Final Results

10 April 2025

INSPECS Group plc

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

Preliminary unaudited results for the year ended 31 December 2024

Focused on delivering operational efficiencies and strategic execution; introduction of medium term targets

INSPECS Group plc, a leading designer, manufacturer, and distributor of eyewear (sunglasses, optical frames, lenses and low vision products) today announces its unaudited preliminary results for the year ended 31 December 2024.

Financial Highlights

· Group revenue of £198.3m (2023: £203.3m)

· Group revenue on a constant exchange rate basis1 of £203.2m (2023: £203.3m)

· Gross profit margin up 130 bps to 52.2% (2023: 50.9%)

· Underlying EBITDA1 down £0.4m to £17.6m (2023: £18.0m)

· Operating profit up £0.5m to £3.4m (2023: £2.9m)

· Cash flows from operating activities down £2.7m to £14.2m (2023: £16.9m)

· Net debt excluding leasing reduced by £1.3m to £22.9m (2023: £24.2m)

Operational Highlights and Current Trading

· Distribution agreed for key new brands into leading retailers across the USA, Canada and Europe

· Completion of the Group's new state-of-the-art manufacturing facility in Vietnam

· The integration of our US businesses completed in the year

· Group centralised procurement generating supply chain efficiencies

· Launch of a new optics product 'Optaro', being a video magnifier specifically made for smartphones

· Operational efficiency drive is delivering pleasing results

· Pallet programmes to major US and Canadian chains secured in 2024 for delivery H1 2025

· New finance facilities put in place until 2027 with improved terms

· First quarter 2025 trading in line with expectations

Tariffs

The ongoing tariff situation remains fast-paced, and management continues to monitor closely. Whilst it presents uncertainty for the year ahead, mitigations include:

· The tariffs are based on the landed value of the products, which will not materially affect the price to the end consumer and therefore this is not expected to impact current consumer demand.

· Our non-US based businesses are not currently affected by the recent changes in tariffs, and the Group is confident that the continuing focus on supply chain efficiencies, reducing operational expenditure and selective pass through of cost increases to preserve margins across key markets will largely mitigate the effects of these new tariffs.

Introduction of medium-term targets

The Board is pleased to set out the Group's medium-term ambition to deliver:

· CAGR organic revenue growth 40% above the market rate, which is currently forecast to grow at 3% CAGR over the next 5 years2

· Double digit underlying EBITDA %

· Net debt to be 40% - 75% of underlying EBITDA

1. Constant exchange rates and Underlying EBITDA are non-statutory measures. Please refer to note 4 for details.

2. Market Benchmark: Based on Statista Eyewear: Market Data & Analysis, covering Sunglasses and Eyewear Frames revenue projections.

Richard Peck, Chief Executive Officer of INSPECS Group plc, commented:

"INSPECS demonstrated resilience in 2024 despite challenging macroeconomic conditions, with revenue declining by 2.5% to £198.3m due to softer consumer demand and competitor consolidation. However, our continued focus throughout the year on the integration and simplification of our business has been significant.

"We successfully got our new factory in Vietnam up and running, which has significantly improved our capacity. We also strengthened our brand portfolio by introducing several new brands and expanding our existing ones, all the while working on our supply chain and efficiencies. Additionally, we have focused on growing our customer base in key markets. These strategic initiatives allowed us to improve our margins, maintain our administrative costs in an inflationary environment, and reduce our net debt, setting us up well for the future.

"The first quarter has laid the groundwork for a pivotal year and as we move forward, the focus remains on sharpening efficiency, streamlining operations, and advancing key initiatives. Notwithstanding the recently announced tariffs and caution in relation to market conditions, compelling new projects in the pipeline give us confidence in delivering on market expectations for 2025 and our medium-term ambition to accelerate revenue growth, deliver double digit Underlying EBITDA whilst targeting net debt of 40%-75% of Underlying EBITDA."

For further information please contact:

About INSPECS Group plc

INSPECS is a leading provider of eyewear solutions to the global eyewear market. The Group produces a broad range of eyewear frames, low vision aids and lenses, covering optical, sunglasses and safety, which are either "Branded" (under licence or under the Group's own proprietary brands), or "OEM" (unbranded or private label on behalf of retail customers).

INSPECS is building a global eyewear business through its vertically integrated business model. Its continued growth is underpinned by increasing the penetration of its own-brand portfolio, worldwide distribution, growing retail presence, maximising group synergies and its global network, expanding its manufacturing capacity and scaling the research and development department as it develops new and innovative eyewear products. The Group has operations across the globe: with offices and subsidiaries in the UK, Germany, Portugal, Scandinavia, the US and China (including Hong Kong, Macau and Shenzhen), and manufacturing facilities in Vietnam, China, the UK and Italy.

INSPECS customers are global optical and non-optical retailers, global distributors and independent opticians. Its distribution network covers over 80 countries and reaches approximately 75,000 points of sale.

More information is available at: https://INSPECS.com

CHAIRMAN'S STATEMENT

Performance highlights

Despite ongoing macroeconomic headwinds, INSPECS has remained focused on delivering operational efficiency and strategic execution. Revenue for the year reduced by £5.0m against prior year to £198.3m, reflecting a weaker than anticipated consumer demand in key markets and the impact of customer consolidation. Our disciplined cost management and efficiency improvements resulted in a 130-basis point improvement in gross profit margin however our revenue performance, combined with increased losses in our Lenses segment, led to a £0.4m reduction in Underlying EBITDA to £17.6m.

Our vertically integrated business model continues to provide significant advantages, enabling us to maintain operational efficiency across our global supply chain. The integration of past acquisitions is now largely complete, delivering synergies that are contributing to both revenue protection and margin improvements. Furthermore, our investment in sustainable production methods reinforces our leadership in ethical and environmentally responsible eyewear solutions.

Our strategic focus on mid-market and premium eyewear remains well aligned with consumer preferences for quality, craftsmanship, and sustainability. This has supported the development of new partnerships with leading global retailers while also driving direct-to-consumer growth.

Strategic developments in 2024

Throughout 2024, we remained focused on the six key pillars that guide our strategy: vertical integration, worldwide distribution, innovation, growth, global network and fit for the future.

- Vertical integration: Investments in automation and digital transformation have driven production efficiencies and quality enhancements. These improvements have also mitigated cost pressures from inflationary trends and supply chain disruptions.

- Worldwide distribution: We continued to expand in key growth markets, particularly in North America, with revenue from this region increasing by 4.0%.

- Innovation: We introduced several new eyewear designs, including collaborations with globally recognised fashion brands, broadening our portfolio and engaging new customer segments. Our R&D investments in smart eyewear technology have also delivered promising early-stage results, positioning INSPECS at the forefront of industry innovation.

- Growth: Expansion of our omnichannel retail presence has improved the customer experience, integrating in-store and online shopping. We continue to invest in our direct-to-consumer e-commerce platforms.

- Global Network: We remain committed to identifying acquisitions that align with our existing portfolio.

- Fit for the future: We are always looking at ways to improve our climate goals, and with that in mind, we are setting a clear new target: a 40% reduction in our global Scope 1 and Scope 2 emissions by 2040, using 2023 as our base year. This shifts our focus from our previous goal of carbon-neutral operations by 2030 to making deeper, more direct emissions reductions. At the same time, we are staying committed to sustainability by ensuring that by 2030, all our packaging will be recyclable, reusable, biodegradable, or made from biobased materials.

Outlook for 2025

Looking ahead, demand for eyewear, particularly in the mid-to-premium and sustainable categories, remains robust, supported by trends such as increasing health awareness and global demand for optical correction. We expect to realise further benefits from investments made since our IPO in 2020, particularly in our expanded manufacturing capabilities and distribution networks. Plans for additional expansion into underpenetrated regions such as Latin America, the Middle East, and Southeast Asia present significant opportunities for growth.

Our commitment to innovation and responsible design remains unwavering. In 2025, we plan to introduce new eyewear collections with thoughtfully sourced materials and accelerate progress on integrating smart technology into our product lines. Additionally, we will leverage data analytics to enhance our understanding of customer preferences, ensuring our offerings remain aligned with evolving consumer needs.

Operational priorities for 2025 include reinforcing supply chain resilience, maintaining strict cost discipline, and increasing the proportion of our Group's procurement from in-house manufacturing rather than third-party suppliers. While macroeconomic headwinds such as inflation and currency volatility remain risks, we are confident that our business model and strategic agility will enable us to effectively navigate these challenges.

As per our communication to the market on 20 December 2024, I intend to step down as Executive Chairman at the conclusion of the company's AGM pending the outcome of the ongoing search for a new Non-Executive Chair.

I would like to take this opportunity to express my gratitude to our leadership team and employees worldwide for their dedication and hard work throughout 2024. Their efforts have been instrumental in driving our progress.

To our stakeholders, thank you for your continued support and confidence in our vision.

As we enter 2025, I am confident that INSPECS is on a strong growth trajectory, equipped with the right strategy, talent, and resources to capitalise on emerging opportunities.

Robin Totterman

Executive Chairman

CHIEF EXECUTIVE'S REVIEW

Overall Performance

Starting with our financial performance, the Group delivered revenue of £198.3m, down from £203.3m the previous year. On a constant currency basis, the Group's revenue was £203.2m. Despite a difficult first half, revenue in the second half of the year increased 3.4%, from the previous year, to £95.3m. Underlying EBITDA decreased to £17.6m from £18.0m.

We continued to generate positive cashflow in the year and reduced our net debt by £1.3m to £22.9m, even after investing in a new factory and paying deferred consideration on previous acquisitions. In December, we successfully refinanced our banking arrangements with HSBC UK Bank plc. The new loan facilities, maturing in 2027, are expected to reduce interest costs starting in 2025 and continuing thereafter.

Frames and Optics

Our Frames and Optics segment performance in the USA, Canada and the UK was robust. However, as highlighted through the year, we did experience a softer market in Europe, which impacted our overall performance. Whilst the segment saw a dip in sales from £179.0m to £172.2m, improvements in gross margin helped mitigate the impact on Underlying EBITDA.

The team has focused on operational and strategic initiatives through the year. Our strategy to grow by introducing our brands into more markets, while continuously simplifying our business operations, has shown promising results. The launch of a new brand, Barbour, globally has been very well received in the market.

We have made significant developments in centralising our procurement processes, with a dedicated global team delivering synergies. The integration of our US businesses completed in the year, streamlining our operations under a single team, which has already delivered efficiencies and enhanced performance.

In regard to brand portfolio highlights, we were excited to announce the addition of a new brand, Tom Tailor, in August 2024. Our house brand, Titanflex, has continued to deliver strong results this year with a record number of sales. In Q4 Eschenbach Optiks successfully launched a revolutionary low vision aid - a video smartphone magnifier, which was well received by the market.

Manufacturing

Revenue from our manufacturing segment was £20.7m, compared to £20.2m in 2023. A major highlight of the year was the completion of the Group's new, state-of-the-art manufacturing facility in Vietnam. This expansion of manufacturing capability, which is now fully operational, has significantly increased our capacity allowing the Group to be able to produce an additional 5 million units per year in the future.

Lenses

Our Lenses segment grew its revenue by 18.2%. Despite this growth in sales, operationally the business increased its losses by £0.5m. Our satellite businesses have been merged into our main production facility in early 2025 to reduce operational overheads and we are currently carrying out a strategic review of the business which is expected to be concluded by June 2025.

ESG

In 2024, we maintained our focus on ESG across our operations, remaining committed to aligning with UK mandatory climate-related financial disclosures and meeting stakeholder expectations. We have shifted from a carbon-neutral goal to a 40% emissions reduction target, focusing more on direct reductions to our carbon footprint. As we move forward, we remain dedicated to regularly reviewing and refining our ESG strategy to drive meaningful progress across our global operations.

Our role within the community remains important to us, and we continue to foster strong partnerships with charities and non-profit organisations, both in the UK and internationally. In 2024, we proudly supported various initiatives, including the food bank project at Eschenbach, Sight Support Southwest with INSPECS Ltd, and the local food support programme at Tura.

Current trading and outlook

Looking ahead, we remain committed to growth with several key initiatives this year. We will introduce Tom Tailor, a significant brand in eyewear with Eschenbach in Europe. In Asia, production in our factories is ramping up, which will allow us to manufacture more products for our customers. In February, we attended the world's largest optical fair in Italy, where we received strong interest in our new Vietnam factory. We delivered solid growth in H2 2024 and I am pleased to report that our current trading is in line with expectations, giving the Board confidence in delivering growth in revenue, margins and profits in 2025.

In addition to these efforts, we are focusing on enhancing our technological capabilities to stay ahead in the market. We are investing in digital transformation initiatives to improve our supply chain efficiency and customer experience. Our commitment to innovation remains steadfast, and we are exploring new product lines and services to diversify our offerings. We believe that these strategic moves will position us well for sustained growth and success in the coming years.

Richard Peck

Chief Executive Officer

CHIEF FINANCIAL OFFICER'S REVIEW

Group sales for the year of £198.3m was a decrease of 2% on the previous year's sales of £203.3m. On a constant currency basis* our sales of £203.2m were flat on the previous year's sales of £203.3m.

The Group's Operating Profit increased from £2.9m to £3.4m.

The Group's Underlying EBITDA decreased by 2% in the year from £18.0m in 2023 to £17.6m.

Reported loss before tax of £1.0m (FY23: Profit before tax £0.2m) is after incurring non-underlying costs (net) £0.5m (FY23: £0.1m), exchange adjustments on borrowings £0.1m (FY23: £1.3m) and net finance costs of £4.0m (FY23: £3.9m).

*Constant exchange rates: figures at constant exchange rates have been calculated using the average exchange rates in effect for the corresponding period in the relevant comparative year.

REVENUE

Total revenue for the year was £198.3m, decreasing by 2% from £203.3m in 2023. On a constant currency basis, revenue remained flat, at £203.2m in 2024 and £203.3m in 2023.

GROSS MARGIN

The Group's gross profit margin for 2024 was 52.2% compared to 50.9% in 2023, an increase of 130 basis points. The Group continues to focus with its new procurement team on supply chain efficiencies.

UNDERLYING EBITDA

The Group considers Underlying EBITDA as one of its key operating performance indicators. Our Underlying EBITDA decreased by £0.4m, from £18.0m to £17.6m, a decrease of 2%. Underlying EBITDA margin remained flat at 8.9% during the year. Our Underlying EBITDA performance reflects the decrease in sales in 2024 from 2023.

OPERATING EXPENSES

Operating expenses decreased from £100.7m to £100.0m in 2024 despite cost inflation on wages, salaries and operating costs. The Group will continue to seek further operational cost savings in 2025.

The table below sets out our operating costs as a percentage of revenue.

(LOSS)/PROFIT BEFORE TAX

In 2024, the Group made a statutory loss before tax of £1.0m (FY23: profit £0.2m), a decrease of £1.2m. The Group made an Underlying EBITDA of £17.6m (FY23: £18.0m).

KEY ITEMS IMPACTING THE CURRENT YEAR'S RESULTS ARE AS FOLLOWS:

Depreciation and amortisation

The Group's depreciation and amortisation charge is set out below. Amortisation costs principally arise from the capitalisation of customer relationships on acquisitions.

Exchange adjustment on borrowings

The exchange adjustment on borrowings primarily relates to intragroup loans, where the functional currency of the entities differs from the loan currency. This exchange adjustment also relates to the revolving credit facility and term loan held in Euros.

Share based payment expense

The Group has an LTIP scheme in place that vests over a period of three years from the date of the grant of the option at market value, and is subject to the continued employment of the individual over that period. The Group has recognised a non-cash charge of £0.4m in 2024 (FY23: £1.0m). The scheme is designed to give the equivalent of one year's salary to an individual over that three-year period. The Remuneration and Nomination Committee have approved the issue of further options, with this expected following the announcement of the 2024 results.

Earnout on acquisitions

The acquisitions of EGO Eyewear and BoDe Designs in December 2021 both contained amounts due for contingent consideration, based on the performance of those businesses. In 2024, the amount of contingent consideration recognised under the agreements amounted to £1.0m (FY23: £1.1m) and has been charged to the profit and loss account in accordance with IFRS 3.

Net finance costs

Total net finance costs of £4.0m remained in line with 2023. On 13 December 2024 the Group repaid its previous multicurrency term loan and revolving credit facility with HSBC. At the same time, the Group entered into a new term loan and multicurrency revolving credit facility with HSBC. The Group's multicurrency facility has now been drawn down in Euros with the interest rate charge based on Euribor rather than Sonia. On 13 December the Sonia rate was 4.7%, the Euribor rate was 2.9%. The new facilities were put in place to reduce net finance costs over the term of the new facilities. The amortisation of loan transaction costs relates to the refinancing charges that are amortised over the period of the financing facilities available to the Group.

Non-underlying costs (net)

The Group incurred £0.5m of non-underlying costs (net) in 2024 (2023: £0.1m). During the year the Group incurred restructuring costs of £0.4m which included the integration of INSPECS USA and Tura. The Group incurred a provision charge of £0.3m (2023: £nil) in relation to pre-acquisition withholding tax. The Group also recognised a non-underlying gain of £0.2m in relation to the sale of the Magdala Road site.

CASH FLOWS

During the year, the Group generated £7.2m in net cash flows from operating activities after tax and interest (2023: £12.7m). An analysis of how the Group has deployed its free cash flow in the year is set out below.

WORKING CAPITAL

The Group monitors its working capital position to ensure that it has sufficient resources to meet its day-to-day requirements and to fund further investing activities to supply its customer base.

Receivables

The Group closely monitors its receivable due days to ensure that amounts overdue more than 30 days are kept to a minimum balance.

Inventory

Our sales to inventory ratio decreased from 5.0 to 4.6. The Group constantly monitors its working capital position, with a view to increase the sales to inventory ratio where possible.

Current asset ratio

The current asset ratio is a liquidity ratio that measures a company's ability to pay its short-term obligations, or those due within one year.

Quick ratio

The quick ratio is an indicator of a company's short-term liquidity position and measures a company's ability to meet its short-term obligations with its most liquid assets.

Net debt

The Group's closing net debt, including and excluding lease liabilities, is shown below. During the year the Group decreased its net debt excluding leases from £24.2m to £22.9m.

FINANCING

During the year, the Group refinanced its facilities with HSBC. The new loan facilities, maturing in December 2027, have a leverage ceiling of 2.25, debt service cover of 1.05 (increasing to 1.1 in December 2025) and an interest cover of 3.0. The Group finances its operations through the following facilities.

LEVERAGE (USING DEBT TO EQUITY RATIO)

The Group's leverage positions, calculated in the context of its banking covenants, are shown below including and excluding operating lease liabilities:

The Group's leverage is constantly updated, and a rolling projection for 12 months is reviewed to ensure compliance with the Group's covenants.

(LOSS)/EARNINGS PER SHARE

DIVIDEND

The Group does not intend to pay a dividend for the year ended 31 December 2024.

GOING CONCERN

The Directors have undertaken a comprehensive assessment of the Group's ability to trade out to at least 30 June 2026. Taking this into consideration, the Directors have a reasonable expectation that the Group have adequate resources to continue to trade throughout the review period. Therefore, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.

Chris Kay

Chief Financial Officer

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2024

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

for the year ended 31 December 2024

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2024

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2024

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2024

Notes

1. GENERAL INFORMATION

INSPECS Group plc is a public company limited by shares and is incorporated in England and Wales (company number 11963910). The address of the Company's principal place of business is 7-10 Kelso Place, Upper Bristol Road, Bath BA1 3AU.

The principal activity of the Group in the year was that of design, production, sale, marketing and distribution of high fashion eyewear, lenses and OEM products worldwide.

2. ACCOUNTING POLICIES

Basis of preparation

The Consolidated Financial Statements have been prepared in accordance with UK adopted international accounting standards, and those parts of the Companies Act 2006 applicable to companies reporting under UK adopted international accounting standards.

The Consolidated Financial Statements have been prepared on a historical cost basis, except where fair value measurement is required under IFRS as described below in the accounting policies.

Going concern

The financial statements have been prepared on a going concern basis, as the Directors reasonably expect the Group to continue operating and meeting its obligations to 30 June 2026.

The Group's borrowings totalled £46.8m (including invoice financing) with a net debt position of £22.9m (excluding leases) on 31 December 2024. These borrowings are subject to three key covenants: leverage, cash flow cover, and interest cover ratios, assessed on a 12-month rolling basis for each relevant period. The financing facilities have a three-year term, with two one-year extension options.

A breach in the cash flow cover covenant as of 31 March 2025 was identified, which was caused by accelerated payments to suppliers. Controls over subsidiary bank accounts have been strengthened such that a breach of a similar nature cannot reoccur. The breach was formally waived by HSBC on 9 April 2025, and no further covenant breaches or liquidity challenges are expected through the going concern period.

To evaluate financial resilience, the Board considered three scenarios:

Base Case

· The Base Case reflects the Board-approved budget, updated with actual trading data up to 31 March 2025.

· The budget assumes conservative growth and enhanced cost controls within the Group.

· Market conditions remain resilient, with trading aligning with expectations.

· The Group anticipates maintaining its budgeted margin throughout 2025.

· No further covenant breaches or liquidity challenges are anticipated.

Severe but Plausible Downside Scenario

· This scenario assumes a 10% monthly revenue reduction from 1 April 2025 onward.

· The Directors consider this 10% reduction appropriately conservative, given the current trading position, declining global inflation, and increasing consumer confidence.

· The model incorporates cost-saving measures wholly within managements control, including reductions in employee bonuses, commissions, and discretionary operational spending.

· No further covenant breaches or liquidity challenges are anticipated.

Reverse Stress Test

· This scenario models a 28% decline in forecast revenue from 1 April 2025, with gross margins maintained.

· Such a decline would significantly surpass historical reductions and result in a breach of cash flow cover in the June 2026 reporting period.

· This scenario includes some cost-saving measures wholly within management's control would include reductions in employee expenses, headcount, and discretionary operating costs.

· The analysis focused on covenant compliance risks rather than liquidity constraints, as the Group would breach covenants before encountering cash flow shortfalls.

· In the event of a severe revenue decline, the Group could implement additional cost-saving initiatives and, whilst not wholly within management's control, could explore covenant amendments or waivers with its banking partners.

· Given current business momentum, the Directors consider this scenario to be a remote possibility.

The Board has reflected on the likely effects of the recent announced increases in tariffs: The majority of US eyewear is supplied from Chinese manufacturing. In the short to medium term, the Board's view is that it is unlikely that the shape of this supply chain will alter in the face of these changes. The tariffs are based on the landed value of the products, which will not materially affect the price to the end consumer and therefore this is not expected to impact current consumer demand.

Our non-US based businesses are not currently affected by the recent changes in tariffs, and the Group is confident that the continuing focus on supply chain efficiencies, reducing operational expenditure and selective pass through of cost increases to preserve margins across key markets will largely mitigate the effects of these new tariffs..

Based on these assessments, the Board has a reasonable expectation that the Group has sufficient resources to continue operating as a going concern and to meet its commitments as they fall due over the going concern period to 30 June 2026. Accordingly, the Directors have adopted the going concern basis in preparing the financial statements.

Basis of consolidation

The consolidated financial information incorporates the Financial Statements of the Group and all of its subsidiary undertakings. A subsidiary is defined as an entity over which the Group has control. Control exists when the Company has power over the investee, the Company is exposed, or has rights to variable returns from its involvement with the subsidiary and the Company has the ability to use its power over the investee to affect the amount of investor's returns. The Financial Statements of all Group companies are adjusted, where necessary, to ensure the use of consistent accounting policies. Acquisitions are accounted for under the acquisition method from the date control passes to the Group. On acquisition, the assets and liabilities of a subsidiary are measured at their fair values. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recorded as goodwill.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. Acquisition-related costs are expensed as incurred and classified as non-underlying costs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group reassesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested annually for impairment. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units (CGUs) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Revenue recognition

Revenue from the sales of goods is recognised at the point in time when control of the asset is transferred to the customer, in line with agreed incoterms. Revenue is recognised at the fair value of the consideration received or receivable for sale of goods to external customers in the ordinary nature of the business. The fair value of the consideration takes into account trade discounts, settlement discounts, volume rebates and the right of return. Revenue in relation to royalty income is recognised over the period to which the royalty term relates. Revenue in relation to design income is recognised as the work is performed.

Rights of return

Under IFRS 15 a sale with right of return is recognised if the customer receives any combination of the following:

- a full or partial refund of any consideration paid;

- a credit that can be applied against amounts owed, or that will be owed, to the entity; and

- another product in exchange (except for in cases of a defective product being returned, or the exchanged item is of the same type, quality, condition and price).

The Group recognised a liability where it has historically accepted a right of return. The Group estimates the impact of potential returns from customers based on historical data on returns. A refund liability is recognised for the goods that are expected to be returned. A right of return asset (and corresponding adjustment to cost of sales) is also recognised for the right to recover the goods from the customer, to the extent that these goods are not considered impaired.

Inventories

Inventories are stated at the lower of cost and estimated selling price less costs to sell after making due allowance for obsolete and slow-moving items. Inventories are recognised as an expense in the period in which the related revenue is generated.

Cost is determined on an average cost basis. Cost includes the purchase price and other directly attributable costs to bring the inventory to its present location and condition.

At the end of each period, inventories are assessed for impairment. If an item of inventory is impaired, the identified inventory is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the income statement.

Royalties

Royalties payable reflect balances owed to brand owners for the right to use the brand name. The royalty is payable based on a pre-agreed percentage of sales volumes, with some arrangements also having minimum royalty payments for specific periods. Royalties payable are recognised on delivery of the products covered by such arrangements, with an additional accrual made where it is considered that the sales level required to meet the minimum payment will not be met.

Refinancing

Where a loan arrangement is replaced with a subsequent facility which is materially different in relation to repayment structure or interest rate, or a loan arrangement is repaid and a new loan entered, any capitalised loan arrangement fees in respect of the previous loan are expensed, with transaction costs relating to the new loan capitalised and held against the value of the related liability.

Cash and cash equivalents

For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents comprise cash on hand and demand deposits, and short-term highly liquid investments that are readily convertible into known amounts of cash, that are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group's cash management.

For the purpose of the Consolidated Statement of Financial Position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

Deferred and contingent consideration in relation to acquisitions

Deferred consideration to the previous owners arising on acquisitions are treated as part of the consideration for the acquisition, with the liability recognised on the statement of financial position at the date of the acquisition. Where the consideration is contingent on continuing employment within the Group, the charge is recognised through the income statement over the period to which it relates.

Non-underlying costs

Non-underlying costs are those that in the Directors' view should be separately disclosed due to their nature to enable a full understanding of the Group's financial performance. These include income and expenditure that is considered outside of the usual course of business and therefore is separately identified to allow the users of the Financial Statements comparability versus prior periods. The main categories of costs disclosed as non-underlying are acquisition costs, restructuring costs and other professional service costs relating to the accounting integration of acquisitions.

New and amended standards and interpretations

The following standards have been published and are mandatory for accounting periods beginning after 1 January 2024:

- Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current

- Amendments to IFRS 16: Leases

- Amendments to IAS 7: Statement of Cashflows

- Amendments to IFRS 7: Financial Instruments: Disclosures

None of the above standards have given rise to a significant change in the reported results or financial position of the Group or Company.

The following standards have been published but are not mandatory for the year-ended 31 December 2024 and have not been early adopted by the Group:

- IFRS 18: Presentation and Disclosure in Financial Statements

- IFRS 19: Subsidiaries without Public Accountability: Disclosures

- Amendments to IAS 21: The Effects of Changes in Foreign Exchange Rates

The Group is currently reviewing the impact of the new standards not yet in issue which are expected to change the structure and presentation of the Group's Financial Statements.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of the Group's Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Estimates involve the determination of the quantum of accounting balances to be recognised. Judgements typically involve decisions such as whether to recognise an asset or liability.

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the CGUs to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the CGUs and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The Group has considered the impact of climate risk on these cash flow assessments, with mitigations such as price structuring. The carrying amount of goodwill at 31 December 2024 was £55,741,000 (2023: £55,578,000). No provision for impairment of goodwill was made as at the end of the reporting period. See note 14 for further information.

Right of return

Management applies assumptions in determining the right of return liability and the associated right of return asset. These assumptions are based on analysis of historical data trends but require estimation of appropriate time periods and expected return rates. During the period, a change in commercial arrangement has been made in relation to the period over which returns are accepted, with this under the control of the Group, and this applied to the current period end position. This has been recognised through the current year profit and loss in line with IAS 8.

The right of return liability at the period end is £10,608,000 (2023: £11,297,000) with an associated right of return asset (held within inventory) of £1,247,000 (2023: £1,415,000). If the change in commercial arrangement was not applied as at 31 December 2024, a right of return liability of £11,175,000 and an associated inventory asset of £1,347,000 would have been recognised.

Judgements made by management which are considered to have a material impact on the Financial Statements are as follows:

Uncertain tax positions

Tax authorities could challenge and investigate the Group's transfer pricing or tax domicile arrangements. As a growing, international business, there is an inherent risk that local tax authorities around the world could challenge either historical transfer pricing arrangements between other entities within the Group and subsidiaries or branches in those local jurisdictions, or the tax domicile of subsidiaries or branches that operate in those local jurisdictions. Judgement is therefore required in determining the completeness of all uncertain tax positions identified. Further details are given in note 18.

Intangible Assets

On an annual basis, the Group assess its intangible assets for indicators of impairment using both external and internal sources of information. If an indicator of impairment is identified, the Group estimates the recoverable amount of the asset. The judgements made by management in determining whether there are any indicators of impairment can have a material impact on the Financial Statements. During 2024, no indicators of impairment in relation to material intangible assets were identified. The carrying amount of intangible assets as at 31 December 2024 was £23,406,000 (2023: £29,813,000).

Deferred tax

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.

4. NON-STATUTORY MEASURES

When reviewing performance, the Directors use alternative performance measures in order to give meaningful year on year comparison. These alternative performance measures are:

- EBITDA

- Underlying EBITDA

- Underlying Profit Before Tax (formally Adjusted Profit Before Tax)

- Underlying Profit After Tax

- Underlying operating expenses

- Revenue on a constant exchange rate basis

Whilst we recognise that the measures used are alternative (non-Generally Accepted Accounting Principles) performance measures which are not defined within IFRS, these measures are important and should be considered alongside the IFRS measures.

During the year the Group has introduced a new alternative performance measure, being Underlying Profit After Tax. Underlying Profit After Tax presents a performance measure of the company's profitability by excluding one-time charges and non-operational items, with this measure building on Underlying EBITDA to incorporate depreciation, interest and current tax charges.

A reconciliation to these non-GAAP performance measures is shown below:

Underlying Profit After Tax is used to calculate basic and diluted Underlying earnings per share as per note 12. Underlying operating expenses is calculated as the difference between gross profit and Underlying EBITDA.

In addition, the Directors consider the revenue of the Group on a constant exchange rate basis. This is calculated using the average exchange rates in effect for the corresponding comparative period for the translation of its overseas operations.

5. REVENUE

The revenue of the Group is attributable to the one principal activity of the Group.

a) Geographical analysis

The Group's revenue by destination is split in the following geographic areas:

For the year ended 31 December 2024 the Group had no customers which accounted for more than 10% of the Group's revenue. For the year ended 31 December 2023 the Group had one customer which accounted for more than 10% of the Group's revenues, with the revenue generated from this customer amounting to £21,769,000. The revenue from this customer was generated across both the Frames & Optics and Manufacturing reportable segments identified in note 6.

For the year ended 31 December 2024 the Group had revenues attributed to two foreign countries which accounted for more than 10% of the Group's revenue. These countries were the United States of America with revenues of £67,316,000 (2023: £63,707,000) and Germany with revenues of £64,246,000 (2023: £68,579,000).

b) Right of return assets and liabilities

The right of return asset is presented as a component of inventory and the right of return liability is presented separately on the face of the statement of financial position. The right of return liability is presented as a current liability as the timing of its utilisation is dependent on customer returns which varies period to period and is outside of the Group's control.

6. SEGMENT INFORMATION

The Group operates in three operating segments, which upon application of the aggregation criteria set out in IFRS 8 Operating Segments results in three reporting segments:

- Frames and Optics product distribution

- Manufacturing - being OEM and manufacturing distribution

- Lenses - being manufacturing and distribution of lenses

The criteria applied to identify the operating segments are consistent with the way the Group is managed. In particular, the disclosures are consistent with the information regularly reviewed by the CEO and the CFO in their role as Chief Operating Decision Makers, to make decisions about resources to be allocated to the segments and to assess their performance.

The reportable segments subject to disclosure are consistent with the organisational model adopted by the Group during the financial year ended 31 December 2024 and are as follows:

The reportable segments subject to disclosure are consistent with the organisational model adopted by the Group during the financial year ended 31 December 2023 and are as follows:

Total assets are the Group's gross assets excluding deferred tax asset. Total liabilities are the Group's gross liabilities excluding loans and borrowings, current and deferred tax liabilities.

Non-underlying costs (net), as well as net finance costs and taxation are not allocated to individual segments as they relate to Group-wide activities as opposed to individual reporting segments.

Deferred tax and borrowings are not allocated to individual segments as they are managed on a Group basis.

Adjusted items relate to elimination of all intra-group items including any profit adjustments on intra-group sales that are eliminated on consolidation, along with the profit and loss items of the Parent Company.

Adjusted items in relation to segmental assets and liabilities relate to the elimination of all intra-group balances and investments in subsidiaries, and assets and liabilities of the Parent Company.

Underlying EBITDA by segment

Non-current operating assets

Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, goodwill and intangible assets.

During the year we have identified Tura and Eschenbach as separate CGUs (see note 14), and as a result, the goodwill, along with the customer relationship intangible assets arising on acquisition have been reallocated from Europe to North America in the above table.

With respect to non-current assets located in material individual foreign countries, the Group has determined that the necessary information is not available and the cost to develop this is excessive.

7. EMPLOYEES AND DIRECTORS

The average number of employees during the year by operating segment was as follows:

Directors' remuneration during the year was as follows:

Information regarding the highest paid Director is as follows:

The number of Directors to whom employer pension contributions were made by the Group during year is three (2023: three). This was in the form of a defined contribution pension scheme.

8. NON-UNDERLYING COSTS (NET)

Non-underlying costs (net) are those that in the Directors' view should be separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Group's financial performance in the year and business trends over time. Non-underlying costs (net) incurred during the year are as follows:

Restructuring costs of £335,000 (2023: £58,000) were incurred in the period in relation to strategic re-organisation and simplification, including the integration of Inspecs USA with Tura and a sales team restructure for one of our European subsidiaries. A provision of £302,000 (2023: £nil) has been recognised through non-underlying costs in relation to pre-acquisition withholding tax on one of the Group's subsidiaries.

Acquisition costs of £24,000 (2023: £nil) were incurred relating to the acquisition of A-Optikk AS. Gain on disposal of property, plant and equipment of £193,000 (2023: £nil) relates to the sale of the Magdala Road property previously used as the manufacturing facility by Norville.

9. FINANCE COSTS AND FINANCE INCOME

10. (LOSS)/PROFIT BEFORE INCOME TAX

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

11. INCOME TAX

Analysis of tax expense:

Factors affecting the tax charge

The tax charge assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

Movements in other comprehensive income relating to foreign exchange on consolidation are not taxable.

As a result of the increase in the UK corporation tax rate from 19% to 25% from 1 April 2023, the standard rate of corporation tax in the UK for the year ended 31 December 2023 was 23.5%

Pillar Two legislation has been enacted in certain jurisdictions in which the Group operates. However, this legislation does not apply to the Group as its consolidated revenue is lower than €750 million.

12. LOSS PER SHARE ('LPS')

Basic LPS is calculated by dividing the profit or loss for the year attributable to ordinary equity holders of the Parent by the weighted average number of Ordinary Shares outstanding during the year.

Diluted LPS is calculated by dividing the profit or loss attributable to ordinary equity holders of the Parent by the weighted average number of Ordinary Shares outstanding during the year plus the weighted average number of Ordinary Shares that would be issued on conversion of all the dilutive potential Ordinary Shares into Ordinary Shares, to the extent that the inclusion of such shares is not anti-dilutive. A loss has been made in the year to 31 December 2024 and the comparative period. In accordance with IAS 33, potential Ordinary Shares shall be treated as dilutive when, and only when, their conversion to Ordinary Shares would decrease earnings per share or increase loss per share from continuing operations. As a loss is made, including the dilution of potential Ordinary Shares reduces the loss per share and therefore the outstanding options should not be treated as dilutive when calculating LPS.

Basic underlying earnings per share figures are calculated by dividing Underlying Profit After Tax for the year by the weighted average number of Ordinary Shares outstanding during the year. Diluted underlying earnings per share figures are calculated by dividing Underlying Profit After Tax for the year by the weighted average number of Ordinary Shares plus the weighted average number of Ordinary Shares that would be issued on the conversion of all dilutive potential Ordinary Shares into Ordinary Shares. A reconciliation to Underlying Profit After Tax can be found in note 4.

The following table reflects the income and share data used in the basic and diluted LPS calculations: