Embed effective risk management, internal controls and assurance activities, considering both opportunities and threats, throughout the organisation (QCA Principle 5)

The nature of medical diagnostics development and the early stage and scale of our operations means there are a number of risks and uncertainties. The Board has established a robust risk management framework to identify, assess, and mitigate risks to ANGLE’s business. The framework is reviewed regularly to ensure it remains effective in addressing both current and emerging risks. A summary of the principal risks and uncertainties that could have a material impact on the Group are reported on pages 28 to 33 of the Group’s Annual Report and Financial Statements 2024.

Key areas are carefully monitored such as clinical applications, competitive position, financial, intellectual property, manufacturing, market acceptance, operational, regulation and quality assurance, research and development, employees, key suppliers and key partners. An ongoing assessment is made of their potential impact and mitigation strategies and actions. The Board considers the materiality of financial and non-financial risks and the relationship between the cost of, and benefit from, internal control systems. New potentially material risks which arise between reviews are added to the risk register, discussed at Board level as they arise and followed up by the Board as appropriate.

The Audit Committee has adopted formal terms of reference (see Principle 7) and considers financial reporting, corporate governance and internal controls. Its review of financial reporting includes discussion of major accounting issues, policies and compliance with UK-adopted international accounting standards, the law (Companies Act 2006), review of key management estimates and judgements (Note 1.17 Critical accounting estimates and judgements, of the Group’s Annual Report and Financial Statements 2024), review and update of the risk register, risk identification and assessment and risk management and mitigation activities and going concern assumptions. The Audit Committee formally consider the independence of the external auditor by assessing whether any relationships or conflicts of interest exist that could impair the auditor’s independence, such as personal or financial ties between the auditor and the Company and employees.

Internal control systems are designed to meet the particular needs of the Group and the risks to which it is exposed. The system of internal control is designed to manage the risk of failure to achieve business objectives, rather than to eliminate it, and by its nature can only provide reasonable but not absolute assurance against material misstatement or loss.

A review process exists to ensure early identification of new accounting issues arising from the introduction of new areas of business and/or the adoption of new or amended accounting standards. The process will ensure the impacts are assessed, advice or training is obtained if required and policies (new or revised) are agreed and documented on a timely basis. An internal financial audit function is not considered necessary or practical due to the size of the Group and the close day-to-day control exercised by the Executive Directors and senior management. The Board will continue to monitor the requirement to have an internal audit function.

The key procedures that the Directors have established with a view to providing an effective system of internal control are as follows:

Management structure

The Board has overall responsibility for the Group and focuses on the overall Group strategy (see Principle 1) and the interests of shareholders (see Principles 3 and 10). There is a schedule of matters specifically reserved for decision by the Board (see Principle 7). The Board has an organisational structure with clearly defined responsibilities and lines of accountability and each Executive Director has been given responsibility for specific aspects of the Group’s affairs (see Principles 6 and 7). Internal financial risks are controlled through authorisation procedures/levels and segregation of accounting duties. Delegation of Authority processes are regularly reviewed and updated.

Quality and integrity of personnel

ANGLE is focused on having the right people in the right roles working together to deliver key objectives. The integrity and competence of personnel are ensured through high recruitment standards and subsequent training. We assess employee competence at all levels, identify development requirements and provide training and development support, aligned with business and personal objectives. High-quality, motivated personnel are seen as an essential part of the control environment.

Budgets and reporting

Each year the Board approves the annual budget which includes an assessment of key risk areas. Performance is monitored and relevant action taken throughout the year through regular reporting to the Board of variances from the budget and preparation of updated forecasts for the year together with information on the key risk areas.

Investment and divestment appraisal

All material investment and divestment decisions require appraisal, review and approval by the Board.

Internal controls

The Board reviews the effectiveness of the Group’s systems of internal controls and has a process for the continuous identification, evaluation and management of the significant risks the Group faces. Assessment considers the external environment, the territories in which the Group operates, the industry in which the Group operates including applicable regulations and standards, the internal environment and non-financial risks such as operational and legal risks. The risks identified are ranked based on significance and likelihood of occurrence. The Board reviews the controls in place to mitigate those risks and improvements are made where required. The Group conducts its operations in accordance with the ISO 13485:2016+A11:2021 quality management system standard and continues to invest in its systems and people taking into consideration the Group strategy and risk assessment to ensure the appropriate operational controls and measures are in place and working effectively. The quality system is subject to annual Notified Body audit (BSI) in the UK. The Group uses external specialist resources (regulatory, design, manufacturing etc.) as required. Day-to-day responsibility for the implementation of effective internal control and risk monitoring rests with senior management.

Metrics and quality objectives continue to be actively implemented and monitored as part of a continual improvement programme. A number of incremental improvements have been made in the year driven by planned internal quality system auditing and risk assessment and other larger improvements have been identified and are being progressed. Improvements have included:

• A new product commercial/operational readiness process has been developed and embedded across the Group to accelerate bringing product to market
• Ongoing improvement of existing New Product Development (NPD) process to be embedded across the Group
• Improved product defect management processes within our ISO 13485:2016 Quality Management System, as part of the development of our internal manufacturing capability and management of our external contract manufacturing
• Ongoing implementation of a transition plan to ensure the ANGLE Clinical Laboratory GCLP-compliant quality system meets the requirements of ISO 15189:2022
• A Group-wide productivity review workshop was carried out to identify areas of improvement and remove “roadblocks” that impact everyday processes. Several actions have been implemented as an outcome to address the issues raised by employees and foster a culture of continuous improvement. This includes better project management process, improved communication initiatives, simplified purchasing processes, and improved IT support
• Working towards SOC2 certification by improving IT system and data security infrastructure to ensure compliance with various laws and regulations, and protection of customer and company data
• Introduction of a new worldwide distributor management strategy to ensure efficiency whilst maintaining best practice for training and customer support
• Ongoing improvement of supplier management strategy including the implementation of secondary suppliers for our critical supply and active management of contracts
• Development of annual conference strategy to identify high impact conferences and ensure cost efficiency in line with our product and services roadmap
• Ongoing effort focused on process automation in multiple areas such as operations, customer support and quality assurance
• SAP Concur system expense management implemented, moving from manual process to an automated process for out-of-pocket and credit card expenses with refreshed travel policy to support employee understanding of travel expectations, in line with latest tax guidance, allowing for consistent control over travel and expense costs
• Comprehensive overhaul of Employee Handbook and HR, IT and Health and Safety policies to reflect up to date legislation and developments in both the UK and the US
• Completion of employee engagement survey resulting in updated ANGLE’s core values and various engagement initiatives with employees
• Transition to new cloud-based temperature monitoring system improving reliability, managing the risks associated with loss of temperature-controlled product and gaining efficiencies.

The Board confirms that it has, during the reporting period, reviewed on an ongoing basis the effectiveness of the Company’s system of internal controls including financial, operational and compliance controls and risk management systems and has reviewed insurance provisions. No significant failing or weaknesses have been identified.