The directors present the strategic report for the year ended 31 December 2024.

The past year presented both challenges and opportunities for HHB Communications Limited. Amidst ongoing global economic pressures, including geopolitical tensions, persistent inflation, supply chain constraints, and shifts in customer spending behavior, the company remained focused on delivering high-quality audio solutions to its customers and strengthening strategic partnerships with its brands and key dealers. The commercial landscape of the Broadcast and Post-production sector was profoundly altered in the aftermath of the 2023 US Writers' and Actors' strikes with significant consolidation which in turn substantially impacted investment for the majority of 2024. In anticipation of emerging challenges and in alignment with its established reputation for agility and excellence, the company has undertaken a comprehensive reassessment of both its short- and long-term priorities. This proactive approach aims not only to reposition it in a rapidly evolving market environment but also to build on its competitive advantage, safeguard operational resilience, and drive sustainable growth. By doing so, the company is firmly focused on and remains committed to maintaining and enhancing its enviable reputation and maintaining and improving its market share whilst ensuring its core operations are adequately resourced across all divisions. The company continues to be responsive to new opportunities and industry dynamics and diligently explores opportunities for strategic growth and business development.

The key financial performance indicators used to monitor the performance of the company are set out below:

In light of the challenging market conditions outlined above, coupled with the ongoing impact of global supply chain disruptions, the company recorded a reduction in turnover during the year ended 2024 with revenue declining to £16.7m compared with £22.7m for the 11-month period ended December 2023.

Notwithstanding the decrease in revenue, the gross profit margin was maintained at 27.9% (same as in the period ended December 23 ) underscoring the resilience of the business and the effectiveness of its operational and commercial strategies. This stability in margin reflects the HHB’s continued focus on cost control, supply chain management, and disciplined pricing practices.

As a result of a comprehensive operational review and a strategic cost realignment in response to evolving market conditions, the company incurred exceptional costs during the year. These non-recurring expenses contributed to a modest loss for the financial year ended 2024.

However, the decisions made and changes implemented during this period were both necessary and forward-looking, aimed at enhancing operational efficiency and ensuring long-term sustainability. These actions have positioned the company on a stronger footing, laying the groundwork for a return to profitability and sustained growth in 2025 and beyond.

Importantly, the company continued to generate positive operating cash flow during the period. This consistent cash generation confirms the strength of the company’s underlying financial position and provides a robust foundation for future investment, even in the face of ongoing macroeconomic uncertainty.

Throughout 2024, HHB Communications Limited continued to strengthen its reputation as a leading provider of professional audio products and services to the media and entertainment sectors. Alongside sustaining existing business and developing new commercial opportunities, as detailed below, the company remained committed to its sustainability objectives. This included an ongoing review of the environmental impact of its operations, with a particular focus on reducing its carbon footprint across all areas of the business.

During the period HHB continued to work with many notable post-production facilities, film and recording studios, and broadcasters including but not limited to: BBC, Streamland Media, Formosa Group, Harbor Post, Factory Studios University of Greenwich, University of York and Royal Opera House amongst others. Through its relationships with these customers, the company played a key role in supporting the development of multiple new production facilities, as well as delivering significant upgrades to a number of existing studios. These projects reflect HHB’s technical expertise and its ability to meet the evolving needs of clients across the sectors.

HHB has continued to prioritise the growth and enhancement of its established core product partnerships, reinforcing long-term supplier relationships and product portfolio depth with Immersive Machines appointing the company as UK dealer for Immersive Master Pro as well as HHB becoming a reseller for Axel Technology. In addition, HHB was chosen as the exclusive UK distributor by Sony for its revolutionary new technology Sony 360 VME launching in the latter part in 2025.

New brands for Source Distribution in 2025 include Mackie - a leading manufacturer of pro audio products, including mixers and loudspeakers for home, studio and stage use, high end professional recording equipment brand Warm Audio, Rodec mixers and boutique synth brand 1010Music.

Throughout the year, Source Distribution received frequent recognition in industry media, such as Sound On Sound, MusicRadar, TechRadar, Pro Moviemaker and Digital Camera World, with several of its distributed products earning Specialist Press Awards. These accolades underscore its influence, credibility, and strong reputation within the professional audio and consumer electronic sectors. Notable examples include, but are not limited to:

• Financial Times HTSI October Edition magazine featured the Arturia Polybrute 12

• Sound on Sound / Gear of the year awards for

  • Best Microphone for Warm Audio WA-19

  • Best Audio Interface – Lynx Hilo 2

  • Best Keyboard/Synth – Arturia PolyBrute 12

• Pro Moviemaker Gear of the Year Awards - Best Wireless Mic – RØDE Wireless Pro

• What HiFi Product of the Year in the Wired Headphones category for the Rode NTH100 headphones

Additionally, during the period Source Distribution exhibited its portfolio of brands very successfully at essential industry events such as Photo & Video Show, MPTS, Podcast Show, GearFest UK, RADAR Festival, Synthfest UK and Machina Bristronica amongst others.

From the perspective of the Board of the Company, as a result of the Group (Midwich Group pie) governance structure, the matters that it is responsible for considering under Section 172 (1) of the Companies Act 2006 ('s172') have been considered to an appropriate extent by the Board at HHB Communications Limited in relation both to the Group and to the Company. The Board has also considered all relevant matters where appropriate. To the extent necessary for an understanding of the development, performance and position of the entity, the Board have considered that they have acted in the way they consider would be most likely to promote the success of the Company for the benefit of all its stakeholders whilst taking into account the impact of business decisions on the stakeholders. Positive communication and engagement with key stakeholder groups such as but not limited to employees, customers, and suppliers is of paramount importance for the success of the Company and is carefully considered within the implementation of the Company's strategy. In addition, an explanation of how the Group Board has considered the matters set out in s172 (for the Group and for the Company) is set out in the Group's annual report, which does not form part of this report.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2024.

The principal activity during the year was the importing, distribution and resale of professional audio, video and music technology products.

The results for the year are set out on page 11.

Ordinary dividends were paid amounting to £4,600,000. The directors do not recommend payment of a further dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

In accordance with the company's articles, a resolution proposing that Rickard Luckin Limited be reappointed as auditor of the company will be put at a General Meeting.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

We have audited the financial statements of HHB Communications Limited (the 'company') for the year ended 31 December 2024 which comprise the income statement, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its loss for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management; and via inspection of the company’s regulatory and legal correspondence.

We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.

We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the company.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the company is subject to laws and regulations that directly affect the financial statements, including: the company’s constitution, relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

Secondly the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigations. We identified the following areas as those most likely to have such an affect: employment legislation; health and safety legislation; trade and import and export legislation; the waste electronic and electronic equipment (WEEE) regulations; data protection legislation; anti-bribery and anti-corruption legislation.

ISAs (UK) limit the required procedures to identify non-compliance with these laws and regulations and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance with laws and regulations that could have a material impact on the financial statements.

In relation to fraud, we performed the following specific procedures in addition to those already noted:

• Challenging assumptions made by management in its significant accounting estimates in particular in relation to the stock provision estimate;

• Identifying and testing journal entries, in particular any entries posted with unusual nominal ledger account combinations, or large and unusual journal entries;

• Performing analytical procedures to identify unexpected movements in account balances which may be indicative of fraud;

• Ensuring that testing undertaken on both the performance statement, and the balance sheet includes a number of items selected on a random basis; and

• Discussions with management.

These procedures did not identify any actual or suspected fraudulent irregularity that could have a material impact on the financial statements.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with ISAs (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.

A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

The income statement has been prepared on the basis that all operations are continuing operations.

HHB Communications Limited is a company limited by shares incorporated in England and Wales. The registered office is Vinces Road, Diss, Norfolk, IP22 4YT.

The financial statements are presented for a 12 month period in the current year. The prior year figures relate to an 11 month period to bring the period end date in line with its new parent company, Midwich Limited and the Midwich Group. Comparative amounts presented in the financial statements (including the related notes) are therefore not entirely comparable.

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.

As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:

• inclusion of an explicit and unreserved statement of compliance with IFRS;

• the requirements of IAS 7 Statement of Cash Flows;

• disclosure of the objectives, policies and processes for managing capital;

• disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;

• the requirements of IFRS 7 Financial Instruments: Disclosures;

• disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;

• the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;

• the requirements of paragraph 17 of IAS 24 Related Party Disclosures; and

• the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of the group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.

Where required, equivalent disclosures are given in the consolidated financial statements of Midwich Group plc.

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

HHB Communications Limited is a wholly owned subsidiary of Midwich Group plc and the results of HHB Communications Limited are included in the consolidated financial statements of Midwich Group plc which are available from Vinces Road, Diss, Norfolk, United Kingdom, IP22 4YT.

These financial statements have been prepared under the going concern basis. true

The directors have at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from contracts for the provision of services is recognised when the performance obligations are satisfied and the amount can be estimated reliably. Turnover is shown as the total amount of work having been done in that period. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct costs that have been incurred in bringing the inventories to their present location and condition.

Inventories held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.

The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event and it is probable that the company will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.

Exceptional items

Income and expenses classified as exceptional are shown separately on the face of the profit and loss account. Income and expenses are treated as exceptional in nature if they are significant one off income and expenses and are not expected to reoccur.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Warranties are provided on products sold by the company. Where the company is liable for these warranties, a provision is made for this. This provision requires management's best estimation of the costs that will be incurred in meeting its warranty obligations. In addition the timing of the cashflows and therefore the net present value of the obligation require management's judgement. At the period end, the warranty provision amounted to £229,230 (2023: £277,661).

Stock is provided for where items are identified as slow moving or obsolete based on the ageing of the stock. The calculation of the provision involves management's best estimate of the timing and the percentages to be used in arriving at the level of the provision required to ensure stock is held at the lower of cost and net realisable value. At the period end, the stock provision amounted to £445,236 (2023: £572,557).

In accordance with IFRS 16, material leases for right of use assets are capitalised with a corresponding liability. There is estimation uncertainty involved in arriving at the interest rate to be used in arriving at the present value of the lease payments unpaid at the commencement date of the lease. See note 19 for details.

Depreciation is based on an estimate of the useful economic life of each asset. The useful economic life of assets has been determined by the directors at varying rates. The directors have exercised judgement when assessing the useful economic life for each class of assets.

During the year, the company incurred exceptional costs relating to one off settlement payments in relation to employment termination costs as part of a strategic restructuring.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

Included in the above amounts are redundancy costs of £101,514. For further information please see note 4.

As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.

The charge for the year can be reconciled to the (loss)/profit per the income statement as follows:

Property, plant and equipment includes right-of-use assets, as follows:

HSBC Corporate Trustee Company (UK) Limited has a fixed and floating charge over all the property or undertaking of the company.

The directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

Details of the company's subsidiaries at 31 December 2024 are as follows:

Registered office addresses (all UK unless otherwise indicated):

At the year end the directors made a provision for old and damaged stock. During the year there was a net credit to the income statement in respect of this totalling £127,321 (2023: £104,864).

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

The deferred tax asset set out above is expected to reverse after 12 months and is considered recoverable as the company is expected to return to profitability in the foreseeable future.

The warranty provision relates to the estimated future cost of product repairs discounted to present value. £68,267 (2023: £104,030) of the provision is expected to be utilised in the next 12 months, with the balance expected to be utilised after 12 months.

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

The company has one class of ordinary shares which carries one vote and no right to fixed income.

The retained earning are wholly distributable.

Amounts recognised in profit or loss as an expense during the period in respect of lease arrangements are as follows:

The lease commitments outstanding at the period end totalled £6,028 (2023: £36,866)

During the year the company entered into transactions with other group companies. The company has taken advantage of the exemption provided in FRS 101 not to disclose transactions with wholly owned members of a group.

Amounts owed to a related company at the year end totalled £105,000 (2023: £96,258). This company is related by virtue of having the same director with significant influence.

Total remuneration, including pension contributions, paid to directors' family members amounted to £22,000 (2023: £6,264).

The following transactions took place during the year from related parties at an arms length basis:

Sale of goods with one of its directors for a total value of £38,970 (2023: £Nil)

The company leased two premises from a related company by virtue of having the same director with significant influence. Both of these leases commenced in July 2023 and are for a period of 5 years. The annual rent for these properties are £200,000 and £150,000 respectively.

The immediate parent company is HHB Communications Holdings Limited. The ultimate parent company is Midwich Group plc, a company registered in England and Wales. The registered office of the ultimate parent company is Vinces Road, Diss, Norfolk, United Kingdom, IP22 4YT.

Midwich Group plc is the parent undertaking of the largest and smallest group which prepares group financial statements and copies can be obtained from the Registrar of Companies, Companies House, Maindy, Cardiff, CF14 3UZ.

There is no ultimate controlling party.

A prior period adjustment has been made to correct the start date of a property lease on transition to FRS101 in the prior period. The impact of this restatement was to increase the right of use asset by £7,099, decrease the lease liability by £348,357, decrease the deferred tax asset by £88,864, reduce administrative expenses by £19,867, decrease finance costs by £6,365 and decrease the tax credit by £6,558.