Creo Medical Group PLC Final Results (3803W)

TIDMCREO

RNS Number : 3803W

Creo Medical Group PLC

14 November 2017

Creo Medical Group plc

("Creo" or the "Company")

Preliminary Financial Results for the financial year ending 30 June 2017

Maiden results - a year of key milestones successfully achieved

Chepstow, South Wales, 14 November 2017 - Creo Medical Group plc (AIM: CREO), a medical device company focused on the emerging field of surgical endoscopy, is pleased to announce its preliminary results for the year ended 30 June 2017.

FY 17 Operational Highlights

   --      Successful  listing on AIM in December 2016 

o Raised approximately GBP20 million (before expenses)

   --      First in human study data successfully completed 

o Demonstrated safety and efficacy of the application of microwave energy to coagulate bleeds in the colon in 30 patients

o Represents first device to use microwave energy in combination with radiofrequency

-- CROMA Platform and Speedboat RS2 device received CE Mark approval for microwave energy, adding to the devices previously awarded CE Mark for radiofrequency

   --      First patient treated with Speedboat RS2 device using the CROMA platform 

-- Non Clinical study pathway agreed with FDA for ablation products at FDA pre-submission meeting

-- Participation in the Semiconductor-based Ultrawideband Micromanipulation of Cancer Stem Cells ("SUMCASTEC"), a Horizon 2020 project

FY 17 Financial Highlights

   --      Cash and cash equivalents of GBP13.7m at 30 June 2017 (as at 30 June 2016: GBP0.8m) 

-- Operating loss after one-off IPO related expenses of GBP8.9m (4 months to 30 June 2016: GBP1.9m) reflecting increased operating expenses incurred in relation to clinical and developmental activities as well as further investment in headcount and business infrastructure

   --      Cash burn and operating loss in line with management expectations 
   --      Net assets of GBP14.7m (as at 30 June 2016: GBP1.6m) 
   --      Loss per share of 13 pence (4 months to 30 June 2016: 5 pence) 

Post-Period Highlights

-- 510(k) Clearance received ahead of expectations from the US Food and Drug Administration for Creo's Speedboat RS2 device and CROMA platform

   --      Moved into a new facility in Chepstow, providing the engineering development capability and manufacturing capacity to expand and build the business 

Craig Gulliford, Chief Executive Officer, commented:

"I am delighted to announce our first full year results since listing. The GBP20 million raised on IPO has enabled us to develop our technology and provide the Company with the resources for future development and commercialisation. Over the last year, we have made significant clinical and regulatory progress advancing us along the pathway to become a leading advanced energy, minimally invasive, medical device company. We continue to execute against our strategy and are on track with our soft launch of Speedboat RS2, the first product in our CROMA platform."

 
 Contacts 
 Creo Medical:                                      Cenkos:                      FTI Consulting: 
 Richard Rees                                       Camilla Hume/Mark Connelly   Brett Pollard / Mo 
  [phone] [e-mail]    (NOMAD)                      Noonan 
                                                     Michael Johnson / Russell    [phone] 
                                                     Kerr (Sales)                 [e-mail] 
                                                     [phone] 
 

About Creo Medical

Creo Medical, founded in 2003, is a medical device company focused on improving patient outcomes by applying microwave and radiowave energy to a range of minimally invasive surgical devices. Creo has developed CROMA, an electrosurgical platform that combines bipolar radiofrequency, for precise localised cutting, and microwaves, for controlled coagulation. This technology provides physicians with flexible, accurate and controlled surgical solutions.

The Company's strategy is to bring its CROMA platform to market through a suite of medical devices which the Company has designed, initially for the emerging field of GI therapeutic endoscopy; an area with high unmet needs. The CROMA platform will be developed further for bronchoscopy and laparoscopy procedures. The Company believes its technology can impact the landscape of surgery and endoscopy by providing safer, less-invasive and more cost-efficient option of treatment.

For more information about Creo Medical please see our website, www.creomedical.com.

Chief Executive's Review

I am pleased to report that we have made good strategic, operational and financial progress in the period and have delivered against the milestones we set ourselves.

The last year has seen the attainment of several important achievements. The first was the completion of our multicentre clinical study which successfully demonstrated the safety and efficacy of microwave energy to coagulate bleeds in 30 patients. This was the first such study in the surgical endoscopy field and provided data in support of the CE mark approval received later in the financial year, which cleared the product for clinical use in Europe.

Subsequent to receiving the CE mark we initiated training at selected institutions and, following which, the first patients were successfully treated with Speedboat RS2. The clinical training programme continues to expand with the device poised for use in additional patients over the course of the next year.

In March 2017 we were awarded a EUR530,000 research grant for early stage research focused on Glioblastoma. Creo is one of six European partners in a multidisciplinary consortium developing a truly innovative micro-optofluidic lab-on-chip platform that deploys semi-conductor technology to neutralise cancer stem cells with electromagnetic waves.

Shortly after the end of the financial year we were delighted to receive 510(k) regulatory clearance from the FDA for Speedboat RS2 in the US, several months earlier than anticipated. In addition to the advantages of the device itself, we believe that the early achievement of this major landmark reflects our sound quality assurance and regulatory strategy which puts us in good stead for future submissions. We are now able to commit to, and plan, the US roll-out of initial clinical cases and establish our training regime.

Since the IPO we have invested in significant commercial appointments with experience in delivering training and education programmes in laparoscopic surgery. This expertise is already being applied as we further build out the CREO surgical training programmes and identify distribution partners in Europe, EMEA and the US.

We have recently moved into our new facility in Chepstow. The new facility is four times larger than our previous one, but at a comparable underlying rent, giving us additional capacity from which to expand and build the business to meet the anticipated demand for our CROMA platform. With a growing headcount, I have been proud to support the team through investment in leadership and personal development and I would like to thank all of our employees for their continued dedication and hard work which is reflected in the strong progress we have made this year.

Product development summary

Our technology makes it possible to treat conditions using flexible endoscopy in the endoscopy suite as opposed to a surgical outcome carried out in the operating theatre under general anaesthetic. CROMA delivers dissection, resection, haemostasis and ablation with unparalleled controllability.

The benefits for physicians and patients include:

-- a bipolar radiofrequency energy source which facilitates precise, localised cutting or resecting of tissue, resulting in predictable tissue effect and reducing the risk of remote burns and of unwanted thermal damage to healthy tissue;

-- a microwave energy source which facilitates controlled and focussed coagulation of vessels and ablation of cancerous or pre-cancerous lesions to provide more control to the surgeon. This results in highly predictable tissue effects;

   --      a connection which uniquely combines the delivery of RF and microwave energy; and 
   --      energy which is optimised for specific purposes without the need for complex set up. 

The CROMA platform will be accompanied by a suite of medical devices which we have designed, focused on three therapeutic endoscopic specialisms: lower gastrointestinal, lung/bronchoscopy and upper gastrointestinal ("GI"). Our devices are at various stages of development, from concept to in-vivo testing. The main products are Speedboat RS2, the Haemostasis Graspers, the Haemostasis Probe, the Resector and the flexible Ablation Probe.

Speedboat RS2 is the first device approved for use with CROMA. The Speedboat RS2 device harnesses the cut and coagulation capability of CROMA and enables the removal of cancerous and pre-cancerous GI growths and lesions in the bowel with a flexible endoscope. This approach can replace open or laparoscopic surgery as well as the alternative endoscopic approach of Endoscopic Mucosal Resection ("EMR"). EMR can remove larger lesions but in many pieces, which can lead to residual abnormal tissue being left behind, causing recurrence. With the Speedboat RS2 device, the endoscopist is able to remove the lesion in a single large piece (en-bloc), providing a more complete and accurate specimen for analysis and reducing the need for frequent endoscopic checks. The use of the Speedboat RS2 device reduces the risks associated with alternative laparoscopic procedures and can reduce the length of hospital stays.

We are working on further areas of application of bipolar radiofrequency and microwave technology including bronchoscopically guided lung tumour ablation, an area associated with a low suitability for curative surgery and poor survival rates. CROMA could potentially offer a minimally invasive treatment for these lesions. We have developed the Ablation Probe and the related 'super-cable' prototype intended to enhance the navigation of the Ablation Probe while providing integrated navigation and imaging. Development of the Ablation Probe and 'super-cable' is at preliminary stages, although in-vivo testing to demonstrate navigation deep into the lung has been achieved.

Strategy update

In this first year since IPO, our strategy has been to focus on our first regulatory approvals as well as defining and advancing our next products. As we move into the second year, our focus will remain on developing our products, demonstrating the clinical utility, whilst continuing to build a commercial platform. This platform will be founded on a mix of direct and indirect distribution resources. By the end of the third year we expect to have launched a fuller suite of products from our development pipeline and significantly expanded our commercial reach.

In the period, a small number of patients have been treated with our technology. We have also had positive feedback from the first participants in our clinical training programme through which we will continue to select, train and supervise participants for 18 months. We will initially start with a small number of cases in Europe and then progress to a wider group of carefully-selected trainees, in Europe and the US, to ensure the delivery of the best possible quality of clinical outcomes. This process will take place over the next 18 to 24 months. The goal is to deliver a repeatable, predictable training programme that delivers clinical results in the wider endoscopy community, creates market awareness and drives adoption of the CHROMA platform.

We continue to make good progress, delivering against our strategy of bringing additional instruments on the CROMA platform to the patients that need them.

Intellectual property

Creo has an established and growing IP portfolio including 97 granted patents and 245 pending patent applications, all in the area of electrosurgical energy generation and control, together with a range of applicator structures for advanced tissue management.

Outlook

We have made pleasing progress to advance our pipeline through our phased commercialisation model and we remain on track for the market to adopt our first device during 2018 ahead of our anticipated commercial builds in 2019.

Financial Review

Revenue

The Group does not currently generate any revenue from its activities. Other operating income of GBP0.3m in the year (4 months to June 2016: GBP0.2m) relates to research grants.

Operating loss

The operating loss for the period increased to GBP8.9m (4 months to 30 Jun 2016: GBP1.9m), reflecting the increased operating expenses in relation to clinical and development activities together with further investment in headcount and business infrastructure to support the business and enable it to continue to develop and commercialise its technology. This continued investment in the business will support its anticipated growth and development in the coming periods.

The underlying operating loss (or adjusted EBITDA) for the year was GBP5.6m (4 months to 30 June 2016: GBP1.6m).

Whilst EBITDA is not a statutory measure the Board believe it is helpful to investors to include as an additional metric to help provide a meaningful understanding of the financial information as this measure provides an approximation of the ongoing cash requirements of the business through development phase. The Adjusted EBITDA position excludes share based payment expenses which are non-cash, exceptional costs relating to the flotation of the Group in the year and incorporates the recovery of research and development (R&D) expenditure which the Group is able to benefit from through R&D Tax credit schemes.

 
                                              12 months 
                                                     to    4 months to 
                                                30 June 
 (All figures GBP)                                 2017   30 June 2016 
-----------------------------------------  ------------  ------------- 
 
 Operating Loss                             (8,903,066)    (1,874,656) 
 
 Share based payments                           776,782         20,361 
 Depreciation and Amortisation                  142,423         46,942 
 R&D Tax Credits                              1,142,933        255,077 
 Expenses of the initial public offering 
  - one off                                   1,252,692              - 
 
 Underlying operating loss                  (5,588,236)    (1,552,276) 
-----------------------------------------  ------------  ------------- 
 

Expenses of the initial public offering (IPO)

IPO related costs incurred in the period were GBP1.3m (4 months to 30 June 2016: GBPnil). These costs primarily related to commissions, legal, accounting and other advisor fees including irrecoverable VAT in connection with the IPO. In addition to these costs a further GBP1.5m (4 months to 30 June 2016: GBPnil) was capitalised.

Tax

The tax credits recognised in the current and previous fiscal year relate solely to R&D tax credit claims.

Expenses

Administrative expenses comprising R&D, operational support, sales and marketing, and finance and administration costs totalled GBP9.2m (4 months to 30 June 2016: GBP2.0m). Adjusting for costs and tax income above, underlying administrative expenses are GBP5.6m (4 months to 30 June 2016: GBP1.6m).

This annualised increase of GBP0.9m reflects the continued investment made by the Group in clinical and development activities. Personnel costs continue to be the largest expense and represent approximately 69% of the Group's underlying administrative expenses.

Loss per share

Loss per share was 13 pence (4 months to 30 Jun 2016: 5 pence). Removing the significant non-recurring costs in relation to the IPO of GBP1.3m the loss per share is 11 pence.

Cash flow and Balance Sheet

Net cash used in operating activities was GBP6.9m (4 months to 30 Jun 2016: GBP1.6m), driven by the planned increase in investment in research and development during the period. Net cash generated from share issue was GBP20.0m (4 months to 30 Jun 2016: GBPnil) reflecting the net proceeds of the issue of shares in the IPO and Pre-IPO rounds of fundraising.

Total assets increased to GBP16.1m (30 Jun 2016: GBP2.4m), a 571% increase, reflecting the increase in cash arising from the issue of new ordinary shares at the IPO and pre IPO rounds, offset by the operating cash outflow for the period.

Cash and cash equivalents at 30 June 2017 was GBP13.7m (30 Jun 2016: GBP0.8m). Net assets were GBP14.7m (30 Jun 2016: GBP1.6m), a 819% increase.

Consolidated Statement of Profit and Loss and Other Comprehensive Income

 
                                                   12 months       4 months 
                                                          to             to 
                                                     30 June 
 (All figures GBP)                        Note          2017   30 June 2016 
---------------------------------------  -----  ------------  ------------- 
 
 Revenue                                   1               -              - 
 Other operating income                    1         277,687        169,407 
 Administrative expenses                         (9,180,753)    (2,044,063) 
 
 Operating loss                                  (8,903,066)    (1,874,656) 
 
 Finance costs                                      (10,721)        (1,472) 
 Finance Income                                        5,337          7,793 
 
 Loss before tax                           2     (8,908,450)    (1,868,335) 
 
 Taxation                                  3       1,142,933        255,077 
 
 Loss for the year                               (7,765,517)    (1,613,258) 
---------------------------------------  -----  ------------  ------------- 
 
 Other comprehensive income                                -              - 
 
 Total comprehensive loss for the year           (7,765,517)    (1,613,258) 
---------------------------------------  -----  ------------  ------------- 
 
 
 Earnings per Share 
 Basic and diluted                         4          (0.13)         (0.05) 
 
 

Consolidated Statement of Financial Position

 
 (All figures GBP)                Note   30 June 2017   30 June 2016 
-------------------------------  -----  -------------  ------------- 
 
 Assets 
 Non-current assets 
 Intangible assets                             10,896         12,876 
 Property, plant and equipment                325,019        239,748 
 Other financial assets                             -          7,402 
 Other non current receivables                 14,853         13,053 
 
                                              350,768        273,079 
 Current assets 
 Inventories                                   91,333              - 
 Trade and other receivables                  542,914        479,150 
 Tax receivable                    5        1,449,976        842,466 
 Cash and cash equivalents                 13,688,762        823,283 
 
                                           15,772,985      2,144,899 
 
 Total assets                              16,123,753      2,417,978 
-------------------------------  -----  -------------  ------------- 
 
 Shareholder equity 
 Called up share capital           7           80,712          1,436 
 Share premium                     7       19,810,393              - 
 Merger reserve                    7       13,602,735     13,480,175 
 Share option reserve              7        1,288,250        511,468 
 Retained earnings                 7     (20,129,432)   (12,363,915) 
 

                                           14,652,658      1,629,164 
 
 Liabilities 
 Non-current liabilities 
 Interest bearing liabilities                   1,448         15,044 
 
                                                1,448         15,044 
 Current liabilities 
 Trade and other payables                   1,455,874        761,987 
 Interest bearing liabilities                  13,773         11,783 
 
                                            1,469,647        773,770 
 
 Total liabilities                          1,471,095        788,814 
 
 Total equity and liabilities              16,123,753      2,417,978 
-------------------------------  -----  -------------  ------------- 
 

Consolidated Statement of Cash Flows

 
 
                                                     12 months       4 months 
                                                            to             to 
                                                       30 June 
 (All figures GBP)                          Note          2017   30 June 2016 
-----------------------------------------  -----  ------------  ------------- 
 
 Cash flows from operating activities 
 Total comprehensive loss for the period           (7,765,517)    (1,613,258) 
 Depreciation/amortisation charges                     142,424         46,941 
 Increase in share option reserve                      776,782         20,361 
 Fair value adjustment to derivatives                    7,402        (6,002) 
 Finance costs                                           3,319          1,472 
 Finance income                                        (5,337)        (1,791) 
 R&D expenditure credit (RDEC)                        (17,067)              - 
 Taxation                                    3     (1,142,933)      (255,077) 
 
                                                   (8,000,927)    (1,807,354) 
 
 Increase in inventories                              (91,333)              - 
 Increase in trade and other receivables              (65,564)       (65,556) 
 Increase in trade and other payables                  693,887        260,781 
 
                                                   (7,463,937)    (1,612,129) 
 
 Interest paid                                         (3,319)        (1,472) 
 Tax received                                          552,490       (26,719) 
 
 Net cash from operating activities                (6,914,766)    (1,640,320) 
 
 Cash flows from investing activities 
 Purchase of intangible fixed assets                   (1,265)       (13,244) 
 Purchase of tangible fixed assets                   (224,450)       (86,961) 
 Interest received                                       5,337          1,791 
 
 Net cash from investing activities                  (220,378)       (98,414) 
 
 Cash flows from financing activities 
 Capital repayments in year                           (11,606)        (4,762) 
 Share issue                                        20,012,229              - 
 
 Net cash from financing activities                 20,000,623        (4,762) 
 
 Increase/(Decrease) in cash and cash 
  equivalents                                       12,865,479    (1,743,496) 
 
 Cash and cash equivalents at beginning 
  of period                                            823,283      2,566,779 
 
 Cash and cash equivalents at end of 
  period                                            13,688,762        823,283 
-----------------------------------------  -----  ------------  ------------- 
 

Notes to the financial statements

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 June 2017 or 2016 but is derived from those accounts-. Statutory accounts for 2016 have been delivered to the registrar of companies, and those for 2017 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

1. Revenue and other operating income

The Group does not currently generate any revenue from its activities.

Other operating income relates to research grants. Income is recognised necessary to match it with the related costs in the profit or loss on a systematic basis over the periods in which the entity recognises expenses for the related costs for which the grants are intended to compensate. Furthermore, income is recognised only when there is reasonable assurance that the company will comply with any conditions attached to the grant and the grant will be received.

Segmental reporting: Operating segments are identified on the basis of internal reporting and decision making. The board regularly reviews the company's performance and balance sheet position for its operations and receives financial information for the company. As a result the company has one reportable segment, which is being the research and development of electrosurgical medical devices relating to the field of surgical endoscopy. As there is only one reportable segment whole profit, expenses, assets, liabilities and cash flows are measured and reported on a basis consistent with the financial statements, no additional disclosures are necessary.

2. Loss before tax

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

 
                                              12 months       4 months 
                                                     to             to 
 (All figures GBP)                         30 June 2017   30 June 2016 
----------------------------------------  -------------  ------------- 
 
 Depreciation - owned assets                    127,090         42,544 
 Depreciation - assets on hire purchase 
  contracts                                      12,088          4,029 
 Amortisation                                     3,245            368 
 Operating leases - land and buildings          129,859         36,707 
 Operating leases - other                        51,340         21,028 
 Research and development expenditure         3,583,041        833,881 
 Foreign exchange differences                    12,734          (657) 
 
 

3. Taxation

 
 Recognised in the income statement 
                                                     12 months       4 months 
                                                            to             to 
 (All figures GBP)                        Note    30 June 2017   30 June 2016 
---------------------------------------  ------  -------------  ------------- 
 
 Current tax: 
 Current year                                      (1,172,621)      (263,255) 
 Adjustments for prior years                            29,688          8,178 
 
 Current tax credit                                (1,142,933)      (255,077) 
-----------------------------------------------  -------------  ------------- 
 
 Deferred tax: 
 Origination and reversal of temporary 
  timing differences                        6                -              - 
 
 Total tax credit                                  (1,142,933)      (255,077) 
-----------------------------------------------  -------------  ------------- 
 
 Reconciliation of effective tax rate 
 
 
                                              12 months       4 months 
                                                     to             to 
 (All figures GBP)                         30 June 2017   30 June 2016 
---------------------------------------   -------------  ------------- 
 
 Loss for the period                        (7,765,517)    (1,613,258) 
 Total credit                               (1,142,933)      (255,077) 
 
 Loss excluding taxation                    (8,908,450)    (1,868,335) 
----------------------------------------  -------------  ------------- 
 
 Tax using the UK corporation tax 
  rate of 19.75%                            (1,759,419)      (373,667) 
 Research and development                     (468,342)      (100,634) 
 Movement in deferred tax not provided          883,432        171,231 
 Non-deductible expenses                        171,708         39,815 
 Prior year adjustment                           29,688          8,178 
 
 Total tax credit                           (1,142,933)      (255,077) 
----------------------------------------  -------------  ------------- 
 

The tax credit of GBP1,142,933 (Period to 30 June 2016: GBP255,077) relates to R&D tax relief claims submitted by the Group under the small or medium sized enterprises ('SME') scheme and therefore is accounted for as a tax credit in accordance with IAS12 Incomes Taxes. In addition, the Group as 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 GBP17,067 (period to 30 June 2016: GBP10,183) has been accounted for 'above the line' as a reduction from the related expenditure in the statement of comprehensive income.

4. Earnings per share

 
                                                  12 months       4 months 
                                                         to             to 
 (All figures GBP)                             30 June 2017   30 June 2016 
--------------------------------------------  -------------  ------------- 
 
 (Loss) 
 (Loss) attributable to equity holders 
  of Company (basic)                            (7,765,517)    (1,613,258) 
 
 Shares (number) 
 Weighted average number of ordinary shares 
  in issue during the period                     60,017,322     33,211,080 
 
 Earnings per share 
 Basic & diluted                                     (0.13)         (0.05) 
--------------------------------------------  -------------  ------------- 
 
 Ordinary shares start of year                   33,211,080     33,211,080 
 Issued in year 
 Issue 1 - Ordinary                                 691,920              - 
 Issued with 9 months remaining 
 Issue 2 -Ordinary                               18,501,480              - 
 Issued with 7 months remaining 
 Issue 3 - Ordinary                               1,991,465              - 
 Issued with 7 months remaining 
 Issue 4 - Ordinary                              26,315,800              - 
 Issued with 7 months remaining 
 Closing ordinary shares                         80,711,745     33,211,080 
 Average ordinary shares                         60,017,322     33,211,080 
 Basic EPS                                           (0.13)         (0.05) 
--------------------------------------------  -------------  ------------- 
 

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

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume conversion of all potential dilutive ordinary shares. The potential ordinary shares are considered to be antidilutive on the basis that they reduce the loss per share and are such are not included in the Company's EPS calculation, meaning that diluted EPS is the same as basic EPS. Adjusted EPS is calculated as follows:

 
                                                  12 months       4 months 
                                                         to             to 
 (All figures GBP)                             30 June 2017   30 June 2016 
--------------------------------------------  -------------  ------------- 
 
 (Loss) 
 (Loss) attributable to equity holders 
  of Company (basic)                            (7,765,517)    (1,613,258) 
 Expenses of the initial public offering 
  (non-recurring)                                 1,252,692              - 
 
 Adjusted operating loss                        (6,512,825)    (1,613,258) 
 
 Shares (number) 
 Weighted average number of ordinary shares 
  in issue during the period                     60,017,322     33,211,080 
 
 Earnings per share adjusted 
 Basic & diluted                                     (0.11)         (0.05) 
--------------------------------------------  -------------  ------------- 
 

5. Deferred tax and other tax receivables

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

 
 (All figures GBP)                 30 June 2017   30 June 2016 
--------------------------------  -------------  ------------- 
 
 Balances: 
 Accelerated capital allowances          39,905         36,528 
 Tax losses offset (see below)         (39,905)       (36,528) 
 
                                              -              - 
--------------------------------  -------------  ------------- 
 

The accelerated capital allowances deferred tax liability set out above is expected to reverse over the life of the related fixed assets. The tax losses deferred tax asset is expected to reverse in future years. Deferred tax has been calculated at a rate of 17%.

There are unused trading losses at 30 June 2017 of GBP11,272,469 (30 June 2016: GBP6,906,165). A deferred tax asset of GBP1,916,320 (30 June 2016: GBP1,344,705) has not been recognised in respect of these tax losses due to uncertainty in respect of its recoverability.

Tax receivables at 30 June 2017 of GBP1,449,976 (30 June 2016: GBP842,466) relate solely to R&D Tax credits. The company has submitted R&D tax credit claims for the periods presented in relation to its qualifying research & 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.

6. Interest bearing liabilities

 
 (All figures GBP)                           30 June 2017   30 June 2016 
------------------------------------------  -------------  ------------- 
 
 Current: 
 Finance lease liabilities                         13,773         11,783 
 
 Non-current: 
 Finance lease liabilities                          1,448         15,044 
 
                                                   15,221         26,827 
------------------------------------------  -------------  ------------- 
 
 Finance lease liabilities are payable as 
  follows: 
 Less than one year                                13,773         11,783 
 Between one and five years                         1,448         13,621 
 More than five years                                   -          1,423 
 
                                                   15,221         26,827 
------------------------------------------  -------------  ------------- 
 

7. Share capital and reserves

 
                                                 Preferred 
                                   Ordinary       Ordinary      Deferred         Share 
 (All figures GBP)                   shares         shares        shares       capital 
------------------------------  -----------  -------------  ------------  ------------ 
 
 Balance at 30 June 2016 
 Number of shares                    92,253         51,393     1,683,050     1,826,696 
 Price per share (GBP)                 0.01           0.01          0.01          0.01 
 Share value (GBP)                      922            514        16,831        18,267 
 
 Issue of share capital 
  (06/10/2016) 
 Number of shares                     1,922              -             -         1,922 
 Price per share (GBP)                 0.01              -             -          0.01 
 Share value (GBP)                       19              -             -            19 
 
 Cancellation of shares 
  (04/11/2016) 
 Number of shares                         -              -   (1,683,050)   (1,683,050) 
 Price per share (GBP)                    -              -        (0.01)          0.01 
 Share value (GBP)                        -              -      (16,831)      (16,831) 
 
 Bonus issue of share capital 
  (09/11/2016) 
 Number of shares                 3,296,125      1,798,755             -     5,094,880 
 Price per share (GBP)                 0.01           0.01             -          0.01 
 Share value (GBP)                   32,962         17,988             -        50,950 
 
 Subtotal 09/11/2016 
 Number of shares                 3,390,300      1,850,148             -     5,240,448 
 Price per share (GBP)                 0.01           0.01             -          0.01 
 Share value (GBP)                   33,903         18,502             -        52,405 
------------------------------  -----------  -------------  ------------  ------------ 
 
 Subdivision of shares by 
  10 (09/11/2016) 
 Number of shares                33,903,000     18,501,480             -    52,404,480 
 Price per share (GBP)                0.001          0.001             -         0.001 
 Share value (GBP)                   33,903         18,502             -        52,405 
 
 Reclassification of shares 
  (09/12/2016) 
 Number of shares                18,501,480   (18,501,480)             -             - 
 Price per share (GBP)                0.001        (0.001)             -             - 
 Share value (GBP)                   18,502       (18,502)             -             - 
 
 AIM Listing (09/12/2016) 
 Number of shares                26,315,800              -             -    26,315,800 
 Price per share (GBP)                0.001              -             -         0.001 
 Share value (GBP)                   26,316              -             -        26,316 
 
 Issue of share capital 
  (09/12/2016) 
 Number of shares                 1,991,465              -             -     1,991,465 
 Price per share (GBP)                0.001              -             -         0.001 
 Share value (GBP)                    1,991              -             -         1,991 
 
 Balance at 30 June 2017             80,712              -             -        80,712 
------------------------------  -----------  -------------  ------------  ------------ 
 

On 6 October 2016 1,922 GBP0.01 ordinary shares were issued. On 4 November 2016 1,683,050 deferred shares were cancelled. On 9 November 2016 for every one share held an additional 35 shares were issued. The ordinary shares were then sub divided by 10 giving 33,903,000 GBP0.001 total ordinary shares. On 9 December 2016 the preferred ordinary shares were converted to 18,501,480 GBP0.001 ordinary shares and the Company listed on AIM, where a further 28,307,265 GBP0.001 ordinary shares were issued.

Share capital

Is the amount of nominal value of share held by shareholders. At 30 June 2017 80,711,745 shares have been issued, each with the nominal value of GBP0.001 equalling a share capital for the Company of GBP80,712. All ordinary shares rank as pari passu with regards to voting, dividends and rights on winding up.

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.

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.

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.

Retained Earnings

Retained earnings including profit or loss for the year comprises the earned profit of the Parent Company and its subsidiary.

8. Subsequent events

After the end of the financial year, and prior to approving the annual report, the company received regulatory clearance from the FDA for the speedboat device in the US. In accordance with IAS10 an adjusting event occurs if it is indicative of circumstances that were in place at the reporting date. In this case the subsequent FDA clearance provides evidence that at the reporting date the design of the Speedboat and CROMA products were sufficiently advanced to the feasibility criteria of IAS 38 Intangible assets. However as at period end this was not known and IAS 38 Paragraph 71 prohibits the capitalisation of expenditure that was initially recognised as an expense. Therefore no adjustment is made to costs at period end.

This is a significant milestone in the development of that particular product and therefore it has been disclosed in the annual report in order to provide sufficient information as to the nature and impact of the subsequent event. Whilst there is no current financial effect its impact is significant in relation to the appropriateness of the directors' going concern assessment.

This information is provided by RNS

The company news service from the London Stock Exchange

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(END) Dow Jones Newswires

November 14, 2017 02:01 ET (07:01 GMT)