Final Results

Surgical Innovations Group PLC
29 April 2004

Surgical Innovations Group plc

Preliminary results for the year ended 31 December 2003

29 April 2004


CHAIRMAN'S STATEMENT

Once again, I am delighted to report further progress in your Group's overall 
performance in the year 2003.

Group turnover increased from £2.22 million in 2002 to £2.75 million in 2003, an
increase of 24%, which has resulted in a pre-tax profit of £136k compared with
£60k in the previous year.  Furthermore, our order book is currently at a record
level.

As detailed in the recent April press release, I am pleased to confirm that we
have signed a cross-licensing agreement with Applied Medical Resources.  Under
the terms of the agreement, the Group will retain the manufacturing, marketing
and distribution rights to Variglide for up to three years.  Thereafter, Applied
Medical Resources will be granted worldwide manufacturing and distribution
rights in return for royalty payments.  In addition, the Group will be provided
with an indefinite licence for YelloPort, our reusable port access system, and
unlimited access into the US market.  Importantly, the agreement removes any
potential concerns regarding the patent position of both systems. Furthermore,
following constructive discussions, we have agreed to co-operate more closely to
explore future opportunities that may lead to mutually beneficial product
development projects.  I see this as an important step in our ongoing commitment
to increasing shareholder value.

Our royalty income from the global sales of Endoflex by Snowden Pencer has been
strengthened by the sales of Goldfinger, an Endoflex derivative, to Ethicon.  As
part of its move into the growing area of anti-obesity surgery, Ethicon uses
Goldfinger as a key device in the deployment of its gastric band.  The overall
contribution from royalties for 2003 was £394k.

In line with our product development programme, these royalties were reinvested
in research and development expenditure of £318k.  This represents 12% of
turnover, which emphasises our commitment to this vital area.

2003 resulted in a further increase in sales of our single-use scissors and our
reusable YelloPort system as the relationships between the Group and our
strategic partners continued to flourish.  I am proud that we are associated
with internationally renowned medical device companies such as Aesculap,
Cardinal Health, Applied Medical Resources and Pilling Weck.  These partnerships
are resulting in new product ideas and increased opportunities to promote our
quality laparoscopic devices.

As Chairman of Surgical Innovations, I appreciate that the majority of our
success has been generated from products for minimally invasive surgery. 
However, we remain fully aware of the potential for the Group in the field of
Autologous Blood Transfusion (ABT) and we have been waiting until we are able to
generate sufficient profits from the other sectors before committing to the
levels of expenditure needed to enhance our current ABT product range.  2004
will be an important year in this regard as we begin to manufacture our post-
operative products in a new manufacturing facility.  In the UK, the post-
operative ABT products are gaining popularity and with the current issues
surrounding donated blood, I anticipate sustained interest and growth for ABT.

2003 proved to be successful in establishing a platform on which we can now push
ahead in all areas of our business. With the current order book at the highest
ever level and the necessary resources now in place to satisfy demand, we
approach 2004 with optimism for further growth in sales and profitability.

Once again, on your behalf, I wish to thank my Board colleagues and all the
Group's employees for their continued dedication and commitment and I look
forward to reporting further progress during the current year.

Doug Liversidge CBE
Chairman
28 April 2004


Consolidated Profit and Loss Account
For the year ended 31 December 2003
                                                                               Notes               2003            2002
                                                                                                  £'000           £'000

Turnover (including Royalties)                                                                    2,750           2,224
Cost of sales                                                                                    (1,312)         (1,048)
Gross profit                                                                                      1,438           1,176

Administrative expenses                                                                          (1,255)         (1,098)
Operating profit                                                                                    183              78

Interest receivable                                                                                   -               1
Interest payable                                                                                   (47)            (19)

Profit on ordinary activities for the year before taxation                                          136              60

Tax on profit on ordinary activities                                                                  3              18
Retained profit for the year                                                                        139              78

Earnings per ordinary share                                                         2             0.05p           0.03p



Consolidated Balance Sheet
As at 31 December 2003

                                                                                     2003                   2002
                                                                             £'000         £'000      £'000       £'000
Fixed assets
Tangible assets                                                                              892                    660

Current assets
Stocks                                                                         721                      562
Debtors                                                                      1,245                    1,073
Cash at bank                                                                     -                       13
                                                                             1,966                    1,648

Creditors: amounts falling due within one year                              (1,111)                    (775)
Net current assets                                                                           855                    873

Total assets less current liabilities                                                      1,747                  1,533
Creditors: amounts falling due
after more than one year                                                                    (352)                  (285)

Net assets                                                                                 1,395                  1,248

Capital and reserves
Called up share capital                                                                    2,559                  2,555
Share premium account                                                       16,048                   16,044
Capital reserve                                                                329                      329
Accumulated losses                                                         (17,541)                 (17,680)
                                                                                          (1,164)                (1,307)
Equity shareholders' funds                                                                 1,395                  1,248



Consolidated Cash Flow Statement
For the year ended 31 December 2003


                                                                      Notes         2003                  2002
                                                                             £'000         £'000      £'000       £'000

Net cash inflow /(outflow) from operating activities                    3                    265                   (141)
Returns on investments and servicing of finance
Interest payable on finance leases                                             (23)                     (10)
Interest payable on bank overdrafts                                            (17)                      (2)
Interest payable on convertible loan notes                                      (7)                      (7)
Interest receivable                                                              -                        1

Net cash outflow from returns on investments and servicing of finance                        (47)                   (18)
Taxation                                                                                      37                     11
Capital Expenditure: purchases of tangible fixed assets                                     (158)                  (207)
Net Cash inflow/(outflow) before financing                                                    97                   (355)

Financing
Issue of shares                                                                  -                        3
Receipts from borrowings                                                         -                        9
Capital repayments under bank loans                                             (3)                      (1)
Capital repayment under finances                                               (63)                     (22)
Net cash outflow from financing                                                              (66)                   (11)

Increase/(decrease) in cash                                             4                     31                   (366)


Notes

For the year ended 31 December 2003

1.          Accounting policies

            The principal accounting policies which remain unchanged from the previous year, are as follows:

            a)       Basis of accounting

                     The financial statements have been prepared under the historical cost basis of accounting and in
                     accordance with applicable Accounting Standards in the United Kingdom.

            b)       Basis of consolidation

                     The Group financial statement consolidate those of the Company and of its subsidiary undertakings
                     drawn up to 31 December 2003.  The results of subsidiaries accounted for under the acquisition
                     accounting method are included in the consolidated profit and loss from the date of their
                     acquisition.  The results of subsidiaries, accounted for under the merger accounting method, are
                     included in the consolidated profit and loss account as if they had always been part of the Group.
                     Intra-Group sales and results are eliminated on consolidation and all sales and results relate
                     to external transactions only.

2.          Earnings per ordinary share

            The earnings per ordinary share has been calculated by dividing the profit attributable to ordinary
            shareholders for the year ended 31 December 2003 of £139,000 (2002 : £78,000) by the weighted average
            number of ordinary shares in issue during the year of 255,659,894 (2002 : 254,995,289) and amounted to
            0.05p per share (2002 : 0.03p per share).


3.          Net cash inflow/(outflow) from operating activities

                                                                                                   2003            2002
                                                                                                  £'000           £'000

            Operating profit                                                                        183              78
            Depreciation of tangible fixed assets                                                   104              88
            Increase in stocks                                                                     (159)            (13)
            Increase in debtors                                                                    (206)           (241)
            Increase / (decrease) in creditors                                                      343            (53)
                                                                                                    265           (141)

4.          Reconciliation of net cash flow to movement in net debt

                                                                                                   2003            2002
                                                                                                  £'000           £'000

            Increase/(decrease) in cash in the year                                                  31           (366)
            Cash outflow from finance leases and loans                                               66              14
            Change in net debt resulting from cash flows                                             97           (352)
            Conversion of loan notes                                                                  -               1
            New finance leases                                                                     (178)           (259)
            Movement in net debt                                                                    (81)           (610)
            Net debt at beginning of year                                                          (559)              51
            Net debt at end of year                                                                (640)           (559)


5.          Analysis of changes in net debt

                                                                                 At     Cash     Non-cash            At
                                                                          1 January     flow      changes   31 December
                                                                               2003                                2003
                                                                              £'000    £'000        £'000         £'000

    Cash at bank and in hand                                                     13      (13)           -             -
    Bank overdrafts                                                            (217)      44            -          (173)
                                                                                          31

    Bank loan                                                                    (8)       3            -            (5)
    Finance leases                                                             (237)      63         (178)         (352)
                                                                                          66

    Convertible loan notes                                                     (110)       -            -          (110)
                                                                               (559)       97        (178)         (640)


6.  The Annual General Meeting of the Company will be held at the Village Hotel and Leisure Club, 186 Otley Road,       
    Headingley Leeds LS16 5PR at 11.30am  on Wednesday, 2 June 2003.


7.  The foregoing statements do not constitute the Group's statutory accounts.  The Group's statutory accounts, on
    which the Company's auditors, Grant Thornton, have given an unqualified opinion in accordance with Section 235 of
    the Companies Act 1985, are to be delivered to the Registrar of Companies and will be posted to shareholders
    shortly.  Additional copies of the Annual Report and of this announcement will be available at the Company's
    registered office: Clayton Park, Clayton Wood Rise, Leeds, LS16 6RF


Enquiries:

Surgical Innovations Group plc
Graham Bowland, Finance Director                                         Tel: [phone]

Westhouse Securities LLP
Philip Johnson                                                           Tel: [phone]





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