Company registration number 05188033 (England and Wales)
PHARMARON MANUFACTURING SERVICES (UK) LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
PHARMARON MANUFACTURING SERVICES (UK) LTD
COMPANY INFORMATION
Directors
S C Lewinton
B Lou
Secretary
S C Lewinton
Company number
05188033
Registered office
Windmill Industrial Estate, Shotton Lane, Cramlington, Northumberland, England, NE23 3JL
Auditor
Azets Audit Services, Ty Derw, Lime Tree Court, Cardiff Gate Business Park, Cardiff, United Kingdom, CF23 8AB
PHARMARON MANUFACTURING SERVICES (UK) LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Income statement
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
PHARMARON MANUFACTURING SERVICES (UK) LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 1 -

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

Business Review

The long-term strategic plan for the site is to increase operational flexibility, so that both shorter production runs as well as semi-continuous and long-term production can be supported, to service a wider group of clients.

 

This will involve reconfiguration of both operations and infrastructure over a period. The Business Development Team will work closely with the site to maximise the potential revenue streams available.

 

The strategic development of the site has continued in 2024 with the approval of a further ~£3.75m of capital investment in modular configuration and upgrade of technical capabilities .

 

Revenue was £6.1m for Generic product revenue.

 

Other production revenue was £1.5m.

 

Other services and development work generated revenue of £1.3m.

 

For the year the results for the Company show revenue of £8.9m (2023: £7.5m revenue) and an operating loss of £13.6m (2023: operating loss £13.7m). Interest costs, FX revaluation losses, net with interest receivable, result in an overall loss for the year of £16.3m (2023: loss of £16.1m).

 

The Company had negative net assets of £21.7m at the period-end (2023: £25.8m).

 

 

Key Performance Indicators

 

Year ended

Year ended

 

 

31 December 2024

£’m

31 December 2023

£’m

Operating loss

 

(13.6)

(13.7)

Profit / (Loss) after tax

 

(16.3)

(16.1)

Net assets

 

(21.7)

(25.8)

 

 

 

 

Outlook

 

The Company is in the process of reviewing its plans to develop the production facilities at the Cramlington site, and as further noted in the section on Going Concern on page 3, it has the financial support of its ultimate parent to continue with its development plans.

 

PHARMARON MANUFACTURING SERVICES (UK) LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 2 -
Principal risks and uncertainties

The management of the business and the execution of the Company’s strategy are subject to several risks. The key business risks and uncertainties include reliance upon key customers/products, regulatory/legal risk, product quality, restructuring and political/socio-economic risk. Further discussion of key risks and uncertainties, in the context of the Company is discussed below.

 

Financial risk management

Credit risk

The Company trades with only recognised, credit worthy third parties. In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant. Company policy is to arrange Company funding requirements through the Parent group. The Company itself does not have any external third-party borrowings and has access to sufficient resources to meet its needs.

Foreign exchange risk

Foreign exchange risk is limited to a small number of sales and purchases with no large balances held.

 

Interest rate risk

Interest rate risk relates to changes in SONIA, which can impact interest charged on Inter-Company loan balances.

 

Liquidity risk

Liquidity risk relates to the Company’s ability to settle its debts as they fall due.

 

Price risk

Price risk relates to the Company’s ability to purchase commodities at a competitive and profitable rate.

 

Credit Facility

Included within the prior year cash and cash equivalent balance is £1.25m, held on deposit with Lloyd’s bank to operate as security for the BACS credit facilities. This has now been released due to moving banking facilities over to HSBC in 2024, No amount is now held on deposit.

 

Asset impairment

A full review of fixed assets has been completed and assessments made as to future financial benefits derived from the use of such assets, in the form of a site evaluation based on future potential cash flow.

On behalf of the board

S C Lewinton
Director
10 June 2025
PHARMARON MANUFACTURING SERVICES (UK) LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 3 -

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

Principal activities

Pharmaron Manufacturing Services (UK) Ltd, (“the Company”), manufactures and sells active pharmaceutical ingredients (‘API’s’). The Company primarily operates from its manufacturing location in Cramlington in the United Kingdom.

Results and dividends

The results for the year are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

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

S C Lewinton
B Lou
Research and development

We continue to invest in the development of new products for our customers and process improvements for our existing products.

Statement of disclosure to auditor

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.

Going Concern

The Company is in the process of reviewing its plans to develop the production facilities at the Cramlington site, and as further noted in the section on Going Concern on page 11, it has the financial support of its ultimate parent to continue with its development plans.

On behalf of the board
S C Lewinton
Director
10 June 2025
PHARMARON MANUFACTURING SERVICES (UK) LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 4 -

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:

 

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.

PHARMARON MANUFACTURING SERVICES (UK) LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF PHARMARON MANUFACTURING SERVICES (UK) LTD
- 5 -
Opinion

We have audited the financial statements of Pharmaron Manufacturing Services (UK) Ltd (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:

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:

PHARMARON MANUFACTURING SERVICES (UK) LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF PHARMARON MANUFACTURING SERVICES (UK) LTD
- 6 -
Matters on which we are required to report by exception

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:

Responsibilities of directors

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.

Auditor's responsibilities for the audit of the financial statements

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.

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.

PHARMARON MANUFACTURING SERVICES (UK) LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF PHARMARON MANUFACTURING SERVICES (UK) LTD
- 7 -

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

 

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

 

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

 

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the company’s member 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 member, those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.

Andrew Howells (Senior Statutory Auditor)
For and on behalf of
17 June 2025
Azets Audit Services
Chartered Accountants
Statutory Auditor
Ty Derw
Lime Tree Court
Cardiff Gate Business Park
Cardiff
CF23 8AB
PHARMARON MANUFACTURING SERVICES (UK) LTD
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 8 -
2024
2023
Notes
£
£
Revenue
3
8,853,443
7,487,180
Cost of sales
(1,997,889)
(1,082,310)
Gross profit
6,855,554
6,404,870
Administrative expenses
(20,409,174)
(20,286,080)
Exceptional item
-
0
182,372
Operating loss
4
(13,553,620)
(13,698,838)
Finance costs
6
(2,771,953)
(2,366,474)
Loss before taxation
(16,325,573)
(16,065,312)
Tax on loss
-
0
-
0
Loss and total comprehensive income for the financial year
(16,325,573)
(16,065,312)
PHARMARON MANUFACTURING SERVICES (UK) LTD
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2024
31 December 2024
- 9 -
2024
2023
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
8
18,010,024
16,499,602
Current assets
Inventories
9
3,424,508
4,019,745
Trade and other receivables
10
2,217,605
3,499,570
Cash and cash equivalents
1,808,106
2,763,713
7,450,219
10,283,028
Current liabilities
11
(3,822,805)
(6,128,171)
Net current assets
3,627,414
4,154,857
Total assets less current liabilities
21,637,438
20,654,459
Non-current liabilities
11
(43,333,205)
(46,388,182)
Provisions for liabilities
Other provisions
16
(18,703)
(43,641)
Net liabilities
(21,714,470)
(25,777,364)
Equity
Called up share capital
18
876,500
672,910
Share premium account
19
20,625,192
469,741
Capital redemption reserve
20
76,558
76,558
Share based payment reserve
21
118,018
88,592
Retained earnings
(43,410,738)
(27,085,165)
Total equity
(21,714,470)
(25,777,364)
The financial statements were approved by the board of directors and authorised for issue on 10 June 2025 and are signed on its behalf by:
S C Lewinton
Director
Company registration number 05188033
PHARMARON MANUFACTURING SERVICES (UK) LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
- 10 -
Share capital
Share premium
Capital redemption reserve
Other reserves
Retained earnings
Total
Notes
£
£
£
£
£
£
Balance at 1 January 2023
701,253
469,741
48,215
42,130
(11,019,853)
(9,758,514)
Year ended 31 December 2023:
Loss and total comprehensive income for the year
-
-
-
-
(16,065,312)
(16,065,312)
Transactions with owners in their capacity as owners:
Transfer to other reserves
-
-
-
46,462
-
0
46,462
Other movements
(28,343)
-
28,343
-
-
-
Balance at 31 December 2023
672,910
469,741
76,558
88,592
(27,085,165)
(25,777,364)
Year ended 31 December 2024:
Loss and total comprehensive income for the year
-
-
-
-
(16,325,573)
(16,325,573)
Issue of share capital
18
203,590
20,155,451
-
-
-
20,359,041
Transfer to other reserves
-
-
-
29,426
-
0
29,426
Balance at 31 December 2024
876,500
20,625,192
76,558
118,018
(43,410,738)
(21,714,470)

The notes on pages 11 to 23 form part of these financial statements.

PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
- 11 -
1
Accounting policies
Company information

Pharmaron Manufacturing Services (UK) Ltd is a private Company limited by shares incorporated in England and Wales. The registered office is Windmill Industrial Estate, Shotton Lane, Cramlington, Northumberland, England, NE23 3JL. The Company's principal activities and nature of its operations are disclosed in the directors' report.

1.1
Accounting convention

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. 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:

1.2
Going concern

The Company has truenet current assets of £3.6m as at 31 December 2024 (31 December 2023: net current assets £4.1m) and a loss for the period then ended of £16.3m (31 December 2023: loss of £16.1m). Going concern has been assessed, considering the Company’s current financial position and after modelling the impact of certain scenarios related to operational restructuring on the revenue, profitability, and funding of the Company.

 

As a result of the current and forecast financial position of the Company as well as the stress testing of these forecasts, the directors concluded that the entity requires support from the ultimate parent Company to meet liquidity needs during the going concern period which is twelve months from the date that these accounts are signed.

 

The directors have assessed the profitability and liquidity of its ultimate parent undertaking and are confident that should financial support be called upon the parent entity can provide the required support. The Directors have obtained a letter of support from the Company’s ultimate parent, Pharmaron Beijing Co Ltd, which confirms that they are willing to provide financial support to meet liabilities as they fall due should this be necessary. Therefore, the directors have a reasonable belief that the Company has adequate resources to continue in operational existence for the next twelve months and they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 12 -
1.3
Revenue

Revenue is recognised as performance obligations to deliver products or services are satisfied. The transaction price of each contract is allocated to separately identifiable performance obligations based on the amount of consideration expected to be received in exchange for satisfying these performance obligations.

 

Products sold are active pharmaceutical ingredients (API). Service represents in-house development and support on new and existing customer programmes.

 

Performance obligations for the sale of products are dependent on the terms and conditions of sale. The point in time at which revenue is recognised may therefore vary between the point goods are made available for customers to collect, and the point at which they are delivered to the customers.

 

Performance obligations for service revenues are recognised over time as the service is provided based on contractual rates agreed within the contracts and service hours delivered. Advance payments received from customers are credited to contract liabilities and the related revenue is released to the income statement in accordance with the recognition criteria described above

1.4
Property, plant and equipment

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

Land and assets in the course of construction are not depreciated. Depreciation on other assets is provided using the straight-line method to allocate the cost, less estimated residual values, of the assets over their expected useful economic lives as follows:

Freehold land and buildings
3% per annum
Plant and equipment
10% - 33% per annum
Computers
33% per annum
Leased asset
16% - 20% per annum

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 recognised in the income statement.

1.5
Impairment of tangible and intangible assets

At each reporting 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.

PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 13 -

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.

1.6
Inventories

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

 

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

1.7
Cash and cash equivalents

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.

1.8
Financial assets

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.

Financial assets at fair value through profit or loss

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 assets held at amortised cost

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.

PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 14 -
Financial assets at fair value through other comprehensive income

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.

The Company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost 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 recognized through other comprehensive income are directly transferred to retained earnings when the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.

Impairment of financial assets

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.

 

For trade receivables, the simplified approach permitted by IFRS 9 is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

 

 

Derecognition of financial assets

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.

1.9
Financial liabilities

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

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.

PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities

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

1.10
Equity instruments

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.

1.11
Provisions

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.

 

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

1.12
Employee benefits

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.

1.13
Retirement benefits

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

1.14
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

 

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 16 -
1.15
Leases

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.

2
Critical accounting estimates and judgements

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.

Critical estimates
PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
2
Critical accounting estimates and judgements
(Continued)
- 17 -
Revenue recognition

The Company’s revenue recognition policies require management to make estimates in respect of the revenue accounting for major manufacturing contracts and/or material amendments to contracts. Revenue is recognised in line with IFRS15.

Tangible Fixed Assets

Please see details of estimates made in respect of the impairment of fixed assets in note 9.

Stock

It is essential that the Company makes a consideration of the recoverable value of inventory held and the associated provision that is required.  When calculating the inventory provision, management will consider the turnover of relevant product lines and also their ultimate obsolescence to the market.  The condition of inventory and the recoverable scrap value will also be considered, as well as the condition and saleability of inventory held for long periods or returned from customers.

3
Revenue
2024
2023
£
£
Revenue analysed by class of business
Sale of goods
7,509,635
6,161,348
Rendering of services
1,343,808
1,325,832
8,853,443
7,487,180
2024
2023
£
£
Revenue analysed by geographical market
United Kingdom
4,036,293
3,133,020
Europe
795,245
2,845,887
Rest of World
4,021,905
1,508,273
8,853,443
7,487,180
4
Operating loss
2024
2023
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange gains
(47,316)
(29,755)
Research and development costs
1,175,358
-
Fees payable to the Company's auditor for the audit of the Company's financial statements
30,200
23,100
Depreciation of property, plant and equipment
3,206,853
2,464,555
Cost of inventories recognised as an expense
1,977,889
1,082,310
Share-based payments
29,240
46,462
PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 18 -
5
Employees

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

2024
2023
Number
Number
Production
77
77
Maintenance
44
39
Administration
17
22
Total
138
138

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
6,929,919
6,683,036
Social security costs
699,275
726,785
Pension costs
626,193
587,751
8,255,387
7,997,572
6
Finance costs
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest payable to group undertakings
2,791,387
2,335,007
Interest on lease liabilities
17,453
7,566
2,808,840
2,342,573
Other finance costs:
Exchange differences on financing transactions
(36,887)
23,901
Total finance costs
2,771,953
2,366,474
7
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

2024
2023
£
£
In respect of:
Property, plant and equipment
116,271
-
0
Recognised in:
Administrative expenses
116,271
-
PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 19 -
8
Property, plant and equipment
Freehold land and buildings
Assets under construction
Plant and equipment
Leased asset
Total
£
£
£
£
£
Cost
At 1 January 2024
6,132,512
3,921,654
42,542,777
299,996
52,896,939
Additions
-
0
4,885,679
-
0
28,823
4,914,502
Disposals
-
0
(44,190)
(185,117)
(22,731)
(252,038)
Transfer
344,273
(7,052,502)
6,708,229
-
0
-
0
At 31 December 2024
6,476,786
1,710,641
49,065,889
306,088
57,559,404
Accumulated depreciation and impairment
At 1 January 2024
2,851,085
-
33,498,519
47,732
36,397,336
Charge for the year
1,116,087
-
0
2,016,157
74,609
3,206,853
Impairment loss (profit or loss)
-
0
-
0
116,271
-
0
116,271
Eliminated on disposal
-
0
-
0
(148,348)
(22,731)
(171,079)
At 31 December 2024
3,967,172
-
0
35,482,599
99,609
39,549,381
Carrying amount
At 31 December 2024
2,509,614
1,710,641
13,583,290
206,479
18,010,024
At 31 December 2023
3,281,427
3,921,655
9,044,257
252,264
16,499,602

In view of the trading losses incurred by the Company the directors have undertaken an impairment review on the carrying value of the Company's tangible fixed assets. The assessment has been based on the calculation of the value in use of the assets. The assessment has been to discount the expected cashflows to be derived from the use of the assets over their remaining lives of 10 years at a weighted cost of capital of 7.15%. The assessment has indicated a level of headroom of approximately £33m.

The key sensitivity in the assessment is the estimated future revenue levels. The company's parent has confirmed that they will be able to introduce significant levels of revenue to the company. The directors note that forecast revenues would need to be 19% lower than forecast to result in an impairment.

 

9
Inventories
2024
2023
£
£
Raw materials
688,510
1,351,071
Work in progress
593,877
1,496,001
Finished goods
2,142,121
1,172,673
3,424,508
4,019,745
PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 20 -
10
Trade and other receivables
2024
2023
£
£
Trade receivables
1,689,597
2,484,059
Provision for bad and doubtful debts
(3,866)
(61,669)
1,685,731
2,422,390
Corporation tax recoverable
-
213,222
VAT recoverable
-
148,316
Prepayments and accrued income
531,874
715,642
2,217,605
3,499,570
11
Liabilities
Current
Non-current
2024
2023
2024
2023
Notes
£
£
£
£
Borrowings
12
-
0
-
0
43,188,935
46,191,875
Trade and other payables
14
3,579,662
5,901,065
-
0
-
0
Taxation and social security
171,389
167,830
-
-
Lease liabilities
15
71,754
59,276
144,270
196,307
3,822,805
6,128,171
43,333,205
46,388,182
12
Borrowings
Non-current
2024
2023
£
£
Borrowings held at amortised cost:
Loans from parent undertaking
43,188,935
46,191,875

Amounts owed are unsecured and repayable on the maturity date of 31 December 2028 with an option to repay in whole or in part at anytime. Interest is charged at 2.2% per annum plus the closing SONIA daily rate for the first day of the 3 month period and accrues across each 3 month period.

13
Contracts with customers
2024
2023
Period end
Period end
£
£
Contracts in progress
Contract liabilities
1,370,853
1,847,780
PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
13
Contracts with customers
(Continued)
- 21 -

Contract liabilities relates to two elements. There is capital investment for where there is an agreement to recharge the expenditure to the customer. The income received is deferred and released over the useful economic life of the asset. There is also deferred income for revenue contracts with customers that will be realised as contract milestones are met.

14
Trade and other payables
2024
2023
£
£
Trade payables
1,145,164
1,895,761
Contract liabilities (note 13)
1,370,853
1,847,780
Amount owed to parent undertaking
44,191
-
0
Amounts owed to fellow group undertakings
49,505
4,110
Accruals and deferred income
950,655
1,159,025
Other payables
19,294
994,389
3,579,662
5,901,065
15
Lease liabilities
2024
2023
Maturity analysis
£
£
Within one year
71,754
59,276
In two to five years
144,270
196,307
Total undiscounted liabilities
216,024
255,583

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:

2024
2023
£
£
Current liabilities
71,754
59,276
Non-current liabilities
144,270
196,307
216,024
255,583
2024
2023
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
17,453
7,566
PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 22 -
16
Provisions for liabilities
2024
2023
£
£
18,703
43,641
Movements on provisions:
£
At 1 January 2024
43,641
Utilisation of provision
(24,938)
At 31 December 2024
18,703

The provision represents an amount due under an onerous contract and is expected to be settled within the next year. A contract was entered into by the previous owners of the business for the provision of software services. Upon the change of ownership of the business, the software became obsolete.

17
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
626,193
587,751

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.

18
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of 1p each
87,650,041
67,291,000
876,500
672,910
19
Share premium account
2024
2023
£
£
At the beginning of the year
469,741
469,741
Issue of new shares
20,155,451
-
At the end of the year
20,625,192
469,741
PHARMARON MANUFACTURING SERVICES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 23 -
20
Capital redemption reserve
2024
2023
£
£
At the beginning of the year
76,558
48,215
Other movements
-
28,343
At the end of the year
76,558
76,558
21
Share based payment reserve
2024
2023
£
£
At the beginning of the year
88,592
42,130
Additions
29,426
46,462
At the end of the year
118,018
88,592
22
Capital commitments
2024
2023
£
£

At 31 December 2024 the Company had capital commitments as follows:

Contracted for but not provided in the financial statements:
Acquisition of property, plant and equipment
227,351
988,933
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