These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

ADS2 Limited is a private company limited by shares incorporated in England and Wales. The registered office is Thirsk Industrial Park, York Road, Thirsk, North Yorkshire, United Kingdom, YO7 3BX.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

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. The principal accounting policies adopted are set out below.

In assessing the Company's ability to continue as a going concern, the Directors have considered the ongoing impact of global geopolitical uncertainty, particularly the rising costs of raw materials and energy. This assessment has included the Company's forecast performance, sustained demand for its product portfolio, the availability of financial resources, and the wider Celli Group's commitment to supporting operations in the United Kingdom.

The Directors have considered the appropriateness of preparing the financial statements on a going concern basis and have concluded that this basis is no longer appropriate. Accordingly, the financial statements have not been prepared on a going concern basis.

The Company has been included within a wider Group supply chain review aimed at consolidating manufacturing operations and establishing centres of excellence across the Group. Following this review, it was determined that the Company's manufacturing facilities were too small and specialised to be maintained as a standalone operation. Consequently, the decision has been taken to cease the Company's activities, close both the manufacturing plant and the legal entity, and transfer production activities, including research and development, assets, machineries, injection moulding, traditional and digital printing and assembly operations, to the Group's facility in Thirsk.

The Thirsk facility will operate as an integrated manufacturing site managing end-to-end processes from product design and component manufacture through to final assembly. The Group expects this operating model to reduce production lead times and costs, while improving operational efficiency through economies of scale, enhanced technical expertise, increased opportunities for continuous improvement, procurement synergies, more effective inventory management and optimisation of capital employed.

In 2025 the Directors will implement a structured wind-down plan, which includes an assessment of the profitability of each production area; the orderly transfer of customer and suppliers into the Celli UK Group legal entity; the implementation of an employee exit programme in compliance with applicable UK employment legislation; the termination of vehicle lease agreements, the transfer of property leases and service contracts; and the transfer of the Company's assets, manufacturing activities and inventories to Celli UK Group.

Appropriate provision has been made for the costs associated with these activities where required.

The Directors are taking appropriate steps to manage the orderly cessation of the Company's operations, realise its assets and settle its liabilities in a controlled and efficient manner. The Directors will continue to monitor the Company's financial position throughout the wind-down process to ensure that all statutory, contractual and financial obligations are met.

Group Support

For 2024, if the Company's budgeted outcomes are not fully achieved, additional funding may be required. Celli S.p.a. has confirmed its intention to provide financial support as necessary throughout the going concern period.

While the Directors acknowledge that reliance on group support introduces a degree of uncertainty, they have no reason to believe, as at the date of approval of these financial statements, that such support will not be forthcoming. The ability of Celli S.p.a. to provide this support is itself dependent on the wider Group meeting its own forecasts, which are subject to similar external risks within the global hospitality sector.

For 2024, despite the challenges facing the sector, the Directors remain confident in the Company's financial position. This confidence is underpinned by a robust and transparent budgeting process, developed in close collaboration with major customers and supported by strategic initiatives at Group level.

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.

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation 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:

Tangible fixed assets 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.

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible 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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. 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.

Stocks 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 labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

Stocks 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.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents are basic financial assets and 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.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction 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 profit and loss account 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 liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing 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 profit and loss account, 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.

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 stock or fixed 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.

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 in the period are included in profit or loss.

Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the company but are presented separately due to their size and incidence.

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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The directors have considered and concluded there were no key sources of estimation uncertainty or judgements in applying the accounting policies.

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

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:

After the year end, the directors took the decision to cease trading and wind down the company’s operations. The company is expected to settle its remaining liabilities and realise its assets in an orderly manner.

As this decision was made after the reporting date, it is considered a non-adjusting post balance sheet event and therefore no adjustments have been made to the figures included in these financial statements.

The immediate parent company is Celli International Limited, a company incorporated in England and Wales.

The ultimate parent company, which is both the smallest and largest company into which the Company results are consolidated into, was Celli S.p.a a company incorporated in Italy,

The Group has taken advantage of the exemption conferred by FRS102 paragraph 33.1A and has not disclosed transactions and outstanding balances with its subsidiary undertakings on the basis that all the relevant companies are directly or indirectly wholly owned.

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006.

The auditor's report is qualified and includes the following:

Qualified opinion on financial statements

In our opinion, except for the effects of the matter described in the basis for qualified opinion paragraph, the financial statements:

• give a true and fair view of the state of the company's affairs as at 29 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 qualified opinion

Exceptional items

During the preparation of the 2023 financial statements, a number of errors were identified in the company's balance sheet, some of which date back to the previous 4 financial periods. Management have corrected these errors through the profit and loss account in the prior year, as described in note 3, rather than restating previous years financial statements. The corrections have a material impact on creditors, stocks and intercompany balances as well as the impairment of goodwill.

Consequently as a result of the reported matters above, we were unable to determine whether the opening equity as at 1 January 2023 was materially correct. A change in the treatment of exceptional items in 2023 would impact the profit and loss account for the years ended 31 December 2020 to 2023.

Intercompany balances

We were unable to obtain sufficient appropriate audit evidence regarding the recoverability of intercompany debtor balances amounting to £662,510 (2023: £3,928,763) and intercompany creditor balances amounting to £490,710 (2023: £1,327,504). The entity has not provided adequate documentation to support the recoverability of these balances, and we were unable to perform alternative procedures to obtain sufficient audit evidence.

Consequently, we were unable to determine whether any adjustments might be necessary to these balances or to the related impairment provisions, if any.

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 qualified opinion.

Emphasis of matter

We draw attention to Note 10 in the financial statements, which indicates that after the year end the directors intend to cease trading and wind down the company. As stated in Note 1.2, these events indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company were unable to continue as a going concern.

Our opinion is not modified in respect of this matter.

In respect solely of the limitation on our work relating to exceptional items, comparatives and intercompany balances, described above:

• we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and

• we were unable to determine whether adequate accounting records had been maintained.