Creo Medical Regulatory News (CREO)

Creo Medical Group plc

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

Half-year Report

Commercialisation of core technology and increasing revenues paving way towards profitability

Creo Medical Group plc (AIM: CREO), a medical device company focused on the emerging field of surgical endoscopy, announces its unaudited results for the six-month period ended 30 June 2022.

Operational and commercial highlights (including post-period):

· Growth in revenue driven by Creo's core technology underpinned by stable revenue from Creo's consumables business

· Progress in roll-out of Creo's core technology

o  Doubling (since January 2022) the number of clinicians able to provide training

o  Creo's Pioneer clinician education programme expanded to allow simultaneous multijurisdictional training

o  Doubling in the volume of procedures and regular users of Speedboat Inject vs. H2 2021

o  New market penetration, as Speedboat Inject used to treat multiple Per-oral Endoscopic Myotomy (POEM) procedures in the oesophagus and stomach in the US with additional indications treated in EMEA including a gastrointestinal stromal tumour (GIST)

o  Commercial activity in Asia-Pacific ("APAC") resumed as the region emerges from COVID, with Speedboat Inject training sessions held in multiple locations, most recently in Hong Kong and Bangkok with clinical cases following

· Significant licensing milestones

o  Collaboration agreement signed with Intuitive under Creo's Kamaptive licensing programme to optimise certain Creo products for use with Intuitive's robotic technology

o  First revenues from Kamaptive licensing programme received following signing several non-binding heads of terms related to Creo's SpydrBlade, Cool Plasma and MicroBlate technologies, validating the strength of Creo's technology

· Continue to strengthen commercial footprint

o  Expanded US sales channel to bundle Creo's core technology with Creo Europe consumable GI products

o  Singapore regional hub opened with a direct sales and marketing presence in the APAC region

· Ongoing discussions with third parties on potential licensing opportunities

Financial highlights:

· Revenue of £13.6m (H1 2021: £12.9m, H2 2021: £12.2m) including £0.9m generated from Creo core technology (H1 2021 £0.1m, H2 2021: £0.2m)

· 11.3% increase in revenue vs. H2 2021 driven by core technology and stable revenue from consumable business

· Cash and cash equivalents of £26.1m at 30 June 2022 (H1 2021: £30.6m; FY 2021: £43.5m)

· R&D expenditure was £7.5m (H1 2021: £5.2m) of which tax credits are expected to be claimed of £2.6m (H1 2021: £1.8m)

· Underlying EBITDA loss (EBITDA with R&D tax credits added back) of £11.9m, representing a 21% reduction for the first six months of 2022 vs. H2 2021 (£15.0m)

· Net assets of £61.1m at 30 June 2022 (H1 2021: £52.2m)

· Improved gross margin and reduced operating expenditure through budget management have contributed to a reduced cash burn (before tax and interest adjustments) compared with H2 2021

Craig Gulliford, Chief Executive Officer, said:

"This period has seen a step change in Creo's commercialisation journey, with revenue growth driven from our core technology reflecting the tremendous groundwork and firm foundations put in place by the team over the last few years. We believe this progress marks an inflection point for the business, and we expect this momentum to continue for the rest of the year and beyond as Creo commercialises its technology globally.

"The Company has taken great strides at every stage of the Speedboat Inject adoption process, with increased levels of training, greater numbers of trainers, more training locations and more Pioneer super courses taking place. The number of trained clinicians using Speedboat Inject has doubled over the period, and we have been able to train some of the world's leading clinicians in the use of advanced energy including Speedboat Submucosal Dissection ("SSD") techniques. We have been hugely encouraged to see Speedboat Inject used to treat new indications, such as gastrointestinal stomal tumours (GISTs).

"We continue to optimise our CROMA compatible devices and have ongoing success with our Kamaptive collaborations, including our first agreement which we signed with Intuitive and from which we have now received our first revenues.

"Our strategy has positioned us with a diverse set of growth opportunities and the operational infrastructure to leverage them to improve the lives of as many patients as possible through the use of advanced energy."

Enquiries:

About Creo

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

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

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

Interim results for six months ended 30 June 2022

Chief Executive Review

Overview

Creo is a medical device company focused on the emerging field of surgical endoscopy, enabling clinical procedures to be performed minimally and non-invasively. Our vision is to improve patient outcomes by bringing advanced energy to the emerging field of surgical endoscopy. To achieve our vision, we have developed a suite of novel, minimally invasive, electrosurgical medical devices that are enabled by our ground-breaking CROMA Advanced Energy Platform, powered by our full spectrum adaptive Kamaptive Technology.

Operational

Building on the progress made during 2021, I am pleased to report on the commercial progress and strong first half of 2022, including a significant increase in the number of regular users of Creo's Speedboat Inject device and the resultant increase in Creo core revenues.

During the first six months of 2022, we increased revenues by 11.3% to £13.6m when compared to the last six months of 2021 (H1 2021: £12.9m; H2 2021: £12.2m). £0.9m of this revenue was generated by Creo's core technology (H1 2021 £0.1m; H2 2022: £0.2m) and includes the first revenues from Creo's Kamaptive licensing programme. Revenue within Creo's consumables business increased to £12.7m from H2 2021 (H2-21 £12.0m) including a small contribution from the Aber acquisition in 2021. The commercialisation of the Company's products and reduction in overheads in the first half of 2022 vs. the second half of 2021, has led to a reduction in the Group's operating cash burn before R&D tax credit receipts, enabling Creo to take significant steps towards a positive cashflow and profitability.

This step change in commercialisation has been underpinned by the solid groundwork put in place by the team during COVID, allowing the business to capitalise on established relationships and the backlog caused by the postponement of elective procedures during the pandemic.

In May 2022, we announced a long term, multi-year collaboration agreement with Intuitive to optimise certain Creo products to be compatible with Intuitive's robotic technology. The agreement also provides a framework for joint clinical studies to be undertaken and includes a number of milestone payments to be made to Creo. We continue to be engaged with other potential licensing partners to further exploit Creo's technology in markets adjacent to those where the Company is already operating. This interest not only validates the strength of our technology but also adds credence to our partnering approach. We are excited to deliver against our commitments and to see how these opportunities evolve.

As COVID evolves to being endemic, we will continue to monitor global restrictions and any possible impacts on our business. However, we remain of the view that healthcare providers must invest in new technologies to increase the rate of procedures undertaken and to further mitigate the impact on the healthcare system arising from later diagnosis and, therefore, more advanced conditions not being detected and treated at an earlier stage.

With the lessening of COVID restrictions in Asia, we were pleased to formally open our Singapore regional hub in April. The facility provides a base for Creo's staff working across the region and includes a training centre, demonstration room, service centre and conference room. This forms a key part of Creo's international strategy, providing a direct sales and marketing presence across APAC which is central to managing Creo's distribution partners in the region.

At the end of the period, Creo had cash reserves of £26.1m (H1 2021: £30.6m; FY 2021: £43.5m). This includes the receipt of funds from a mortgage against Creo's land and buildings at its HQ in Chepstow which will be utilised to develop the site.

Clinical Education Programme - Pioneer Programme

Creo's Pioneer Programme ensures clinicians are educated in the use of our Speedboat technology and the CROMA Advanced Energy Platform. Our key objective is to ensure quality control and best patient outcomes.

During H1 2022 we have doubled the number of clinicians able to provide training on Creo's technology compared to the previous six months. This has contributed to a 100% increase in both the volume of procedures and number of regular users of Speedboat Inject internationally over the same period.

Having forged an excellent reputation for training, mentoring and supporting clinicians, the international relaxation of COVID restrictions has seen the take-up of the Company's recently branded (Pioneer) and expanded clinical education training programme increase considerably. Creo has held regional and large-scale simultaneous multinational events during 2022, utilising international facilities and local key opinion leaders. In June alone, Creo held international training courses on three continents, training clinicians from France, the USA, South Africa, Chile, India and elsewhere. 

Our approach to training has quickly opened new territories for Creo's products and resulted in an increase in the number of clinicians trained, a rapid conversion from trainee to regular user, an increase in Creo's regular user base and an increase in the overall pipeline of clinicians able to be trained. We remain on target to achieve our expected growth in regular users by the end of 2022.

Once trained, clinicians are rapidly adopting Creo's technology and identifying new procedures in which they can utilise Speedboat Inject. We have previously reported about the successful use of Speedboat Inject in both upper GI (Per-oral Endoscopic Myotomy ("POEM")) and lower GI (Speedboat Submucosal Dissection ("SSD")) procedures, with POEM procedures in particular opening additional markets for Creo's technology. Another recent and notable example comes from Israel, where Creo's Speedboat Inject device was used at the Assaf Harofeh Medical Centre in July to successfully remove a GIST (Gastrointestinal Stromal Tumour - a nerve cell originating GI tumour) in a patient. This was the first GIST procedure anywhere in the world using Speedboat Inject. Dr. Sergei Vosko, the clinician who performed the procedure, only used Speedboat Inject clinically for the first time in May 2022, further validating the ease in which Creo's technology can be used.

Commercial

As already noted, commercial orders for Speedboat Inject and our CROMA Platform have increased during the first half of 2022, resulting in an increase in revenue from our core technology. Orders remain in line with expectations on pricing and volume. In addition, further cases have taken place in Europe using Creo's MicroBlate Fine device and this has also been used in the APAC region recently for the first time.

Creo's products are distributed via direct and indirect sales channels. Creo has 14 offices in nine countries across Europe, the USA and APAC with access to multiple other jurisdictions through the support of distribution partners (predominantly in the EMEA and APAC regions and more recently in Latin America). The nature of Creo's sales and distribution channels, coupled with our enhanced and flexible Pioneer Programme, allows the implementation of commercialisation models to reflect the markets in which we are operating (indirect vs. direct). For example, in Israel, Creo's distributor has taken the lead on running Speedboat Inject training courses, supported by Creo's in house Clinical Education team. This approach allows for local training to be delivered in country, reducing the time between clinicians completing training and performing their first cases.

In addition to Creo's core technology, Creo also manufactures and sells a number of complementary products through its European and UK business, along with the sale of consumable Original Equipment Manufacturer ("OEM") / Own Brand Labelling ("OBL") and third-party products. These products provide a stable revenue stream to the Group, as well as providing access to key customers for Creo's core technology. Benefitting from the economies of scale from the acquisitions made in 2020 and 2021, Creo is now seeing customers show interest and adopt Creo's core technology into their existing practice whilst continuing to purchase Creo's complementary products.

As the APAC region outside of China emerges from COVID restrictions faster than anticipated, rapid progress has been made following the opening of Creo's regional hub in Singapore. In Thailand, for example, our team has established training centres of excellence to provide quicker, locally led training pathways to support the transition from trainee to independent user.

In the USA, alongside a sharp uptick in Speedboat Inject usage for both upper and lower GI procedures, we have expanded our US sales channel, allowing us to leverage the OEM GI products already sold by Creo in the UK and EU. These products will widen the Group's US offering and is expected to increase Creo's revenues per procedure in the USA.

Products

We continue to evolve and develop Creo's core technology. As of 31 August 2022, the Group has 125 patent families, which currently comprise in total 484 granted patents and 946 pending applications. Our patent estate is growing at a steady rate covering existing products, future enhancements to CROMA and future product ideas.

The Company's development of a suite of endoscopic products for use with CROMA remains on track, with the aim to enhance and introduce new products to support our existing product portfolio. In addition, we continue to investigate other applications for Creo's technology beyond the initial suite of devices.

Management and Employees

Creo continues to attract and retain talented and experienced individuals across all business functions. As of 31 August 2022, Creo employs 316 people: 287 based in EMEA, 23 in the USA, and six in APAC. Approximately 160 employees are involved in R&D and Operations, 104 employees are focussed on Sales and Marketing and 52 employees are within G&A.

Creo has a strong management team to support the Board of Directors. In the last 12 months, Creo has bolstered its team with key managerial recruitments in HR, Operations, Sales and Procurement.

In line with Creo's overall objective to improve lives, we have always recognised our wider ESG responsibilities. Our immediate priority is the communities that we serve, most obviously our patients and their families along with the clinicians that treat and care for them. This also includes our staff and their families and the local communities in which we employ them. We continue to assess our responsibilities under the ESG framework and take steps to ensure that we meet our obligations as well as being prepared for the future. We will report on the actions we have taken during 2022 in our Annual Report.

Outlook

The team continues to execute against our strategy and deliver against operational milestones. We continue to look to the Company's future with confidence, strengthened by our ability to continue to:

· work with third parties to license our Kamaptive technology;

· scale up our Pioneer Programme and deliver simultaneous multijurisdictional training courses; and

· put our CROMA platform and our suite of devices in the hands of more clinicians to allow more patients to be treated in more locations around the world.

We recognise that global geopolitical issues may profoundly impact all of our lives and, like all businesses, we continue to monitor and assess these. However, the commercialisation steps achieved so far in 2022 mark an inflection point for Creo.

As we take steps towards profitability through scaling revenues across multiple business streams, evidenced by our significant reduction in underlying operating loss for the period compared to the six months to 31 December 2021, Creo is emerging as a global MedTech player with innovative and unique products supported by world class multijurisdictional training.

We expect to continue towards profitability in the second half of the year, with further growth in our core technology and Kamaptive revenues whilst maintaining our strong gross margin. Active cost control will help support the reduction in operating loss for the period.

On behalf of the Board, I would like to thank Creo's shareholders for their continued support, feedback and encouragement along with all members of the Creo team, our clinicians and their patients, our customers, suppliers and other partners for all their hard work, support and positive contributions during the period.

Craig Gulliford

Chief Executive Officer

8 September 2022

Financial Review

Total sales for the period were £13.6m of which £0.9m was generated through Creo core technology and Kamaptive licence income, an increase of £0.6m from the six months to 31 December 2021 and £0.8m from the six months to 30 June 2021. Creo sales of other products remained stable during the period and generated £12.7m for the period (six months to 31 December 2021: £12.0m, six months to 30 June 2021: £12.8m).

Total operating expenses for the first six months of 2022 of £22.5m have decreased from the previous six months ended 31 December 2021 by £1.8m helping to reduce the operating loss in the period to £15.9m (six months to 31 December 2021 £18.8m). Underlying EBITDA loss (EBITDA with R&D tax credits added back) of £11.9m, representing a 21% reduction for the first six months of 2022 vs. H2 2021 (£15.0m)

The increase in operating expenses in the period to £22.5m against the six-month period to 30 June 2021 (£17.2m) reflects the impact of the investment in headcount and business infrastructure implemented in the second six months to 31 December 2021 (£24.3m). This extra overhead was to support the transition of the business to a fully integrated specialty medical device manufacturer with product origination, development and commercialisation capabilities.

The reduction since H2-21 is a result of additional costs associated with regulatory clearances, clinical costs and product development decreasing and this trend is expected to continue going forward. Research and development expenditure for the period of £7.5m (six months to 30 June 2021: £5.2m) saw a slight decrease from the six months to 31 December 2021 (£7.7m) as we continued to invest in the development of its portfolio of products. Administrative expenses (excluding R&D expenditure) for the period were £15.0m (six months to 30 June 2021: £12.0m), a decrease of £1.6m from the six months to 31 December 2021 driven by cost savings and active budgeting control across the business.

The underlying operating loss for the period is £11.1m (six months to 30 June 2021: £7.4m; six months to 31 December 2021: £13.0m) representing a 15% reduction in underlying operating loss for the first six months of 2022 vs. H2 2021. This is a non-statutory measure which adjusts the operating loss as follows:

Tax

The Company has not recognised any deferred tax assets in respect of trading losses arising in the current financial period. At present, the Company recognises tax assets in respect of claims under the UK research and development Small or Medium-sized Enterprise ("SME") scheme, accrued in line with costs with any adjustments being made on submission of a claim.

Earnings per share

Loss per share was 7 pence for the period (six months to 30 June 2021: 6 pence).

Cash flow and Balance Sheet

Net cash used in operating activities was £15.7m for the six months to 30 June 2022 (six months to 30 June 2021: £12.3m), driven by the increase in research and development as well as development of the US commercial operations during the period. Net cash generated from financing activities was £0.2m (six months to 30 June 2021: £1.3m outflow) reflecting the receipt of the mortgage against the Chepstow land and buildings offset by capital repayments of the loans in the Spanish entity. The mortgage on the Chepstow facility of £2.25m was completed in H1 2022 with repayment terms to be made over a five-year period.

Operating cashflow before tax and interest adjustments was £15.7m a decrease of £0.9m from H2 2021 (£16.6m) reflecting the decrease in cash spent in operating activities before net working capital adjustments of £13.7m (H2 2021 £15.7m) offset by an increase in net working capital driven by timing differences in stock purchases.

Total assets at 30 June 2022 increased to £87.5m (30 June 2021: £80.6m). Cash and cash equivalents at 30 June 2022 were £26.1m (30 June 2021: £30.6m) after the operating costs and payments of deferred and contingent consideration due on the acquisition of Albyn Medical. Net assets were £61.1m (30 June 2021: £52.2m).

At 30 June 2022, the debtor position in relation to R&D Tax Credits was £6.9m including the £4.3m debtor from 2021. Inventory as at 30 June 2022 increased to £8.2m (30 June 2021: £6.9m), representing the increase in stock holding to facilitate current and expected future orders of core Creo products as well as the global expansion of UK and European sales of other products.

Interest bearing liabilities as at 30 June 2022 increased to £10.5m (30 June 2021: £9.0m) due to the £2.25m mortgage facility offset by repayments of loans in Creo Europe.

2022 Outlook

We expect to continue taking steps towards profitability in the second half of the year with further growth in our Creo core technology and Kamaptive revenues and maintaining our strong gross margin in our non-core products. Active cost control will support the continued reduction in underlying operating loss for the second half period.

Consolidated statement of profit and loss and other comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the interim financial statements

1. Basis of preparation

This interim financial report, which is unaudited, does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006. These interim financial statements have been prepared in accordance with the AIM rules and the IAS 34.

The accounts of Creo Medical Group plc for the period ended 31 December 2021, which were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ("adopted IFRSs"), have been delivered to the Registrar of Companies. Those accounts were prepared and audited as required by the Companies Act 2006. The interim statements are presented in sterling and rounded to the nearest thousandth pound.

This interim financial report for the six-month period ended 30 June 2022 (including comparatives for the six months ended 30 June 2021) was approved by the Board of Directors on 8 September 2022.

Going Concern

The business is continually monitoring the economic developments including the war in Ukraine as well as COVID and the current and future impacts they will have on our business. We are on-track with our current business strategy with the commercialisation of Creo's core technology along with our existing distribution sales helping to reduce the cash burn and get us closer to positive cash generation. The Directors recognise to continue with this strategy further investment and financing will be required in the short to medium term.

The Company has prepared detailed forecasts and projections for its planned activities up to and beyond December 2025. These include multiple scenarios including where no further funding or financing is obtained within the next 12 months.

On the basis of these financial projections the Directors are satisfied that the Company will have adequate resources to continue in operational existence for a period of not less than 12 months from the date of signing this interim financial report. Thus, they continue to adopt the going concern basis of accounting in preparing the interim financial report.

Accounting policies

The same accounting policies and basis of measurement are followed in this interim financial report as published by Creo Medical Group plc in its statutory accounts for the period ended 31 December 2021, as delivered to the registrar of companies.

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 2022:

• Amendments to IAS 37 Onerous Contracts - Cost of fulfilling a contract.

• Annual improvements to IFRS standards 2018-2020.

• Amendments to IAS 16 Property. Plant and Equipment: proceeds before intended use.

• Amendments to IFRS 3 Reference to the Conceptual Framework.

Licensing revenue

Following the commencement of the Kamaptive licensing agreement we have updated our revenue recognition policy.

Principal risks and uncertainties

The principal risks and uncertainties impacting the Group are described in our 2021 Annual Report and remain unchanged at 30 June 2022. We continue to monitor the uncertainty around the War in Ukraine, the UK's exit from the European Union, global impacts and effects of Covid along with other geopolitical macro issues.

Critical accounting judgments and key sources of estimation uncertainty

The Group is required 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. Accounting estimates and judgements have been required for the production of these Financial Statements.

Share-based payments

Equity-settled share options are granted to certain officers and employees. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. Fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model, the Monte Carlo method, or a hybrid model where appropriate. Compensation expense is recognised over the tranche's vesting period 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 period, with any forfeitures recognised immediately.

Research and 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 evidence that an economic benefit will flow to the Company.

To date no further capitalisation of its products above the Speedboat and CROMA platform have been recognised.

Deferred tax assets

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 in relation to the element of profit expected to be earned in that entity.

Forecasts for Creo Medical Limited continue to show tax losses for at least the medium term (to three 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.

Segmental reporting

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 period, management have exercised significant judgement in determining whether presenting segment information on an alternative basis would better adhere to this core principle.

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 core technology and the 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 the 2021 Annual Report, 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 reporting periods.

2. Revenue and other operating income

The revenue split for the Group at 30 June 2022 was as follows:

Creo core product revenue comprises of revenues from its suite of devices, CROMA platform and Kamaptive technology.

Creo Europe's sales consist of consumable sales throughout the UK and mainland Europe which do not relate to Creo core products.

3. Earnings per share

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

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.

4. Share capital

5. Post balance sheet events

There were no reportable post balance sheet events.

6. Responsibility statement of the directors in respect of the interim report

We confirm that to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting

· the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Richard Rees

Chief Finance Officer

8 September 2022