to be a significant estimate as it involves future cashflow
projections and assumptions which can have a significant impact on the carrying value of the goodwill. The assumptions
used in the calculation and a sensitivity analysis on these assumptions are shown in Note 12. Management are
comfortable that the assumptions used are appropriate and that the carrying value of the cash generating units supports
the carrying value of the goodwill.
Operating segments
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 year, management have exercised significant judgement in determining whether
presenting segment information on an alternative basis would better adhere to this core principal.
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
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 Note 2 of the financial statements, 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 years.
2. Revenue and other operating income
The revenue split between the Group for 2023 was as follows:
(All figures £m)
UK
Europe
RoW
Total
12 months to
31 December
2023
12 months to
31 December
2022
9.5
20.7
0.6
30.8
7.8
19.1
0.3
27.2
At 31 December 2023 the Group had a number of unsatisfied performance obligations under IFRS 15 in relation to the
Intuitive collaboration in line with the contract agreement. The value of this unsatisfied performance obligation is in excess
of £0.4m. (2022: £1m). We expect this to be received during 2024.
2. Revenue and other operating income continued
Other operating income
Other operating income relates to government grants. Income is recognised necessary to match it with the related costs
in the profit or loss on a systematic basis over the year 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 in the year was £0.4m (2022: £0.1m).
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
3. Loss before tax
The loss before income tax is stated after charging:
(All figures £m)
Depreciation – owned assets
Depreciation – right of use assets
Amortisation
Staff costs
Research and development expenditure
4. Audit and non-audit fees
An analysis of auditors’ remuneration is as follows:
(All figures £m)
Audit of Parent Company and Consolidation
Audit of Group subsidiaries
Audit fees
5. Staff numbers and costs
The cost of employees (including Directors) during the year was made up as follows:
(All figures £m)
Wages and salaries
Social security costs
Other pension costs
Share-based payments
Total remuneration
12 months to
31 December
2023
12 months to
31 December
2022
1.6
0.6
1.2
22.7
11.8
1.3
0.7
1.1
23.1
13.5
12 months to
31 December
2023
12 months to
31 December
2022
0.1
0.2
0.3
0.1
0.1
0.2
12 months to
31 December
2023
12 months to
31 December
2022
18.0
2.7
1.0
1.0
22.7
18.1
2.7
1.0
1.3
23.1
12 months to
31 December
2023
12 months to
31 December
2022
69
128
90
287
100
122
87
309
121
Segmental reporting
The average monthly number of employees during the year was as follows:
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 years.
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.
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
120
(All numbers)
The average monthly number of employees during the year was as follows;
Research and development
Administration & Operations
Sales & Marketing
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
6. Directors’ remuneration
(All figures £m)
Directors’ remuneration
Pension
Total Directors’ remuneration
12 months to
31 December
2023
12 months to
31 December
2022
1.9
0.1
2.0
1.8
0.1
1.9
Directors’ emoluments disclosed above paid to the highest paid Director in the year was £0.6m (31 December 2022:
£0.5m) including Pension contribution of £0.03m. The share options exercised in the year by the highest paid Director was
£nil (31 December 2022: £nil).
There were Company pension contributions of £0.1m made to defined contribution schemes during the current year (31
December 2022: £0.1m). Four Directors are in the defined contribution scheme (2022: Four). No shares were received or
receivable for any Director in respect of long-term incentive schemes. No share options were exercised during the year.
7. Research and development expenditure
During the current and comparative years, research and development was a significant activity of the entity. Expenditure
on research activities is recognised in the statement of profit or loss as incurred.
8. Share-based payments
At 31 December 2023 the Group has an established Enterprise Management Incentive (“EMI”) and non-EMI schemes
(the “Schemes”) under which share options have been granted to certain officers, employees and certain suppliers.
The Schemes are equity-settled share-based payment arrangements whereby holders of vested options are entitled to
purchase shares in the Company at the market price of the shares at the grant date.
The Schemes include both market and non-market based vesting conditions. The share options may be exercised from
the date that they vest until the 10th anniversary of the date of the grant. In addition to the performance-based vesting
conditions the only vesting requirement is that the recipient remains in employment with the Company with the exception
of tranches 11 and 12 where employment is not a criteria. All options are to be settled by the physical delivering of shares.
Details of the grants under these schemes are as follows:
Award Grant date
options Vesting conditions
Number of
Exercise
price (£)
Fair
value (£)
2
3
4
5
6
7
8
9
06 December 2013 243,720 Continual service of employment over 3 years
1,121,400 Continual service of employment over 3 years
14 July 2015
670,680 Continual service of employment over 3 years
14 July 2015
03 August 2015
1,242,000 Continual service of employment over 3 years
216,000 Continual service of employment over 3 years
04 August 2015
29 September 2016 1,944,000 Continual service of employment over 3 years
09 December 2016 5,907,896 Continual service of employment over 3 years
875,902 Continual service of employment and market
04 April 2018
10
29 August 2018
based performance conditions
1,746,718 Continual service of employment over 3
years and non market based performance
conditions
0.21
0.17
0.17
0.17
0.17
0.17
0.76
1.13
1.54
Contractual
life of
options
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
0.09
0.11
0.11
0.12
0.12
0.11
0.48
0.58
0.84
10 years
11
12
13
14
15
16
17
18
19
20
18 October 2018
02 July 2018
17 October 2019 &
7 November 2019
18 February 2020
23 July 2020
04 & 27 January
2021
749,209 Non market based performance conditions
1,000,000 Non market based performance conditions
3,348,475 Non market and market based performance
0.76
1.26
0.001 to 1.71
1.60
0.67
0.86 to 1.69
10 years
10 years
10 years
conditions
490,000 Non market and market based performance
0.01
0.51
10 years
conditions
725,369 Continual service of employment over 3 years
1,117,837 Continual service of employment over 3
2.01
0.001 to 1.92
1.18
0.97 to 2.17
10 years
10 years
years and non market based performance
conditions
14 June 2021
928,164 Non market and market based performance
0.001 to 2.06
0.81–1.84
10 years
conditions
23 November 2021 4,633,465 Market based performance conditions
1,537,212 Market based performance conditions
04 August 2022
12,558,401 Market based performance conditions
7 June 2023 &
2 August 2023
0.001
1.41
0.001 to 1.92 0.26 to 0.76
0.001
0.2352 to
0.3225
10 years
10 years
10 years
41,056,447,
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
122
123
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
8. Share-based payments continued
Share option activity for the year ended 31 December 2023 and 31 December 2022 is presented below:
Outstanding at start of year as previously stated
Granted during the prior year
Granted during the year
Forfeited during the year
Cancelled during the year
Exercised during the year
Outstanding at end of year
Exercisable at end of year
31 December
2023
Number of
options
31 December
2023
Weighted
average
exercise price
31 December
2022
Number of
options
31 December
2022
Weighted
average
exercise price
19,983,867
–
12,558,401
(298,316)
–
–
32,243,951
11,995,324
18,763,437
£0.62
105,000
£0.00
1,537,212
£0.08
(297,835)
£0.98
–
£0.00
(123,947)
£0.00
£0.39 19,983,867
£0.84 10,850,549
£0.60
£1.71
£0.34
£1.69
£0.00
£0.55
£0.62
£0.79
Weighted average remaining contractual life (in years)
of options outstanding at the year end
6.9
6.3
The estimated fair value of the share options was calculated by applying a Black-Scholes model for shares with no market-
based performance conditions and a Monte Carlo model for those with a market-based performance condition. The model
inputs for the current year option grants were as follows:
Exercise price
Share price at date of grant
Risk-free interest rate
Expected volatility
Dividend yield
Contractual life of option (years)
31 December 2023
31 December 2022
£0.001
0.2325–0.3225
4.5%–5%
54%–55%
0%
10
£0.001 – £1.92
£0.75
1.75%
46%
0%
10
Expected volatility was based on historical share price volatility for the 12 months to the grant date, which may not
necessarily be the actual outcome. No share options were exercised during the year. Unless specified the vesting period of
the options is 3 years.
(All figures £m)
Expense arising from share-based payment transactions
Expense arising from SIP scheme
12 months to
31 December 2023
12 months to
31 December 2022
1.0
0.2
1.2
1.3
0.1
1.4
The following amounts for share-based payments are reflected in the above Consolidated Statement of Profit or Loss and
Other Comprehensive Income in relation to Directors:
12 months to
31 December 2023
12 months to
31 December 2022
0.2
0.2
0.1
0.1
0.6
0.2
0.3
0.2
0.0
0.7
(All figures £m)
Professor Christopher Hancock
Craig Gulliford
Richard Rees
David Woods
124
8. Share-based payments continued
During the prior year the Group implemented a SIP scheme for all UK employees. Employees are able to purchase up to
£1,800 in Partnership Shares each year. The Company will then provide two matching shares for each Partnership Share
purchased. Employees must remain with the Company for three years to keep the matching shares and five years to
receive the shares tax free. The shares purchased/issued during the year under the scheme are as follows:
(All figures exact numbers)
Total Shares at 01 January
Partnership Shares purchased in year
Matching shares issued in year
Total Shares in SIP scheme at 31 December
2023
2022
573,801
627,318
1,156,624
2,357,743
139,838
111,211
322,752
573,801
The total value of the Partnership Shares which was charged to administrative expenses in the year was £0.2m.
Matching shares for the partnership shares purchased under the SIP scheme in December 2023 were not issued until
after the yearend.
9. Finance expenses and finance income
(All figures £m)
Finance income:
Bank interest
Fair value adjustment for derivatives
Total finance income
Finance costs:
Bank interest
Interest expense on lease liabilities
Unwind of the discount on lease liabilities
Unwind of the discount on deferred and contingent liabilities
Total finance costs
Information on leases is shown in Note 25.
10. Taxation
Recognised in the statement of profit or loss and other comprehensive income
(All figures £m)
Current tax:
Current year
Adjustments for prior years
Foreign tax:
Adjustments for prior years
Current tax credit
Deferred tax:
Origination and reversal of temporary timing differences
Total tax credit
12 months to
31 December
2023
12 months to
31 December
2022
0.7
–
0.7
0.4
0.0
–
–
0.4
0.1
0.0
0.1
0.2
0.0
0.0
0.1
0.3
12 months to
31 December
2023
12 months to
31 December
2022
Note
(4.0)
0.0
0.1
–
(3.9)
1.1
(2.8)
16
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
(4.4)
–
0.1
–
(4.3)
0.3
(4.0)
125
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
10. Taxation continued
Reconciliation of effective tax rate:
(All figures £m)
Loss for the year
Total credit
Loss excluding taxation
Tax using the UK corporation tax rate of 23.5% (2022: 19%)
Research and development
Movement in deferred tax not provided
Non-deductible expenses
Equity-settled share-based payments
Different tax rates applied in overseas tax jurisdictions
Losses Utilised
Fixed Asset differences
Deferred tax assets recognised
Prior year adjustment
Total tax credit
12 months to
31 December
2023
12 months to
31 December
2022
(21.7)
(2.8)
(24.5)
(26.9)
(4.0)
(30.9)
(5.8)
0.1
2.0
0.3
–
0.0
(0.3)
0.2
0.8
(0.1)
(2.8)
(5.9)
(1.9)
3.0
0.4
0.1
0.1
0.4
0.0
(0.2)
–
(4.0)
The Group has submitted R&D tax relief claims under the small or medium-sized enterprises (“SME“) scheme and £2.7m
(2022: £4.5m) has therefore been accounted as a tax credit in accordance with IAS 12 Income Taxes. In addition, the Group
has also submitted R&D claims under the large company (“RDEC“) scheme in relation to monies received from research
grants. In accordance with IAS 20 Accounting for Government Grants, an amount of £nil (2022: £nil) has been accounted
for ‘above the line’ as a reduction from the related expenditure in the statement of comprehensive income. Movements in
deferred and other taxes were £0.1m.
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase
to 25% (rather than remaining at 19%, as previously enacted). This new law was substantively enacted on 24 May 2021.
For the financial year ended 31 December 2023, the current weighted averaged tax rate was 23.5%. Deferred taxes at the
balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.
11. Loss per share
Loss per share has been calculated in accordance with IAS 33 – Earnings Per Share using the loss for the year after tax,
divided by the weighted average number of shares in issue.
(All figures £)
Loss
Loss attributable to equity holders of Company (basic)
12 months to
31 December 2023
12 months to
31 December 2022
(21,720,908)
(26,936,464)
Shares (number)
Weighted average number of Ordinary Shares in issue during the year
313,004,399
181,335,216
Loss per share
Basic and diluted
Ordinary Shares start of year
Issued in year
Issue 1 – Ordinary
Issued with months remaining
Issue 2 – Ordinary
Issued with months remaining
Issue 3 – Ordinary
Issued with months remaining
Issue 4 – Ordinary
Issued with months remaining
Issue 5 – Ordinary
Issued with months remaining
Closing Ordinary Shares
Average Ordinary Shares
Basic EPS
(0.07)
(0.15)
181,545,885
181,099,186
796,478
11
168,548,909
9
10,000,000
5
360,146
5
–
–
361,251,418
313,004,399
(0.07)
105,810
11
216,942
5
27,000
5
78,947
5
18,000
3
181,545,885
181,335,216
(0.15)
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
126
127
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
12. Intangible assets and goodwill
(All figures £m)
Goodwill
Trade Name
Customer
Relationships
Supplier
Relationships
Development
costs
capitalisation
Computer
software
Assets
under
construction
Cost:
At 1 January 2022
Additions
Transferred
Effect of
movements in
exchange rate
At 31 December
2022
Amortisation:
At 1 January 2022
Charge for the
year
Transferred
Effect of
movements in
exchange rate
At 31 December
2022
Net book value
at 31 December
2022
18.6
–
–
1.0
19.6
–
–
–
–
–
19.6
1.1
–
0.1
1.2
0.2
0.1
0.0
0.3
0.9
1.1
–
0.1
1.2
0.2
0.1
0.0
0.3
0.9
7.2
–
0.4
7.6
1.0
0.7
0.1
1.8
5.8
0.6
–
–
–
0.6
0.3
0.1
0.0
–
0.4
0.2
0.5
0.1
0.0
–
0.6
0.3
0.1
(0.0)
–
0.4
0.2
–
0.0
(0.0)
–
–
–
–
–
–
–
(All figures £m)
Goodwill
Trade Name
Customer
Relationships
Supplier
Relationships
Development
costs
capitalisation
Computer
software
Assets
under
construction
0.6
0.2
–
0.8
0.4
0.1
–
0.5
0.6
0.1
0.0
–
0.7
0.4
0.1
(0.0)
0.5
–
0.1
(0.0)
–
0.1
–
–
–
–
19.6
–
–
(0.5)
19.1
–
–
–
–
19.1
1.2
–
–
(0.0)
1.2
0.3
0.2
1.2
–
–
(0.1)
1.1
0.3
0.1
7.6
–
–
–
7.6
1.8
0.7
(0.0)
(0.0)
(0.0)
0.5
0.7
0.4
0.7
2.5
5.1
Cost:
At 1 January 2023
Additions
Transferred
Effect of
movements in
exchange rate
At 31 December
2023
Amortisation:
At 1 January 2023
Charge for the
year
Effect of
movements in
exchange rate
At 31 December
2023
Net book value
at 31 December
2023
128
12. Intangible assets and goodwill continued
The amortisation of intangibles has been charged to administrative expenses in the Consolidated Statement of profit
or loss and other Comprehensive Income. The supplier relationship intangible arose on the acquisitions of Albyn and
Boucart Medical in 2020. The remaining amortisation of the Albyn supplier relationships is 79 months and the remaining
amortisation for the Boucart supplier relationships is 82 months.
Capitalised development costs
£14k of capitalised software was transferred from assets under construction to computer software in the year. £0.1m in
relation to software was capitalised during the year. Development costs in relation to the Speedboat Ultra of £0.1m and a
Bipolar snare of £0.1m were capitalised during the year (31 December 2022: £nil).
Assets under construction
There was £0.1m of assets under construction at the 31 December 2023 in relation to software purchased during the year
(31 December 2022: £15k).
Impairment of intangible assets
An impairment review of intangibles was carried out including consideration of potential climate related risks on the
longer-term intangibles including trade name, supplier relationships and customer relationships. No impairment to
intangible assets were recognised during the year.
Goodwill impairment test
Goodwill assets considered significant in comparison to the Group’s total carrying amount of such assets have been
allocated to cash generating units or groups of cash generating units as follows:
(All figures £m)
Albyn Group of CGUs
Boucart single CGU
Aber single CGU
Albyn Goodwill Assumptions
31 December
2023
31 December
2022
15.6
2.0
1.5
19.1
16.0
2.1
1.5
19.6
Goodwill arising on acquisition of Albyn has been allocated to a single CGU Group which consists of the subsidiary
entities within the Albyn Group, each being classified as a CGU unit. The recoverable amount of this CGU Group was
based on value in use, estimated using discounted cashflows. The key assumptions used in the calculation are shown in
the table below:
In percent
Pre-tax Discount rate
Terminal value growth rate
Budgeted revenue growth rate (average of next 5 years)
2023
13.37%
2%
4%
2022
14.23%
2%
4%
The discount rate has been calculated based on the weighted average cost of capital for Albyn Medical, based on the
capital asset pricing model. In calculating the relevant inputs we considered historical and long-term market return
studies, data from comparable companies within the industry and other relevant external data.
Total
29.1
0.1
–
1.6
30.8
2.0
1.1
–
0.1
3.2
27.6
Total
30.8
0.4
(0.0)
(0.6)
30.6
3.2
1.2
(0.0)
4.4
0.3
0.2
0.1
26.2
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
129
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Notes to the financial statements continued
12. Intangible assets and goodwill continued
We considered potential future impacts from climate change in the future and the impact these could have on the carrying
value of each CGU in the Group. Although a formal scenario planning has not yet been finalised we did not identify any
indicators which we consider would have a material impact on the assessment of the value in use of the CGU.
The growth rate was based on a five year forecast based on management expectations with revenue assumed to reduce to
a 2% terminal growth rate over the long term. The Group has conducted sensitivity analysis on the impairment testing.
(Amounts in £m)
Albyn CGU Group
Sensitivity scenario (amounts in £’ms):
Discount rate increase by 1%
Terminal value growth rate reduce by 1%
Budgeted revenue growth rate (average of next 5 years) reduced by 2%
Boucart Goodwill Assumptions
Headroom
17.4
Impact on Headroom
(5.0)
(4.0)
(7.5)
Goodwill arising on acquisition of Boucart has been allocated to a single CGU. The recoverable amount of this CGU Group
was based on value in use, estimated using discounted cashflows. The key assumptions used in the calculation are shown
in the table below:
In percent
Pre-tax Discount rate
Terminal value growth rate
Budgeted revenue growth rate (average of next 5 years)
2023
14.15%
2%
4%
2022
13.42%
2%
4%
The discount rate has been calculated based on the weighted average cost of capital for Boucart, based on the capital
asset pricing model. In calculating the relevant inputs we considered historical and long-term market return studies, data
from comparable companies within the industry and other relevant external data.
We considered potential future impacts that climate change could have on the carrying value of the CGU. Although a
formal scenario planning has not yet been finalised we did not identify any indicators which we consider would have a
material impact on the assessment of the value in use of the CGU.
The growth rate was based on a five year forecast based on management expectations with revenue assumed to reduce to
a 2% terminal growth rate over the long term. The Group has conducted sensitivity analysis on the impairment testing.
(Amounts in £m)
Boucart CGU
Sensitivity scenario (amounts in £m):
Discount rate increase by 1%
Terminal value growth rate reduce by 1%
Budgeted revenue growth rate (average of next 5 years) reduced by 2%
Headroom
2.1
Impact on Headroom
(0.7)
(0.5)
(1.2)
12. Intangible assets and goodwill continued
Aber Goodwill Assumptions
Goodwill arising on acquisition of Aber has been allocated to a single CGU. The recoverable amount of this CGU Group
was based on value in use, estimated using discounted cashflows. The key assumptions used in the calculation are shown
in the table below:
In percent
Discount rate
Terminal value growth rate
Budgeted revenue growth rate (average of next 5 years)
2023
15.56%
3%
6%
2022
14.89%
3%
6%
The discount rate has been calculated based on the weighted average cost of capital for Aber, based on the capital asset
pricing model. In calculating the relevant inputs we considered historical and long-term market return studies, data from
comparable companies within the industry and other relevant external data.
We considered potential future impacts that climate change could have on the carrying value of the CGU. Although a
formal scenario planning has not yet been finalised we did not identify any indicators which we consider would have a
material impact on the assessment of the value in use of the CGU.
The growth rate was based on a five-year forecast based on management expectations with revenue assumed to reduce
to a 2% terminal growth rate over the long term. The Group has conducted sensitivity analysis on the impairment testing.
(Amounts in £m)
Aber CGU
Sensitivity scenario (amounts in £’ms):
Pre-tax Discount rate increase by 1%
Terminal value growth rate reduce by 1%
Budgeted revenue growth rate (average of next 5 years) reduced by 2%
Headroom
0.6
Impact on Headroom
(0.2)
(0.2)
(0.3)
130
131
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Notes to the financial statements continued
13. Property, plant and equipment
Land &
Buildings
Leasehold
Improvements
Office
equipment
Fixtures
and
fittings
Motor
vehicles
Plant and
machinery
Assets
under
construction
Demo
Equipment
(All figures £m)
Cost:
At 1 January 2022
Additions
Transferred
Disposals
Exchange rate
movements
At 31 December 2022
Accumulated
Depreciation:
At 1 January 2022
Charge for the year
Disposals
Exchange rate
movements
At 31 December 2022
Net book value at
31 December 2022
Cost:
At 1 January 2023
Additions
Transferred
Disposals
Exchange rate
movements
At 31 December
2023
Accumulated
Depreciation:
At 1 January 2023
Charge for the year
Disposals
Exchange rate
movements
At 31 December 2023
Net book value at 31
December 2023
4.5
0.1
–
–
–
4.6
0.1
0.1
–
–
0.2
4.4
4.6
–
–
–
–
4.6
0.2
0.1
–
–
0.3
0.7
0.1
0.1
–
(0.0)
0.9
0.6
0.1
–
0.0
0.7
0.2
0.9
0.4
1.4
–
1.5
0.3
–
(0.0)
0.0
1.8
1.0
0.3
(0.0)
0.0
1.3
0.5
1.8
0.1
–
–
0.3
0.0
–
(0.0)
0.0
0.3
0.2
–
–
0.0
0.2
0.1
0.3
–
–
(0.0)
0.5
0.2
–
(0.1)
(0.1)
0.5
0.3
0.1
(0.1)
(0.1)
0.2
0.3
0.5
0.1
–
(0.0)
2.2
0.4
–
(0.0)
0.0
2.6
1.3
0.5
(0.0)
0.0
1.8
0.8
2.6
0.1
–
(0.0)
(0.1)
(0.0)
(0.0)
(0.0)
(0.0)
2.6
1.9
0.3
0.6
2.7
0.7
0.3
–
(0.0)
1.0
1.3
0.3
–
(0.0)
1.6
0.2
0.1
(0.0)
(0.1)
0.2
0.2
0.1
(0.0)
(0.0)
0.3
1.8
0.4
(0.0)
(0.0)
2.2
0.1
1.4
(0.1)
–
0.0
1.4
–
–
–
–
–
1.4
1.4
0.1
(1.4)
–
0.0
0.1
–
–
–
–
–
Right of
Use
Asset
Leases
3.1
0.2
–
0.2
3.5
1.1
0.7
–
(0.1)
1.7
Total
13.6
3.4
–
(0.2)
0.1
16.9
5.1
2.0
(0.2)
(0.2)
6.7
1.8
10.2
3.5
0.4
–
(0.6)
16.9
1.3
–
(0.6)
0.7
0.7
–
(0.1)
0.0
1.3
0.5
0.2
(0.1)
0.0
0.6
0.7
1.3
0.1
–
(0.0)
(0.1)
(0.1)
(0.3)
1.3
3.2
17.3
0.6
0.3
(0.0)
(0.0)
0.9
1.7
0.6
(0.6)
–
1.7
6.7
2.2
(0.6)
(0.1)
8.2
4.3
1.6
0.3
0.1
0.3
0.5
0.1
0.4
1.5
9.1
Assets under construction for the year of £0.1m (2022: £1.4m) relate to leasehold improvements in our additional building
at the Chepstow site. £1.4m of brought forward assets under construction were transferred to leasehold improvements
during the year. The Chepstow building is pledged as a security for the mortgage.
132
14. Inventories
(All figures £m)
Raw materials & consumables
Finished goods
Total inventories
31 December
2023
31 December
2022
3.1
5.0
8.1
3.0
6.3
9.3
These carrying values are stated net of impairment provisions of £2.2m (2022: £2.6m). Inventories of £2.2m (2022: £1.4m)
were written down during the year and the expense recognised in the income statement. £1.5m of inventories relating to
PPE for the Spain government were written off during the year with the same value being written off the loan with the
Spain government. £14.4m of inventories was recognised in the income statement in cost of sales. The Directors are of the
opinion that the replacement values of inventories are not materially different to the carrying values stated above.
15. Trade and other receivables
(All figures £m)
Current:
Trade Receivables
Accrued income
Other debtors
Prepayments
Total current
Non-current:
Other debtors
Total trade and other receivables
31 December
2023
31 December
2022
6.4
1.4
0.1
0.7
8.6
0.2
8.8
4.9
0.3
0.4
1.1
6.7
0.2
6.9
An expected credit loss provision of £0.3m (2022: £0.2m) in relation to trade debtors has been booked during the year.
An expected credit loss provision was calculated for the other debtors balance and was deemed immaterial and therefore
not recognised.
16. Deferred tax
The accelerated capital allowances deferred tax liability set out below is expected to reverse over the life of the related
fixed assets. Deferred tax has been calculated at a rate of 25% (2022: 25%).
The movement on the deferred tax account is as shown below:
(All figures £m)
Movement:
At 1 January
Deferred Tax Asset recognised
Adjustment for prior years
Tax charge recognised in profit and loss
Losses utilised
Change in tax rate
Exchange rate movements
At 31 December
(All figures £m)
Balances:
Intangible assets
Pension accruals and other temporary timing differences
Tax losses offset (see below)
31 December
2023
31 December
2022
0.5
(0.8)
(0.1)
(0.5)
(0.9)
1.0
0.1
0.1
0.3
0.1
(0.2)
–
0.1
(0.0)
0.4
–
0.1
0.5
31 December
2023
31 December
2022
1.7
(0.3)
(1.1)
0.3
2.1
(0.1)
(1.5)
0.5
133
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
16. Deferred tax continued
(All figures £’m)
Balances:
Deferred tax asset
Deferred tax liability
Net Deferred Tax liability
31 December
2023
31 December
2022
(1.1)
1.4
0.3
(1.5)
2.0
0.5
There are estimated unused trading losses at 31 December 2023 of approximately £69.4m (31 December 2022: estimated
£59.3m). A deferred tax asset of £0.75m has been recognised in relation to these losses as Group believe they will be
able to offset future profits from Creo Medical UK Limited with c. £0.35m expected to be utilised within 12 months and
c.£0.4m over 12 months. We also have £0.4m deferred tax asset relating to Creo Spain and Creo France. These have been
recognised as we expect to utilise these losses against future profits with c.£0.2 within 12 months and £0.2m over 12
months. A remaining deferred tax asset of approximately £16.6m (31 December 2022: £12.5m) has not been recognised in
respect of these tax losses due to uncertainty in respect of its recoverability. A deferred tax asset of approximately £0.4m
arises in respect of the share options that haven’t yet been exercised. This has not been recognised due to uncertainty in
respect of its recoverability.
Tax receivables at 31 December 2023 of £2.7m (31 December 2022: £4.5m) relate solely to R&D tax credits. The Company
has submitted R&D tax credit claims for the years presented in relation to its qualifying research and development
expenditure and has taken the option of surrendering the resulting losses and claiming an R&D tax credit in the form of
immediate cash payments from HMRC.
17. Trade and other payables
(All figures £m)
Current:
Trade payables
Social security and other taxes
VAT payable
Other payables
Accrued expenses
Derivative Liability
PPE Loan
Deferred and Contingent Consideration
Total trade and other payables
31 December
2023
31 December
2022
2.7
0.4
0.1
0.7
2.0
0.0
–
0.7
6.6
4.3
0.5
0.5
0.6
3.1
0.0
1.6
2.6
13.2
The PPE loan with the Navarra government was settled during the year with the loan being written off. The PPE stock
which was held by Creo was donated to hospitals in Venezuela in agreement with the Navarra government. At the year
end no liability in relation to the loan or asset in relation to the PPE inventory was held on the balance sheet. The PPE loan
was shown on the non-interest bearing loans line in the balance sheet.
As at 31 December 2023 the Group has deferred consideration in relation to the Albyn Medical acquisition in 2020 of £nil.
£1.1m of deferred consideration was paid during the year.
A contingent consideration liability of £0.7m was recognised in the 2022 financial statements in relation to the acquisition
of Albyn Medical SL in 2020. The targets were met and the full and £0.8m was paid during the year. There is no further
contingent liability in relation to the purchase of Albyn Medical.
A contingent consideration liability of £0.4m was recognised in the 2022 financial statements in relation to the acquisition
of Boucart Medial SRL in 2020. The targets were met during the year and the full £0.4m was paid during the year. There is
no further contingent liability in relation to the purchase of Boucart Medical SRL.
A contingent consideration liability of £0.7m has been recognised in the financial statements in relation to the acquisition
of Aber Electronics Limited in 2021. The Group considered it probable that the targets will be achieved based on current
performance to date and therefore expect the provision will be paid in full.
18. Financial instruments
Carrying amount of financial instruments
The amounts for all financial assets carried at fair value are as follows:
(All figures £m)
Investments:
I.Q. Endoscopes
Reconciliation to cashflow movements
01 January 2022
Additions
Cashflow Principals
Cashflow Interest
Non-cash Changes Interest*
Non-cash Changes FX
31 December 2022
01 January 2023
Additions
Cashflow Principals
Cashflow Interest
Non-cash Changes Interest*
Non-cash Changes FX
31 December 2023
31 December
2023
31 December
2022
2.1
2.1
Gross Loan
Lease
Liabilities
6.8
2.9
(1.6)
(0.1)
0.0
0.3
8.3
2.1
0.2
(0.8)
(0.0)
0.0
0.2
1.7
Gross Loan
Lease
Liabilities
8.3
0.2
(1.4)
(0.2)
0.0
0.1
7.0
1.7
0.4
(0.7)
(0.0)
0.0
0.0
1.4
* Non-cashflow changes relate to effective interest rate charge on the Cardiff Capital Region loan and lease interest incurred on IFRS 16 leases
Lease information is shown in Note 25.
Financial instruments measured at fair value
The fair value of forward exchange contracts is estimated by discounting the difference between the contractual forward
price and the current forward price for the residual maturity of the contract using a risk-free interest rate. There were no
forwards at the year end (2022: £nil).
Financial risk management
The main purpose of the Company’s financial instruments is to finance the Company’s operations. The financial
instruments comprise of leases, foreign currency forward contracts, bank loans and facilities, cash and liquid resources
and various items arising directly from its operations, such as trade receivables and trade payables. The main risks arising
from the Company’s finance instruments are exchange rate risk, interest rate risk, and liquidity risk. The Company’s
policies on the management of liquidity interest rates and foreign currency risks are set out below.
Fair values of financial instruments
All financial assets and liabilities are held at amortised cost apart from forward exchange contracts, and the investment
which are held at fair value. Foreign exchange contracts changes go through the statement of profit or loss. The
investment was fair valued at 31 December 2023.
134
135
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
18. Financial instruments continued
(All figures £m)
Carrying Value as at 1 January
Additional Investment
Share Warrant Exercise
Fair Value Gain through OCI
Balance at 31 December
2023
2.1
–
–
0.0
2.1
2022
1.7
0.0
0.0
0.4
2.1
The Company measured the fair value of instruments which are categorised as level 2 in the fair value hierarchy, being
the investment in I.Q. Endoscopes as the price paid per share by other shareholders who also invested in the entity at
the same time as the Group. No additional equity investment was made during the year into the entity. We have therefore
determined the fair value per share to be the same as the previous funding round at £2.45 to be representative of the fair
value of the shares at 31 December 2023.
Shares owned 1 January 2023
Additional shares acquired during the year
Fair Value per share (£)
Fair Value of investment (£m)
Cost of initial investments
Gain through OCI since investment (£m)
850,708
–
2.5
2.1
(1.5)
0.6
We have made an irrevocable election to classify fair value changes of the investment in I.Q. Endoscopes through
other comprehensive income rather than through profit or loss, the impact of this being any changes in fair value will
never be reclassified through the profit or loss account even if the investment is disposed of. Management rationale for
this treatment is that the investment is not being held for the purposes of future sale or to receive returns. Instead the
investment is to help develop their disposable endoscopy products and potential synergies this could have with the Creo
product range.
The Company has not disclosed the fair values for certain financial instruments such as short-term trade receivables and
payables, because their carrying amounts are a reasonable approximation of fair values. Short and long-term interest
bearing liabilities, as detailed in Note 19, are discounted at the effective interest rate of the respective financial liability and
their carrying value is considered to be a reasonable approximation of their fair value.
Liquidity
The Company’s policy is to ensure that it has sufficient cash resources to cover its future trading requirements which is
predominately sourced from its shareholders and investors. Short-term flexibility is available through current investor
support as well as banking facilities across the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from the Group’s receivables from customers and investments in debt securities.
Interest-rate risk and benchmark reform
The Group has limited exposure to interest rate fluctuations with some loans acquired post year end having variable
interest rates. Where possible we look to offset interest from loans with interest received from our cash on deposit. We do
not consider that any significant increase in interest rates would have a material impact on the business. The Group has
some loans linked to the EURIBOR however we don’t consider any major movements in the benchmark would result in a
material interest liability for the Group. We therefore do not consider the transition to alternative benchmark rates to be a
significant risk.
Trade Receivables
The carrying amounts of financial assets represent the maximum credit exposure. As at 31 December 2023 no investments
in debt securities (2022: nil) or other contract assets were held and receivables from customers were £6.4m (2022: £4.7m).
18. Financial instruments continued
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,
management also considers the factors that may influence the credit risk of its customer base, including the default risk
associated with the industry and country in which customers operate as well as other macro-economic conditions.
Each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms
and conditions are offered. The Group’s review includes external ratings, if they are available and review of financial
statements. Where it is deemed the risk of the customer defaulting may be high the Group will require the customer to
pre-pay for items for a certain length of time before offering credit terms.
The Group limits its exposure to credit risk from trade receivables by establishing a maximum payment period of one and
three months for customers. The terms very depending on their individual characteristics such as credit risk assessment,
geographical local and public or private customers. The majority of the Group’s customers have been transacting with the
Group for a number of years with no credit issues arising.
Expected credit loss assessment for trade receivables
The following table provides information about the exposure to credit risk and ECLs for trade receivables and contract
assets from individual customers as at 31 December 2023.
(All figures £m)
Excluded from ECL Calculation
Current (not past due)
0–60 days
61–120 days
121–180 days
More than 180 days past due
Weighted
Average Loss
Gross Carrying
Amount
Loss
Allowance
0%
1%
6%
12%
20%
100%
0.9
4.0
1.4
0.1
0.2
0.1
6.7
–
0.1
0.1
0.0
0.0
0.1
0.3
The Group uses an allowance matrix to measure the ECLs of trade receivables consistent with IFRS 9. Loss rates are
calculated using historical write-off data from the last 18 months to work out the probability of default based on the aging
of the receivable. Where the Group has forward looking information which means the ECL would be unlikely to occur we
have excluded these from the calculation. At 31 December 2023 the ECL for trade receivables was £0.9m (2022: £0.2m).
The movement in the allowance for impairment in respect of trade receivables and contract assets during the year was as
follows:
(All figures £m)
Balance at 1 January
Loss allowance movement
Balance at 31 December
Foreign exchange risk
2023
(0.2)
(0.1)
(0.3)
2022
(0.5)
0.3
(0.2)
The Company currently purchases certain materials throughout the world in connection with research and development of
its primary product.
The Company also has subsidiaries which operate in a different functional currency. The consequence of this is that the
Company is exposed to movement in foreign currency rates. Liabilities within the Group are settled where possible using
the currency of the liability to reduce foreign exchange exposure. Forward foreign exchange contracts are used to manage
the net foreign exchange exposure where appropriate.
Market Risk
We do not consider market risk to be a material risk to the Group at this time.
136
137
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
19. Interest-bearing liabilities
(All figures £m)
Current:
Lease liabilities
Bank credit facilities
Bank loans
Mortgage
Non-current:
Lease liabilities
Bank loan
Commercial loan
Mortgage
Lease liabilities are payable as follows:
Less than one year
Between one and five years
More than five years
Bank borrowings are payable as follows:
Less than one year
Between one and five years
More than five years
31 December
2023
31 December
2022
19. Interest-bearing liabilities continued
The terms and conditions of outstanding loans are as follows:
25
25
0.6
2.0
0.4
0.1
3.1
0.8
0.3
2.1
2.0
5.2
8.3
0.6
0.7
0.1
1.4
2.5
4.4
0.0
6.9
8.3
0.6
2.2
1.1
0.1
4.0
1.2
0.6
2.2
2.1
6.1
10.1
0.6
1.1
0.1
1.8
3.5
4.8
0.0
8.3
10.1
(Amounts in £m)
Secured Bank Loan
Secured Bank Loan
Secured Bank Loan
Secured Bank Loan
Secured Bank Loan
Secured Bank Loan
Secured Bank Loan
Secured Bank Loan
Secured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Unsecured Bank Loan
Mortgage
Commercial Loan
Short term Credit with
Banks
Lease Liabilities
Lease Liabilities
Total interest bearing
liabilities
Currency
Nominal
interest rate
31 December 2023
31 December 2022
Year of
maturity
Principal
Value
Carrying
Value
Principal
Value
Carrying
Value
EUR EURIBOR+2,5%
EUR EURIBOR+2%
EUR EURIBOR+2%
EUR 2%
EUR EURIBOR+2%
EUR EURIBOR+1%
EUR EURIBOR+1%
EUR EURIBOR+1%
EUR EURIBOR+1%
EUR EURIBOR+2%
EUR EURIBOR+2%
EUR 1%
EUR EURIBOR+2%
EUR 2%
EUR 2%
EUR 1%
EUR 1%
EUR 2%
EUR 2%
EUR EURIBOR+1,75%
EUR 0.44%
EUR 0.44%
GBP 2.50%
GBP Base rate +2.5%
GBP 3.66%
EUR 1.45–1.75%
EUR 1.5%–4%
GBP 2.8%–5%
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2025
2023
2023
2023
2023
2025
2025
2025
2025
2024
2024
2026
2027
2025
2024
2021–26
2021–24
0.2
0.0
0.1
0.2
0.2
0.1
0.1
0.1
0.1
0.5
0.5
0.3
0.5
0.3
0.5
0.2
0.3
0.3
0.3
0.3
0.1
0.1
0.1
2.3
2.1
2.3
1.7
0.7
–
–
–
0.0
–
–
–
–
–
0.0
–
0.1
–
–
–
–
0.1
0.1
0.1
0.1
0.1
0.1
0.0
2.1
2.1
2.0
0.8
0.6
0.2
0.0
0.1
0.2
0.2
0.1
0.1
0.1
0.1
0.5
0.5
0.3
0.5
0.4
0.5
0.2
0.4
0.4
0.4
0.4
–
–
0.1
2.3
2.1
2.4
1.8
0.7
14.5
8.3
15.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.1
0.1
0.0
0.0
0.1
0.0
0.3
0.3
0.3
0.3
–
–
0.0
2.2
2.2
2.2
1.2
0.6
10.1
The secured bank loans (other than the UK Secured Bank Loan) belong to Creo Medical SLU (formally Albyn Medical SL)
and are guaranteed by Elkargi. A mortgage for the building purchased in 2021 was obtained during the year. The mortgage
is secured to the property and has a loan to value covenant of 75% and a cashcheck covenant of £5m.
The commercial loan is provided by Cardiff Capital Region for the sum of £2.1m with the first year interest free. The loan
previously had a 1:1 cashflow covenant. This was changed during the year as Creo was in technical breach due to the
wording of the covenant. The loan covenant has been replaced with a cash check covenant requiring the ultimate Parent
Company Creo Medical Group plc to hold £2.3m in cash at all times. The lease liabilities are detailed at Note 25.
138
139
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
20. Provisions
(All figures £m)
At 1 January 2022
Provisions made in the year
Provisions used in the year
At 31 December 2022
Non Current
Current
(All figures £m)
At 1 January 2023
Provisions made in the year
Provisions used in the year
At 31 December 2023
Non Current
Current
Warranty provisions
Warranties
Dilapidations
Legal & Tax
Other
Total
0.1
0.0
(0.0)
0.1
0.0
0.1
0.1
0.4
0.1
(0.1)
0.4
0.4
0.0
0.4
0.2
0.0
(0.2)
0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.1
0.0
0.1
0.1
0.8
0.1
(0.3)
0.6
0.4
0.2
0.6
Warranties Dilapidations
Legal & Tax
Other
Total
0.1
0.0
(0.0)
0.1
0.0
0.1
0.1
0.4
0.0
(0.1)
0.3
0.3
0.0
0.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.0
(0.0)
0.1
0.0
0.1
0.1
0.6
0.0
(0.1)
0.5
0.3
0.2
0.5
Warranty provisions relate to Albyn own brand products and services provided and is based on historical warranty data
associated with similar products and services sold. Management expect the provision to be settled with 12 months of the
year end.
Dilapidation provisions
Provisions have been made for the estimated restoration costs of the leased premises at our UK, Singapore, US, Spain,
France, Germany and Belgium sites.
Provisions for dilapidations are inherently uncertain in terms of quantum and timing, not least because they involve
negotiations with landlords at future dates. The figures provided in the financial statements represent management’s best
estimate of the likely outflows to the Group.
Other provisions
Other provisions include pensions provision of £0.1m as well as other staff benefit provisions which are required in local
jurisdictions. Management expect these liabilities to be settled within 12 months of the year end.
21. Share Capital and Reserves
(All figures £m)
Balance at start of the year
Issue of share capital
Number of shares
Price per share (£)
Share value (£’m)
Balance at 31 December
31 December
2023
31 December
2022
0.2
179.7
0.0
0.2
0.4
0.2
0.4
0.0
0.0
0.2
During the year 168,548,909 shares were issued as part of the fundraise, 1,156,624 issued to the SIP and 10,000,000 shares
issued to the employee benefit trust. The Group has a single class of share: Ordinary Shares £0.001.
Issued share capital
Issued share capital is the amount of nominal value of shares held by shareholders. At 31 December 2023 361,251,418
shares have been issued, each with the nominal value of £0.001 equalling a share capital for the Company of £361,251. All
Ordinary Shares rank as pari passu with regards to voting, dividends and rights on winding up. All shares are authorised
and fully paid.
Share premium
The share premium reserve comprises the difference between the nominal value and the value received on share issue
offset by the costs directly associated with obtaining the capital funding e.g. legal fees. See Note 21 for shares issued
during the year.
Merger reserve
The merger reserve reflects the difference between the existing share capital and premium of Creo Medical Limited prior
to share for share exchange and the nominal value of shares issued. Refer to Note 1 Business combinations and basis
of consolidation.
Share option reserve
The share option reserve reflects the cost to the Group of share options granted but not yet exercised. Refer to Note 8
Share-based payments.
Accumulated losses
Retained earnings including profit or loss for the year comprises the earned profit of the Parent Company and
its subsidiaries.
Foreign exchange gain or loss reserve
The foreign exchange reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations. Unrealised foreign exchange gains or losses from currency translations of foreign
subsidiaries will go through other comprehensive income and into the foreign exchange gain or loss reserve. On disposal
of a foreign operation the gain or loss will become realised and recognised as a profit or loss.
Investment reserve
Any loss or gain on our equity investments which we have elected to revalue through OCI is held in the investment
reserve. This reserve will never be recognised as a profit or loss even upon disposal of the investment. The reserve may be
transferred to retained earnings once the investment is disposed of.
140
141
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
22. Cash from share issue
(All figures £m)
Share issue:
Share options exercised
Issued to EBT Trust
Issued to SIP
Share placing AIM 8 March 2023
Transaction costs AIM 8 March 2023
31 December
2023
31 December
2022
–
0.0
0.0
33.7
(2.0)
31.7
0.1
–
0.0
–
–
0.1
23. Related party disclosures
As at 31 December 2023 the Directors of the Company control 3.18% of the voting shares of the Company.
The remuneration of the Directors of the Company is disclosed in the Directors’ Remuneration Report and Note 6 above.
Share options held by Directors are detailed in the Directors’ Remuneration Report.
Interests and related party transactions are disclosed below
Monkey Business Consultants S.L. is a company owned and managed by Luis Collantes the CEO of the previous Albyn
group for which Creo purchased the remaining 5% of shares from during 2023. For accounting purposes it is assumed
the Group has 100% control. See accounting policy in Note 1. During the year total payments in the ordinary course of
business to Monkey Business Consultants S.L. consisted of £nil. Total amounts paid to Monkey Business Consultants S.L.
in relation to the final earnout was £1.1m.
Total remuneration to Luis Collantes in the year was £0.2m (2022: £0.3m).
Morgan Rees the son of Richard Rees was employed during the year to complete a specific project in relation to fixed
assets within the business. A total of £0.1k was paid through payroll during the year. No balance was payable as at the
year end.
Key management personnel are deemed to be those with ultimate decision making power in a particular area of the
business. Aggregate remuneration for the year for all key management totalled £2.9m (31 December 2022: £2.8m).
(All figures £m)
Salary and other taxable benefits
Pension
SBP
12 months to
31 December
2023
12 months to
31 December
2022
2.1
0.1
0.7
2.9
2.0
0.1
0.7
2.8
The following key management personnel purchased shares in the Company as part of the fundraise in March 2023 as
follows:
KMP
NO. OF ORDINARY SHARE ACQUIRED
CHARLES SPICER
CRAIG GULLIFORD
RICHARD REES
PROFESSOR CHRISTOPHER HANCOCK
DAVID WOODS
JOHN BRADSHAW
IVONNE CANTU
LUIS COLLANTES
165,118
1,000,000
2,715,322
383,171
415,255
1,265,135
125,000
4,442,485
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
142
24. Ultimate controlling party
By virtue of the shareholding structure, there is no sole ultimate controlling party.
25. Leases
The accounting policy for leases under IFRS 16 has been explained in Note 1.
Leases as lessee (IFRS 16)
The Group leases building facilities in the UK, US, Singapore, France, Spain, Germany and Belgium. The leases typically
run for a period of three to ten years, with an option to renew the lease after that date. Lease payments are renegotiated
every five years to reflect market rentals. Some leases provide for additional rent payments that are based on changes in
local price indices. For certain leases, the Group is restricted from entering into any sub-lease arrangements.
Some of the building leases were entered into many years ago as combined leases of land and buildings. Previously, these
leases were classified as operating leases under IAS 17. New leases have been recognised under IFRS 16.
The Group leases equipment under a number of leases, which were classified as finance leases under IAS 17.
The Group leases other equipment with contract terms of one to five years. These leases are short-term and/or leases of
low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.
Information about leases for which the Group is a lessee is presented below.
i) Right-of-use assets
Right-of-use assets related to leased properties that do not meet the definition of investment property are presented as
property, plant and equipment.
2022
(All figures £m)
Balance at 1 January
Depreciation Charge
Additions to right of use assets
Disposals of right of use assets
Exchange difference
Balance at 31 December
2023
(All figures £m)
Balance at 1 January
Depreciation Charge
Additions to right of use assets
Exchange difference
Balance at 31 December
ii) Lease liabilities
(All figures £m)
Maturity Analysis – undiscounted contractual cash flows
Less than one year
One to five years
More than five years
Total lease liabilities at 31 December
Lease liabilities included in the statement of financial position at 31 December
Current
Non-current
Land and
buildings
Plant and
machinery
Motor
Vehicles
1.8
(0.6)
0.2
0.0
0.2
1.6
0.1
(0.0)
0.0
0.0
0.0
0.1
0.1
(0.1)
0.0
0.0
0.0
0.0
Land and
buildings
Plant and
machinery
Motor
Vehicles
1.6
(0.6)
0.4
(0.1)
1.3
0.1
(0.0)
–
(0.0)
0.1
0.0
(0.0)
–
(0.0)
0.0
(0.6)
(0.7)
(0.1)
(1.4)
(1.4)
(0.6)
(0.8)
Total
2.0
(0.7)
0.2
0.0
0.2
1.7
Total
1.7
(0.6)
0.4
(0.1)
1.4
(0.6)
(1.1)
(0.1)
(1.8)
(1.8)
(0.6)
(1.2)
143
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Notes to the financial statements continued
Parent Company statement of financial position
25. Leases continued
iii) Amounts recognised in profit or loss
2023- Leases under IFRS 16
(All figures £m)
Depreciation on right of use asset
Interest on lease liabilities
2023
0.6
0.0
2022
0.7
0.0
The total cash outflow for leases in 2023 was £667k (2022: £827k).
iv) Extension options
Some property leases contain extension options exercisable by the Group up to one year before the end of the non-
cancellable contract period .
Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility.
The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease
commencement date whether it is reasonably certain to exercise the extension options. The Group reassesses whether it
is reasonably certain to exercise the options if there is a significant event or significant changes in circumstances within
its control. As at 31 December 2023 no lease extension is expected to be taken by the Group.
26. Capital commitments
The amounts contracted for but not provided for as at 31 December 2023 are £nil (31 December 2022: £nil).
27. Subsequent events
On 13 May 2024 Creo announced the appointment of Kevin T. Crofton and Brent J. Boucher as independent Non-Executive
Directors. Both Kevin and Brent are expected to join the Board with effect from 1 July 2024, with Kevin succeeding
Charles Spicer as Chair.
(All figures £m)
Assets
Non-current assets
Investments in subsidiaries
Property, plant and equipment
Investments
Other receivables
Current assets
Trade and other receivables
Fixed term deposits
Cash and cash equivalents
Total assets
Liabilities
Current Liabilities
Trade and other payables
Interest Bearing Liabilities
Non-Current Liabilities
Trade and other payables
Total Liabilities
Called up share capital
Share premium
Financial Assets at fair value through other comprehensive income
Share option reserve
Retained earnings/(Accumulated losses)
Total Equity
Total equity and liabilities
* Profit for the year was £1.9m.
As at
31 December
2023
As at
31 December
2022
Note
30
31
32
32
33
33
21
28.0
5.5
2.1
144.1
179.7
0.1
15.5
0.2
15.8
195.5
0.2
0.1
2.0
2.3
0.4
180.9
0.6
9.8
1.5
193.2
195.5
27.4
5.8
2.1
118.9
154.2
0.3
–
8.6
8.9
163.1
2.4
0.1
2.1
4.6
0.2
149.5
0.6
8.6
(0.4)
158.5
163.1
The Company has taken the s408 exemption from presenting a separate profit and loss for the year.
These financial statements on pages 145 to 151 were approved by the Board of Directors on 14 May 2024 and were signed
on its behalf by:
Richard Rees
Director
Company registered number: 10371794
144
145
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Parent Company statement of changes in equity
Parent Company notes to the financial statements
(All figures £m)
Note
Called up
share capital
(Accumulated
losses)/
Retained
earnings
Balance at 1 January 2022
0.2
(1.3)
Share
premium
149.4
Investment
Fair Value
Reserve
Share option
reserve
0.2
7.2
Total
equity
155.7
Total comprehensive
income for the year
Profit for the financial year
Other comprehensive income
Total comprehensive income
Transactions with owners,
recorded directly in equity
Issue of share capital
Equity settled share-based
payment transactions
Balance at 31 December
2022
Total comprehensive
expense for the year
Profit for the financial year
Other comprehensive income
Total comprehensive income
Transactions with owners,
recorded directly in equity
Issue of share capital
Equity settled share-based
payment transactions
Balance at 31 December
2023
–
–
–
0.0
–
0.2
–
–
–
0.2
–
0.4
0.9
–
0.9
–
–
–
–
–
0.1
–
–
0.4
0.4
–
–
(0.4)
149.5
0.6
1.9
–
1.9
–
–
–
–
–
31.4
–
–
–
–
–
–
1.5
180.9
0.6
–
–
–
–
1.4
8.6
–
–
–
–
1.2
9.8
0.9
0.4
1.3
0.1
1.4
158.5
1.9
–
1.9
31.6
1.2
193.2
8
8
28. Parent Company financial statements
As permitted by section 408(3) of the Companies Act 2006, a separate Statement of Comprehensive Income, dealing with
the profit of the Parent Company, has not been presented. The Parent Company profit for the year ended 31 December
2023 is £1.9m (2022: profit £0.9m).
29. Parent Company accounting policies
To the extent that an accounting policy is relevant to both the Group and Company financial statements, refer to the
Group financial statements for disclosure of the accounting policy. The nature of the Company’s operations and business
activities are the same as that of the Group and are described in the Strategic Report.
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’ (“FRS 101”).
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements
of UK-adopted international accounting standards (“Adopted IFRSs”), but makes amendments where necessary in order
to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has
been taken.
In these financial statements the Parent Company has taken advantage of the following disclosure exemptions under
FRS 101:
▶ A Cash Flow Statement and related notes;
▶ Comparative reconciliations for share capital;
▶ Comparative reconciliations for PPE;
▶ Disclosures in respect of transactions with wholly owned subsidiaries;
▶ The effects of new but not yet effective IFRSs;
▶ Disclosures in respect of the compensation of Key Management Personnel;
▶ Disclosures of transactions with a management entity that provides key management personnel services to the
Company; and
▶ Certain disclosures required by IFRS 7 Financial Instrument Disclosures.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions
under FRS 101 available in respect of the following disclosures:
▶ IFRS 2 Share Based Payments in respect of Group-settled share-based payments;
▶ Certain disclosures required by IAS 36 Impairment of Assets in respect of the impairment of goodwill and indefinite
life intangible assets; and
▶ Certain disclosures required by IFRS 3 Business Combinations in respect of business combinations undertaken by
the Company.
The accounting policies set out above have, unless otherwise stated, been applied consistently to all years presented in
these financial statements.
Judgements made by the Directors, in the application of these accounting policies that have significant effect on the
financial statements and estimates with a significant risk of material adjustment in the next year, are discussed in Note 1
Critical accounting judgements and policy update.
Significant Estimates
The carrying value of the investment in subsidiary and the intercompany receivable is considered to be a significant
estimate for the Parent Company as it involves significant assumptions about the future cashflows used to support the
estimate. The Directors believe the assumptions used in the calculation were reasonable and consistent with the forecasts
and assumptions used in the Group future cashflow models.
These financial statements have been prepared on a going concern basis, although the Directors have noted a material
uncertainty, see going concern disclosure on page 112.
These financial statements have been prepared under the historic cost convention.
Changes in accounting policy and disclosures as well as a description of the entities operations and business activities
have been disclosed in Note 1.
146
147
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Parent Company notes to the financial statements continued
29. Parent Company accounting policies continued
Measurement convention
The financial statements are prepared on the historical cost basis except that derivative financial instruments and equity
investments are stated at their fair value.
Investments in subsidiaries are carried at cost less impairment.
30. Investments in subsidiaries
30. Investments in subsidiaries continued
The Company has the following investments in subsidiary companies:
Subsidiary
Domicile
Status
Registered Office address
Shares held Ownership Year end#
Type
Creo Medical
Limited
UK
Trading Creo House, Unit 2 Beaufort Park,
Ordinary
100% 31–Dec
Direct
Beaufort Park Way, Chepstow,
Wales, NP16 5UH
Creo Medical, Inc.
US
Trading 100 Reserve Road, suite B400
Ordinary
100% 31–Dec Indirect***
(All figures £m)
Cost:
As at 1 January 2018
Capital Contribution
As at 31 December 2018
Capital Contribution
As at 31 December 2019
Capital Contribution
Albyn Acquisition
As at 31 December 2020
Capital Contribution
As at 31 December 2021
Capital Contribution
As at 31 December 2022
Capital Contribution
As at 31 December 2023
Investment in
subsidiary companies
0.0
0.6
0.6
0.7
1.3
0.3
23.6
25.2
1.5
26.7
0.7
27.4
0.6
28.0
Creo Medical
Innovations Limited
Creo Medical Ireland
Creo Medical PTE
Limited
Creo Medical SL
(formerly Albyn
Medical SL)
Creo Medical SAS
(Albyn Medical SAS)
Creo Medical UK
Limited (formerly
Albyn Medical
Limited)
Creo Medical GmbH
(formally Endo-
Technik Wolfgang
Griest GmbH)
Premier Endoscopy
Wiest Uropower
Limited
Danbury, CT 06810, USA
UK
Trading Creo House, Unit 2 Beaufort
Ordinary
100% 31–Dec Indirect***
Park, Beaufort Limited Park Way,
Chepstow, Wales, NP16 5UH
Ireland Dissolved 70 Sir John Rogerson’s Quay,
Dublin 2, Limited Ireland
Ordinary
100% 31–Dec Indirect***
Singapore
Trading 60 Paya Lebar Road, #09,
Ordinary
100% 31–Dec Indirect***
Spain
01/02/03/04 Paya Lebar Square,
Singapore, 409051
Trading Cordovilla (Nevarra), Poligno
Industrial Cordovilla, calle D,
Munero 1
Ordinary
100% 31–Dec
Direct
France
Trading 9 avenue Jean Prouve, 88101 Sain-
Ordinary
100% 31–Dec Indirect**
des-Vosges
UK
Trading Kintail House, Beechwood Park,
Ordinary
100% 31–Dec Indirect**
Inverness, Highland, IV2 3WB
Germany
Trading Hans-Böckler-Str. 29, 40764
Ordinary
100% 31–Dec Indirect**
Langenfeld, Germany
UK Dormant Creo House, Unit 2 Beaufort Park,
Ordinary
100% 30–Sep Indirect**
Beaufort Park Way, Chepstow,
Wales, NP16 5UH
Germany Dormant Creo House, Unit 2 Beaufort Park,
Ordinary
100% 30–Sep Indirect**
Beaufort Park Way, Chepstow,
Wales, NP16 5UH
Trading 1070 Anderlecht, rue des
Veterinaires 42, Belgium
Trading Creo House, Unit 2 Beaufort Park,
Beaufort Park Way, Chepstow,
Wales, NP16 5UH
Ordinary
100% 31–Dec Indirect**
Ordinary
100% 31–Dec Indirect***
Boucart Medical SRL
Belgium
Aber Electronics
Limited
UK
# Wiest Uropower Limited and Premier Endoscopy are dormant entities and we have no intention of trading through these companies. As a result their
year-ends have not been aligned with that of the Group.
** Creo Medical SL holds 100% of the shares in these entities.
*** Creo Medical Limited holds 100% of the shares in these entities.
Creo Medical Innovations Limited (Company registration number: 11196260), Aber Electronics Limited (Company
registration number: 07400511), Wiest Uropower Limited (Company registration number 05781601) and Creo Medical UK
Limited (Company registration number: SC128038) is exempt from the requirements to file audited financial statements
by virtue of section 479A of the Companies Act 2006. In adopting the exemption, Creo Medical Group PLC has provided a
statutory guarantee to this subsidiary in accordance with section 479C of the companies Act 2006.
The Company has an investment in equity shares in I.Q. Endoscopes. The Company made an irrevocable election to
classify fair value changes of the investment in I.Q. Endoscopes through other comprehensive income rather than through
profit or loss, the impact of this being any changes in fair value will never be reclassified through the profit or loss account
even if the investment is disposed of.
The fair value calculation for 31 December 2022 is shown in Note 18 of the financial statements.
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
148
149
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements Parent Company note to the financial statements continued
31. Property, plant and equipment
(All figures £m)
Cost:
At 1 January 2022
Additions
Transfers
At 31 December 2022
Accumulated Depreciation:
At 1 January 2022
Charge for year
At 31 December 2022
Net book value at 31 December 2022
(All figures £m)
Cost:
At 1 January 2023
Additions
Transfers
At 31 December 2023
Accumulated Depreciation:
At 1 January 2023
Charge for year
Transferred
At 31 December 2023
Net book value at 31 December 2023
32. Trade and other receivables
(All figures £m)
Current:
Other debtors
Social security and other taxes
Prepayments
Total current
Non-current:
Amount owed by subsidiary undertaking
Total non-current
Total trade and other receivables
Land &
Buildings
Assets under
Construction
Total
4.5
0.1
0.1
4.7
0.0
0.2
0.2
4.5
0.1
1.3
(0.1)
1.3
–
–
–
1.3
Land &
Buildings
Assets under
Construction
4.7
0.0
1.3
6.0
0.2
0.3
–
0.5
5.5
1.3
–
(1.3)
–
–
–
–
–
–
4.6
1.4
–
6.0
0.0
0.2
0.2
5.8
Total
6.0
(0.0)
–
6.0
0.2
0.3
–
0.5
5.5
31 December
2023
31 December
2022
0.0
0.1
0.0
0.1
144.1
144.1
144.2
0.2
–
0.1
0.3
118.9
118.9
119.2
33. Trade and other payables
(All figures £m)
Current:
Derivatives
Other creditors
Interest Bearing Liabilities
Total current
Non-current:
Interest Bearing Liabilities
Total trade and other payables
34. Staff numbers and costs
(All figures £m)
Wages and salaries
Total remuneration
(All numbers)
The average monthly number of employees during the year was as follows;
Executive
31 December
2023
31 December
2022
–
0.2
0.1
0.3
2.0
2.3
–
2.4
0.1
2.5
2.1
4.6
12 months to
31 December
2023
12 months to
31 December
2022
0.5
0.5
0.5
0.5
12 months to
31 December
2023
12 months to
31 December
2022
7.0
7.0
7.0
7.0
Amounts owed by subsidiary undertakings are unsecured and repayable on demand. Interest is charged on the debt at
a rate of 3% per annum. An expected credit loss provision was calculated for the other debtors and amounts owed by
subsidiary balances; both were deemed immaterial and therefore not recognised.
Where figures are shown “0.0” this means the figure is lower than £50,000. Where figures show “-” this means the value is nil
150
151
Creo Medical Group plc2023 Annual Report & AccountsCreo Medical Group plc2023 Annual Report & AccountsStrategic ReportCorporate GovernanceFinancial Statements
Creo Medical Group plc
Creo House
Unit 2, Beaufort Park
Beaufort Park Way
Chepstow
Wales NP16 5UH
United Kingdom
Tel: +44 (0) 1291 606005
Email: info@creomedical.com
www.creomedical.com