Final Results

Surgical Innovations Group plc

("Surgical Innovations", the "Company", or the "Group")

Final Results

Results for the year ended 31 December 2024

Surgical Innovations Group plc (AIM: SUN), the designer, manufacturer and distributor of innovative medical technology for minimally invasive surgery ("MIS"), reports its final results for the year ended 31 December 2024 ("FY24") and announces a strong start to 2025, positioning the Company for growth.

Financial highlights:

1 Adjusted EBITDA, calculated as operating loss of £0.79m adding back depreciation £0.48m and amortisation £0.21m, and non recurring items £0.15m.

2 Net cash comprised of cash at bank of £0.2m (2023: £1.21m) less bank borrowings £0.50m (2023: £0.85m), excluding leases under IFRS16.

Commercial and operational highlights:

Post period end highlights:

Current Trading & Outlook:

Chairman of Surgical Innovations, Jonathan Glenn, said: "2025 has started on a strong note, with all areas of the business demonstrating growth compared to the previous year. Key sectors are trending higher than the same period in 2024, reflecting the positive momentum. The continued emphasis on sustainability is driving new account acquisitions in key markets.

"With a strong start to 2025 and multiple strategic initiatives in motion, the Company is well-positioned for growth and success. The combination of sustainability-driven market expansion, targeted distribution partnerships, and innovative product launches will reinforce the Company's competitive edge. At the same time, ongoing cost-reduction efforts will enhance profitability and ensure long-term sustainability. The recent extension of key distribution agreements, along with new partnerships, further strengthens Elemental's market presence and growth potential. As the year progresses, the Company remains focused on capitalising on emerging opportunities, delivering high-quality solutions, and driving value for both customers and stakeholders."

This announcement has been made available online at https://www.sigroupplc.com/investors-centre/. 

Investor Presentation

David Marsh, Chief Executive Officer, and Brent Greetham, Chief Financial Officer, will provide a live presentation relating to the final results via the Investor Meet Company platform on Thursday 5 June at 16.00 BST.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 09.00. the day before the meeting or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet Surgical Innovations Group plc via:

https://www.investormeetcompany.com/surgical-innovations-group-plc/register-investor. Investors who already follow Surgical Innovations Group plc on the Investor Meet Company platform will automatically be invited.

For further information please contact:

About Surgical Innovations Group plc

The Group specialises in the design, manufacture, sale and distribution of innovative, high quality medical products, primarily for use in minimally invasive surgery. Our product and business development is guided and supported by a key group of nationally and internationally renowned surgeons across the spectrum of minimally invasive surgical activity.

We design and manufacture and source our branded port access systems, surgical instruments and retraction devices which are sold directly in the UK home market through our subsidiary, Elemental Healthcare, and exported widely through a global network of trusted distribution partners. Many of our products in this field are based on a "resposable" concept, in which the products are part reusable, part disposable, offering a high quality and environmentally responsible solution at a cost that is competitive against fully disposable alternatives.

Elemental also has exclusive UK distribution for a select group of specialist products employed in laparoscopy, bariatric and metabolic surgery, hernia repair and breast reconstruction.

In addition, we design and develop medical devices for carefully selected OEM partners and have also collaborated with a major UK industrial partner to provide precision engineering solutions to complex problems outside the medical arena.

We aim for our brands to be recognised and respected by healthcare professionals in all major geographical markets in which we operate and provide by development, partnership or acquisition a broad portfolio of cost effective, procedure specific surgical instruments and implantable devices that offer reliable solutions to genuine clinical needs, the Company's Reposable portfolio enables healthcare providers to reduce both plastic waste and their CO2 footprint as they strive for net zero.

Further information

Further details of the Group's businesses and products are available on the following websites:

www.sigroupplc.com

www.surginno.com

www.elementalhealthcare.co.uk

To receive regular updates by email, please contact [email protected]

Chairman's Statement

For the year ended 31 December 2024

Despite the challenges encountered at the outset of 2024, I am pleased to report that the Company concluded the year with stable revenues, a strengthened operational position, and a range of significant new opportunities. These include the introduction of SI-branded products and the expansion of distribution agreements within the UK. Although operational challenges persisted throughout the period, the Board's strategic actions to enhance operational efficiency, combined with sustained sales growth of SI-branded products, provide a solid foundation for the business as it progresses on a path of sustainable growth in 2025 and beyond.

Market overview

In today's market, healthcare providers continue to face the significant challenge of reducing the backlog of surgeries, which remains above seven million in the UK alone. Additionally, rising supply chain costs and ongoing disruptions have led to backorders of critical components, impacting sales. Despite these obstacles, the growing focus on environmental sustainability is driving organisations to adopt greener practices, not only within their own operations but across the wider healthcare sector. In response, healthcare providers in our key markets are increasingly seeking sustainable solutions. The Company's reposable™ technology aligns with this shift, positioning Surgical Innovations to capitalize on the demand for sustainability as surgical backlogs are gradually addressed.

Financial overview

Revenues of £11.95m compared to the previous year (2023: £12.01m) reflect the challenging start to 2024, however, the Company reports strong growth in SI branded products across most regions is encouraging, up 6.8% to £6.3m in the period (2023: £5.9m), enhanced by the sustainability messaging.

The strong sales of SI branded products continue to grow evidencing the focus on sustainability messaging. This focus on sustainable solutions for the operating room has contributed to significant year-on-year sales increases in key markets. In Europe, sales reached £1.73 million (2023: £1.47m), while APAC saw £1.16 million (2023: £0.99m), and ROW contributed £0.53 million (£0.48m). These results underpin the growing momentum of our sustainability messaging, which have continued to resonate strongly with customers and partners.

The UK business (Distribution / OEM) encountered several significant challenges that impacted revenue, with sales declining to £5.4m (2023: £6.10m). Early-year disruptions from NHS industrial action and NHSSC inventory realignment affected performance. However, opportunities for SI-branded products, supported by key account conversions, are expected to drive growth in 2025.

Challenges remain in the US market, where sales declined to £1.13m (2023: £1.36m). In response, the Company continues to explore opportunities to enhance our route to strengthen its market approach and drive growth in the region. This includes a structured sales training program and co-travelling efforts to reinforce sustainability messaging with healthcare providers. The bandwidth challenges have delayed the search for new distribution channels for the scissor business beyond the South-eastern states as the international team has focused on regions where there are significant growth opportunities.

Operational and supply chain challenges have impacted margins and efficiencies, driven by inflationary pressures on key components, extended lead times, and complex regulatory requirements. These factors have collectively constrained profitability. To address these issues, a project focused on reducing operational overheads was completed in early Q3, with the benefits beginning to be realised in H2 and expected to continue into 2025.

Adjusted EBITDA decreased slightly to £0.05m (£0.20m in 2023) due to the operational and supply chain challenges cited above. This led to an adjusted loss before tax1 for the full year of £0.74m, (2023: loss of £0.69m). Adjusted Loss Per Share amounted to 0.21 pence (compared to earnings of 0.06 pence in 2023).

Throughout the financial year, the Group experienced a cash outflow of £0.1m from operations (2023: cash inflow of £0.26m). Capital expenditure was reduced to £0.1m (2023: £0.3m). While product innovation remains a key strategic pillar, total investment in research expenses for the year amounted to 9.6% of revenue (2023: 9.2%). The Group's closing net cash2 balances as of 31 December 2024 amounted to (£0.31m) (as of 31 December 2023: £0.36m), with available gross cash resources totalling £1.2m (2023: £2.20m), including an undrawn invoice discounting facility of £1.0m.

1 Adjusted profit measures and reconciliation to reported measures set out below.

2 Net cash comprised of cash at bank of £0.2m (2023; £1.21m) less bank borrowings £0.50m (2023: £0.85m), excluding leases under IFRS16.

Strategy and development

The Group specialises in the design, manufacture, sale, and distribution of innovative, high-quality medical products, primarily for use in minimally invasive surgery. We develop, manufacture, and source our branded port access systems, surgical instruments, and retraction devices, which are sold directly in the UK through our subsidiary, Elemental Healthcare, and widely exported via a trusted global distribution network. Many of our products are based on a "resposable" concept-combining reusable and disposable components-to provide a high-quality, cost-effective, and environmentally responsible alternative to fully disposable solutions.

Elemental Healthcare also holds exclusive UK distribution rights for a select range of specialist products used in laparoscopy, bariatric and metabolic surgery, hernia repair, breast reconstruction, upper GI, and colorectal procedures. Additionally, we design and develop medical devices for carefully chosen OEM partners and collaborate with a major UK industrial partner to deliver precision engineering solutions for complex challenges beyond the medical sector.

Our goal is for our brands to be recognized and trusted by healthcare professionals in all key markets where we operate. Through internal innovation, strategic partnerships, and acquisitions, we offer a comprehensive portfolio of cost-effective, procedure-specific surgical instruments and implantable devices-delivering innovative solutions to real clinical needs in the operating theatre.

Regulatory and new product development

The regulatory pathway for the EU Medical Device Regulation (MDR) remains on track, despite delays in the transition process, which have shifted the notified body's focus to more immediate priorities. The Company's Quality Management System, technical files, and microbiology data have been fully aligned with MDR requirements, successfully audited by BSI, and fully approved.

Progress on product technical files continues, with two out of three already approved for MDR and the final file currently undergoing clinical review. Additionally, the UKCA mark has been secured, and another successful completion of the Medical Device Single Audit Program (MDSAP) audit has been achieved. While the ongoing investment in regulatory compliance places a financial strain on the business, achieving these standards is a significant milestone and establishes a strong barrier to entry for competitors.

Despite delays in the regulatory process for new products, investment in product development remains ongoing. Cost-reduction initiatives for the YelloPort Elite range continue, with a focus on exploring new materials and design modifications to drive efficiency. In Q4, the introduction of the 5mm Optical in key markets further strengthened the portfolio. Regulatory delays have delayed the launch of the Logi Dissect and Grasp instruments, now rescheduled for late 2025, early 2026.

Investment in new product development underscores our commitment to sustainability, with a strong emphasis on accelerating time-to-market and implementing cost-saving measures to enhance profitability. The successful UK launch of LogiTube™, a gastric calibration tube designed to address the specific needs of the obesity market, has been followed by a broader rollout across Europe and select APAC regions. This product line will soon be expanded with the introduction of an illuminated version, aimed at improving patient safety. Both LogiTube™ models are expected to be registered in the USA by the end of Q4 2025.

Operational update

Key efficiency initiatives are starting to deliver tangible results, as evidenced by the improvements in H2. The overhead restructuring, aimed at streamlining costs and reallocating resources toward strategic priorities, was successfully completed in Q3 2024. With relatively low investment, the Group has implemented automation in key functions to modernize operations, further reducing overhead costs and enhancing quality control consistency to strengthen our product offering. While progress in reducing inventory has been slower than anticipated, a renewed focus in 2025 will help release cash and improve cash flow.

Overall, these initiatives represent a concerted drive to improve operational efficiencies, maximise productivity, and reduce costs across the organisation. The company expects to see the benefits of such initiatives in 2025.

Board and executive management update

Paul Hardy stood down from his role as Non-executive Director having announced his intention to stand down from the board at the AGM in June 2024, following over eight years in the post. Charmaine Day also left the Group from her position as Chief Financial Officer ('CFO') in April 2024, to pursue other opportunities, after being with the Group since 2012. The board would like to thank both Paul and Charmaine for their dedication to the Company and wish them well with their endeavors in the future.

Chris Martin joined the board in July 2024 as CFO and Executive Director however in early February 2025 informed the Company of his intention to pursue another opportunity. The Board responded and appointed Brent Greetham as CFO on the 24 February 2025. Brent brings with him over 25 years' experience in the life sciences sector, having held senior finance leadership roles in various life science, biotech, and manufacturing organisations. His most recent role was with Charles River Laboratories, where he served as the Senior Finance Director for their Discovery division for nearly seven years. Prior to this, from 2011, Brent held finance leadership roles with Thermo Fisher Scientific, Gilead Sciences and Mission Therapeutics. Brent became a Chartered Accountant in 2004, having initially studied at Sheffield Hallam University, obtaining a degree in Accounting and Finance. Brent began his career in 1998 with the Grampian Country Food Group.

Current trading and outlook

2025 has started on a positive note, with overall sales in line with management expectations, reflecting the momentum in the business. The continued emphasis on sustainability is driving new account acquisitions in key markets, notably in Germany, where our Resposable™ devices are at the forefront of a 20-site Green Surgery trial. A targeted focus on key distribution partners, particularly in Europe and APAC-both showing 12% growth-is proving highly effective and will be a key driver of sustained expansion throughout 2025.

Despite a slowdown in product development due to the MDR, the Company has identified significant opportunities, particularly through new product launches in the obesity market. Following the successful introduction of LogiTube™ in the UK, we expanded into Europe in April 2024, with a US rollout planned later this year, subject to regulatory approval. Additionally, an illuminated version of this device is expected to launch in the UK and Europe in H2 2025, enhancing patient safety and expanding opportunities within the obesity market. These strategic launches reinforce our commitment to innovation and our ability to capitalise on emerging market needs in all regions.

To further strengthen profitability, and in addition to cost saving measures taken in 2024, further cost-reduction initiatives are being implemented to enhance the margins of key Reposable™ products. These projects focus on optimising material selection and implementing functional redesigns to reduce manufacturing costs while maintaining or improving product performance. By leveraging advanced materials and streamlining design processes, the Company aims to enhance efficiency, reduce waste, and drive down production expenses. These efforts not only support margin improvements but also ensure that products remain competitive in the market, offering enhanced value to customers without compromising quality or functionality.

In addition, during 2024, Elemental has secured a new five-year exclusive UK distribution agreement with Microline Surgical Inc. ("Microline"), a Boston-based company, extending a partnership that began in 2007. Under this agreement, Elemental will continue distributing Microline products through 2029, with projected sales of approximately £9 million over the contract term. The Company has also signed new agreements with Cipher Surgical Ltd. ("Cipher"), Aspen Surgical Inc., and Veol Medical Technologies, broadening its portfolio with an exciting range of medical devices for the UK healthcare market. Notably, both Aspen and Cipher have existing UK revenue streams that Elemental will now manage. Additional distribution opportunities are actively being negotiated to further enhance Elemental's market presence. New account conversions in the UK for SI Branded will also strengthen sales to drive growth in 2025.

With a positive start to 2025 and multiple strategic initiatives in motion, the Company is well-positioned for growth and success. The combination of sustainability-driven market expansion, targeted distribution partnerships, and innovative product launches will reinforce the Company's competitive edge. At the same time, ongoing cost-reduction efforts will enhance profitability and ensure long-term sustainability. The recent extension of key distribution agreements, along with new partnerships, further strengthens Elemental's market presence and growth potential. As the year progresses, the Company remains focused on capitalising on emerging opportunities, delivering high-quality solutions, and driving value for both customers and stakeholders.

Jonathan Glenn

Non-executive Chairman

30 May 2025

Operating and Financial Review

Operational overview

People

Our employees are key to our business strategy, and we aim to attract, retain and develop talented individuals.

Supply chain

Although supply chain disruptions eased to some extent, challenges remained throughout 2024, particularly with prolonged lead times on components affecting production efficiency. However, strengthened relationships with key suppliers, supported by strategic investments in personnel, have led to noticeable improvements. A thorough review of these initiatives will continue into 2025 as part of the ongoing operational improvement plan.

Financial overview

Revenue

Margins

1. The net cost of manufacturing reflects the shortfall in recovering both fixed and variable costs, encompassing both direct and indirect expenses.

Use of adjusted measures

Adjusted KPIs are used by the Board to understand underlying performance and exclude items which distort comparability, as well as being consistent with broker forecasts and measures. The method of adjustments is consistently applied but is not defined in International Financial Reporting Standards (IFRS) and, therefore, are considered to be non-GAAP (Generally Accepted Accounting Principles) measures. Accordingly, the relevant IFRS measures are also presented where appropriate.

Financial position

Capital expenditure on tangible assets decreased compared to the prior year, amounting to £0.1m in 2024 (2023: £0.3m). The Group remains committed to reviewing its capital expenditure and will continue to enhance its investment plans. A review of the business priorities and operational improvements will guide our focus in this area as we move further into 2025.

Investment in new product development continues, with investment in the year of £0.27m (2023: £0.41m). Further additions to the YelloPort Elite range saw the introduction of XL cannula to allow for the soft insertion of Laparoscopic Staplers routinely used in Bariatric surgery. Following the successful launch of the LogiTube Gastric Calibration Tube work began on a novel illuminated version to enhance patient safety, this is expected to be launched in Q3 2025.

As part of the annual review development expenditure underwent impairment testing, and it was determined that all current projects continue to provide economic benefit. Therefore, no direct impairment was recognised in 2024 (compared to nil in 2023).

A review of the goodwill arising from the acquisition of Elemental Healthcare Ltd was conducted to assess further impairment. The trading environment in the UK market was significantly affected by the pandemic throughout 2020 and continued into 2021, resulting in a cumulative impairment of £2.76m. However, the UK market has exhibited strong signs of recovery, which has persisted into 2023. With increased visibility on the outlook, the Directors anticipate improved forecasting of future net inflows on this cash-generating unit (CGU). Based on this assessment, the recoverable amount of the CGU exceeds its carrying value by £0.56m.

The presence of several impairment indicators within the business this year necessitated a broader consideration of asset impairment beyond goodwill. A review of the CGU of Surgical Innovations Ltd was conducted, and based on the assessment, the amount of the CGU exceeds its recoverable amount by £1.16m (see note 4).

Working Capital

Inventory levels continue to be managed with a view to mitigating risks associated with extended lead times, with the primary focus being on mitigating exposure to key components. Inventory holdings were £3.0m at the year-end (2023: £2.85m).

Trade receivables increased to £1.7m at the year-end (2023: £1.58m), with minimal risk associated with overdue balances. Trade creditors decreased over the same period (2024: £1.14m, 2023: £1.17m).

Net cash outflows from operations amounted to £0.1m in 2024, compared to inflows of £0.40m in 2023.

The Group concluded the year with net cash balances of (£0.31m) (excluding leases), compared with an opening net cash balance of £0.36m. Total gross cash resources available amounted to £1.21m (compared to £2.20m as of December 31, 2023), including an undrawn invoice discounting facility of £1.0m.

The Group recorded a corporation tax credit of £0.1m in the year. (2023: credit of £0.20m). Overall, the Group continues to hold substantial tax losses on which it holds a cautious view, and consequently the Group has chosen not to recognise those losses.

Key Performance Indicators ("KPIs")

The Group considers the key performance indicators of the business to be:

1. Net cash is stated after bank borrowings £0.50m (2023: £0.85m), excluding leases under IFRS16.

Reconciliation of adjusted KPI / measures;

2. EBITDA is defined as earnings before interest, taxation, depreciation and amortisation (including impairment). EBITDA is calculated as operating loss of £0.791m adding back depreciation £0.48m and amortisation £0.21m. TDA is defined as earnings before interest, taxation, depreciation and amortisation (including impairment).

Principal risks and uncertainties

The management of the business and the nature of the Group's strategy are subject to a number of risks which the Directors seek to mitigate wherever possible. The principal risks are set out below.

Jonathan Glenn

30 May 2025

(Loss) / profit and total comprehensive income relate wholly to the owners of the parent Company.

Consolidated statement of changes in equity

for the year ended 31 December 2024

The merger reserve arose from a business combination in 2017

Notes to the consolidated financial statements

1. Group accounting policies under IFRS

(a) Basis of preparation

Surgical Innovations Group PLC (the "Company") is a public AIM listed company incorporated, domiciled and registered in England in the UK. The registered number is 02298163 and the registered address is Clayton Wood House, 6 Clayton Wood Bank, Leeds, LS16 6QZ.

The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 and as applicable to companies reporting under IFRS. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The financial statements have been prepared under the historical cost convention, are presented in Sterling and are rounded to the nearest thousand.

Going concern

The Directors continue to adopt the going concern basis in the preparation of the financial statements.

The Directors have prepared forecasts for the period to December 2026 based on a full evaluation of the Group's trading activities and costs base, sensitized to reflect a rational judgement of the level of inherent risk.

Financial headroom as at 31 December 2024 was £0.9m with the invoice discounting facility remaining largely undrawn.

The Board is satisfied that there is headroom including testing any sensitivities under reasonably possible scenarios, and the Directors conclude that it continues to be appropriate to prepare the Annual Report and Accounts on a going concern basis.

2. Segmental reporting

Information reported to the Board, as Chief Operating Decision Makers, and for the purpose of assessing performance and making investment decisions is organised into three operating segments. The Group's operating segments under IFRS 8 are as follows:

The measure of profit or loss for each reportable segment is gross margin less amortisation of product development costs. Assets and working capital are monitored on a Group basis, with no separate disclosure of asset by segment made in the management accounts, and hence no separate asset disclosure is provided here. The following segmental analysis has been produced to provide a reconciliation between the information used by the chief operating decision maker within the business and the information as it is presented under IFRS.

Unallocated expenses for 2024 include sales and marketing costs (£664,000), research and development costs (£1,149,000), central overheads (£1,298,000), Direct (Elemental Healthcare) sales & marketing overheads (£909,000), share based payments (£nil) and Other expensed/Non-recurring (£153,000).

*There were no revenues transactions between the segments during the year

Included within the segment results are the following items:

Unallocated expenses for 2023 include sales and marketing costs (£633,000), research and development costs (£1,099,000), central overheads (£869,000), Direct (Elemental Healthcare) sales & marketing overheads (£1,126,000), share based payments (£30,000), Other expensed / Non-recurring (£8,000) note 3.

Disaggregation of revenue

The Group has disaggregated revenues in the following table:

1. APAC-Asia Pacific

Revenues are allocated geographically on the basis of where revenues were received from and not from the ultimate final destination of use. During 2024 £1,788,000 (15.0%) of the Group's revenue depended on one distributor in the OEM segment (2023: £1,503,000 (12.5%)), and £840,000 (7.0%) in the SI Brand segment (2023: £868,000 (7.2%)).

Sales of goods were £11,945,000 (2023: £12,014,000) and sales relating to services in the UK were £Nil (2023: £Nil).

Other expensed items -non-recurring

These are expenses or a group of expenses that are considered non-recurring in nature, as determined by the Directors. They are believed to warrant separate identification in the financial statements to provide readers with a clear understanding of the underlying trading performance of the business.

Non-recurring Costs

Severance costs related to restructuring activities in year (£153k).

Other operating expenses comprised:

Goodwill and intangibles are allocated to the cash generating unit (CGU) that is expected to benefit from the use of the asset.

Impairment losses in the year

During the year, as a result of losses in the Surgical Innovations Limited cash generating unit ('CGU'), the group carried out a review of the recoverable amount of the assets in this CGU. This CGU comprises the SI Brand and OEM segments. Based on the results of the CGU impairment assessment which has been undertaken using a value in use model, an impairment loss of £1.16m has been recognised in profit or loss in respect of the capitalised development costs. The other assets in scope of the impairment assessment, being the property plant and equipment, were concluded to have a fair value less cost of disposal in excess of the carrying value and no impairment in respect of these assets has been recognised. Principal assumptions underlying this calculation are the growth rate into perpetuity of 2.5% and a pre-tax discount rate of 21.3% applied to anticipated cash flows. In addition, the value in use calculation assumes a gross profit margin of 19% increasing to 24% over the 5 year period using past experience of sales made and future sales that were expected at the reporting date based on anticipated market conditions.

Capitalised development costs

Capitalised development costs represent expenditure incurred in developing new products that fulfil the requirements met for capitalisation as set out in paragraph 57 of IAS38. These costs are amortised over the future commercial life of the product, commencing on the sale of the first commercial item, up to a maximum product life cycle of ten years, and taking account of expected market conditions and penetration.

Goodwill

The Group tests goodwill at each reporting date for impairment and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The recoverable amount of a cash generating unit (CGU) is determined based on value in use calculations. These calculations use cash flow projections based on five-year financial budgets approved by management. Cash flows beyond the five-year period are extrapolated using estimated long term growth rates.

An impairment review is carried out annually for goodwill. Goodwill arose on the acquisition of Elemental Healthcare Limited in 2017 and is related to both the Distribution and SI Brand segments of the Group. Elemental Healthcare Limited is considered to be a separate cash-generating unit (CGU) of the Group whose recoverable amount has been calculated on a value in use basis by reference to discounted future cash flows over a five-year period plus a terminal value. Principal assumptions underlying this calculation are the growth rate into perpetuity of 2.5% and a pre-tax discount rate of 18.0% (2023:16.3%) applied to anticipated cash flows. In addition, the value in use calculation assumes a gross profit margin of 56% increasing to 59% over the 5-year period using past experience of sales made and future sales that were expected at the reporting date based on anticipated market conditions.

The Group has conducted a sensitivity analysis on the impairment test of the CGU. Assuming no change to other assumptions, the discount rate can increase by 13% before an impairment would result.

In March 2022, the Group refinanced its existing debt with Yorkshire bank consisting of the following:

· Extension to the CBILS of £1.5m repayable in May 2026, interest is calculated at rate of 2.94% repayable monthly over the Bank of England base rate. Monthly instalments are £0.029m.

· Covenants attached to the CBILS comprise of EBITDA to debt servicing costs at a minimum of 1.25x.

· Additional headroom with an Invoice Discounting facility of £1.0m across the Group, 2.5% on margin with a maximum of nominal administration fee of a maximum of £0.018m if not utilised.

· In March 2024, the bank extended its support by resetting the testing parameters. They excluded 31 March 2024 and initiated the rolling test from June 2024, based on EBITDA being 1x the debt service. Subsequent testing periods included September 2024 (1x, on a 6-month rolling basis), December 2024 (1.25x, on a 9-month rolling basis), and then on a 12-month rolling basis thereafter.

The Group and Company's financial liabilities have contractual maturities (including interest payments where applicable) which are summarised below.