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

The principal activity of Pharmaron Biologics (UK) Ltd ("Company") is the contract research and development of advanced therapeutic products and vaccines through the application of analytical and manufacturing process solutions.

During 2024 the Company has continued to work on multiple client projects ranging from full-service process development and manufacturing for gene therapies to separate, stand-alone analytical solutions. The Company has continued to develop the internal technology platforms necessary to provide services for advanced therapeutic products, particularly in the areas of cell and gene therapy (CGT) and viral vaccines. These technologies will continue to provide us with differentiation from our competitors. The Company has worked on 11 gene therapy and vaccine projects during 2024, including seven at the pre-clinical stage and four at phase I/II. 6 of our 2024 customers were UK based and 5 were from the USA. The Company continues to expand on its service offering with laboratory work performed on our first microbial protein project. Our ‘customer milestone on time’ completion metric reached a new high of >90%.

The Company continued to make significant investment in capital assets during 2024 to replace end of life systems and develop innovative technologies to remain competitive in the marketplace and comply with UK and global regulatory standards and will continue to do this in the future.

Despite headwinds from the construction marketplace, the Company continued its ambitious £89.3m, 8,000m2 expansion project on site in Liverpool. When complete, this will increase analytical and process development capacity four-fold and provide for 3,500m2 of future commercial manufacturing space. The building shell was completed May 2025.

During the year the Company has made the transition from FRS 102 to FRS 101. The accounting framework

requires a restatement of the financial statements that reflects the adjustments required under the new

accounting framework from the first day of the comparative accounting period (1 January 2023).

The loss for the year was £330k (2023: Restated profit due to transition to FRS 101 is £79k).

Net assets at 31 December 2024 increased to £75,742k (2023: Restated net assets due to transition to FRS 101 are £59,880k). Employee numbers averaged 183 during the year.

From the date of preparation to signing the Annual Report and Financial Statements, the directors are unaware of any impacts that would constitute an adjusting post balance sheet event.

The Company’s operations expose it to a variety of financial and non-financial risks.

Foreign Exchange Risk

The Company operates internationally, foreign exchange risk arises from transactions when goods and services are bought or sold in currencies other than sterling. Primarily with respect to the euro and US dollar. Foreign exchange risks arise from future commercial transactions denominated in a currency that is not the entity's functional currency.

Interest Rate Risk

All of the Company’s funding is provided by the parent company. The funding is not interest bearing and therefore the Company has no interest rate risk.

Non-financial risks

The majority of R&D activity relates to early-stage process development and clinical manufacture to determine product safety and efficacy. Each new drug and vaccine candidate carries significant risk of failure due to the inability to develop an efficacious and commercially viable product. While this risk is principally born by the drug developer, the Company’s customer, an adverse outcome to a preclinical or clinical study means a likely discontinuation or delay to a planned program of work. Such an occurrence would negatively impact the capacity utilisation (facility occupancy) and therefore revenues and makes forward resource planning more challenging. These risks are mitigated by recruiting and training flexible scientists who can support different areas of the drug development process and by having a sales and marketing team integrated into the larger Pharmaron Group business to identify areas for cross selling any available capacity and having a diversified client base.

Business continuity risk

The business uses highly specialist facilities that are central to the delivery of services. Disaster recovery planning and risk management policies and procedures are in place to minimise the business continuity risks.

The Company is indirectly majority-owned by Pharmaron Beijing Co., Ltd. ("Pharmaron"), which is dual-listed on the Shenzhen Stock Exchange (stock code: 300759.SZ) and the Main Board of the Stock Exchange of Hong Kong limited (stock code: 3759.HK).

Pharmaron is a leading, fully integrated pharmaceutical R&D services platform business with global operations to accelerate drug innovation for its customers. The principal activity of Pharmaron and its subsidiaries is to provide contract research, development, and manufacturing services for innovative pharmaceutical products throughout the research and development lifecycle and the services are organised in four major categories: laboratory services, chemistry, manufacturing and controls (“CMC”) (small molecule CDMO) services, clinical development services and Biologics and CGT services. Pharmaron operates in 21 locations, 10 in China, 6 in the USA and 5 in the UK.

2024 was again a challenging year for the global pharmaceutical and biotech market. However, despite the external micro and macro economic pressures Pharmaron achieved steady growth in revenue and profit while continuing to focus and invest in long term growth strategies. Pharmaron’s total revenue in 2024 was RMB12,276 million (£737.8 million)) a 6.4% increase on 2023. In 2024 gross margin was 33.8%, a decrease of 1.7 percentage point as compared to 35.5% in 2023. The profit attributable to the owners of the parent was RMB 1,793.4 million (a year-on-year growth of 12%).

The directors believe that analysis using general or non-financial key performance indicators is not necessary or appropriate for an understanding of the development, performance or position of the business of the Company at this time due to the early phase business development model. KPI's will be developed as the Company matures as a CDMO.

On behalf of the board

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

The results for the year are set out on page 10.

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

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

The company has made qualifying third party indemnity provisions for the benefit of its directors which were made during the year and remain in force at the reporting date.

The Company maintained through the year, and at the date of approval of the financial statements, liability insurance for its directors and officer commonly referred to as D&O insurance.

Azets Audit Services Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

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. It has done so in respect of the business review and future developments

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.

The directors believe that preparing the financial statements on the going concern basis is appropriate. Forecasts prepared on the basis of the current costs model show that the Company will need financial support from its ultimate parent, Pharmaron. The directors have received a letter of support from Pharmaron for a period of 12 months from the date of approval of these financial statements in order to ensure that the Company can meet its obligations as they fall due.

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.

We have audited the financial statements of Pharmaron Biologics (UK) Ltd (the 'company') for the year ended 31 December 2024 which comprise the statement of comprehensive income, 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.

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.

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:

• Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud; 

• Reviewing minutes of meetings of those charged with governance;

• Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection; 

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias. 

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.

Pharmaron Biologics (UK) Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 12 Estuary Banks, Speke, Liverpool, L24 8RB. The company's principal activities and nature of its operations are disclosed in the directors' report.

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.

The company meets the definition of a qualifying entity under FRS 101 Reduced Disclosure Framework. These financial statements for the year ended 31 December 2024 are the first financial statements of Pharmaron Biologics (UK) Ltd prepared in accordance with FRS 101. The company transitioned from FRS 102 to FRS 101 for all periods presented and the date of transition to FRS 101 was 1 January 2023.

An explanation of how transition to FRS 101 has affected the reported financial position and financial performance is given in note 25.

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;

• presentation of a statement of cash flows and related notes;

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

• disclosure of key management personnel compensation;

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

• the effect of financial instruments on the statement of comprehensive income;

• comparative period reconciliations for the number of shares outstanding and the carrying amounts of property, plant and equipment, intangible assets, investment property and biological assets;

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

• a reconciliation of the number and weighted average exercise prices of share options, how the fair value of share-based payments was determined and their effect on profit or loss and the financial position;

• comparative narrative information;

• for financial instruments, investment property and biological assets measured at fair value and within the scope of IFRS 13, the valuation techniques and inputs used to measure fair value, the effect of fair value measurements with significant unobservable inputs on the result for the period and the impact of credit risk on the fair value; and

• related party disclosures for transactions with the parent or wholly owned members of the group.

Where required, equivalent disclosures are given in the group accounts of Pharmaron Beijing Co., Ltd. The group accounts of Pharmaron Beijing Co., Ltd are available to the public and can be obtained as set out in note 26.

The directors believe that preparing the financial statements on the going concern basis is appropriate. Forecasts prepared on the basis of the current costs model show that the Company will need financial support from its ultimate parent, Pharmaron. The directors have received a letter of support from Pharmaron for a period of 1true2 months from the date of approval of these financial statements in order to ensure that the Company can meet its obligations as they fall due.

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Turnover relates to third party customers and related companies. Third party turnover is generally recognised on completion of contractual milestones and is stated excluding value added tax. Related companies turnover represents the value of the intellectual property provided in the development of projects recharged to related companies during the year.

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

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years. Amortisation for intangible fixed assets is charged on a straight-line basis.

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:

• Development costs 4 years

• Computer Software 4 years

No amortisation is charged on intangible assets under development until they are complete and ready for their intended use.

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 recognised in the income statement.

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.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

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 labour costs and those overheads 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.

Cost is based on the cost of purchase on a first in, first out basis.

At each Balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its net realisable value. The impairment loss is recognised immediately in profit or loss.

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.

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.

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.

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.

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.

Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.

Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.

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.

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.

The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic life and residual value of assets. To ensure the efficient use of limited space in our facility the useful economic life and residual value of our assets is assessed annually. Values are amended when necessary to reflect current estimates, based on technological advancements, future investments, economic utilisation and the physical condition of assets. Items not required for current projects can be stored off site until required or until deemed obsolete and therefore disposed of. See note 10 for the carrying value of tangible fixed assets and accounting policies relating to the useful economic life of each class of asset.

The Company's ultimate parent issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed over the vesting period, based on the Company’s estimate of the awards that will eventually vest. Fair value is measured by use of the Black-Scholes pricing model.

The equity-settled share-based payment awards granted by the former ultimate parent company, Allergan Pic were cancelled in 2021 and reissued in the form of a cash-settled share-based payment award. The fair value of the cash-settled share-based payment award is determined at the Balance sheet date as the agreed bonus award that the employee will receive. See note 19 for further details.

The RDEC provision is based on a best estimate based on the prior experience and any difference in the claim is reflected in the following years accounts.

Management have reviewed the deferred tax asset of £7,543k (2023: £7,099k) in respect of losses and its recoverability in light of the expected future profitability of the Company following the acquisition by Pharmaron and the expansion plans as a result. They believe that the Company will achieve profitability in the medium term sufficient to allow the tax losses to be utilised and therefore it is appropriate to recognise the deferred tax asset. See note 16 for further details.

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

Their aggregate remuneration comprised:

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

The value of stocks in the Balance sheet is not materially different from the replacement cost.

An impairment reversal (py loss) of -£75k (2023: £77k) was recognised in cost of sales against stock during the year due to obsolete stock.

Amounts owed by group undertakings’ reflect intercompany balances falling due within one year. These amounts are unsecured and repayable on demand.

The deferred tax asset has been classified as being due after more than one year following an assessment of when the asset is expected to be utilised.

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.

As at 31 December 2024, there is a recognised deferred tax asset of £5,136,585 (2023: £4,874,423) relating to tax losses carried forward. Based on the Company's profit forecasts, the directors are confident that the losses will be utilised through future taxable profits in the foreseeable future. As such, the directors consider it appropriate to recognise the deferred tax asset in these financial statements.

Deferred income includes £7m awarded by Life Sciences Manufacturing Innovation Fund (LSIMF). Income will be recognised in line with depreciation on the corresponding fixed assets acquired to which the grant relates. Depreciation is expected to commence towards the end of 2025.

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.

Equity settled share-based payments

The First H Share Award and Trust Scheme

Pharmaron adopted a H share award and trust scheme (the “H Share Scheme”), comprised of the Employee Share Award Plan (the “ESAP”) and the Share Bonus Plan, for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the group’s operations.

The H Share Scheme was approved in the 2020 third extraordinary general meeting (“EGM”) of Pharmaron on 11 December 2020 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date.

The management committee of the H Share Scheme resolved to grant awards of a total of 207,800 H Shares to 24 eligible employees and 368,600 H Shares to 29 eligible employees of the Company on 31 May 2022 and 29 August 2023, respectively. The awards shall be vested over a four-year period, with 25%, 25%, 25% and 25% of total shares vesting on each anniversary date after the respective vesting commencement date upon meeting certain vesting conditions.

On 1 May 2021, all outstanding restrictive share awards and share options were modified, resulting in them being replaced by a cash award, the long term cash bonus award. This award is payable to the employees at a fixed amount, based on the average share price of AbbVie Inc. at the date of the award, on the date the original restrictive share awards and share options would have vested. Payment to the employee is subject to the employee's continued employment with the Company.

The Company accounts for the long term cash bonus award as a cash settled share-based payment scheme under the fair value recognition and measurement provisions under FRS101. The Company’s share based compensation cost is measured at the grant date, based on the fair value of the award, and is recognised as an expense over the requisite service period. The fair value of the award is remeasured at each Balance Sheet date. As awards are linked to service, no expense is recognised for unvested shares relating to employees who have since left the Company.

The Company recognised total expenses of £328k and £410k related to equity-settled share-based payment transactions (including restricted stock units) in 2024 and 2023 respectively.

For cash settled share-based payments, the total expenses recognised during the year and the carrying amount of the liabilities at 31 December 2024 is £88k (2023: 390k) and £164k (2023: £636k) respectively.

As at 31 December 2024, there are bank guarantees of £725k and £10,046k by the Company in relation to the lease of the offices and the government grant respectively.

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

The Company is indirectly majority-owned by Pharmaron Beijing Co., Ltd., which is dual-listed on the Shenzhen Stock Exchange (stock code: 300759.SZ) and the Main Board of the Stock Exchange of Hong Kong Limited (stock code: 3759.HK). Consolidated financial information of Pharmaron Beijing Co., Ltd. is available on its website https://ir.pharmaron.com/en/investors/h-share/.

During the year the company has made the transition from FRS 102 to FRS 101. The accounting framework requires a restatement of the financial statements that reflects the adjustments required under the new accounting framework from the first day of the comparative accounting period (1 January 2023).

The only change in accounting treatment on adoption of FRS 101 has been the presentation of assets formerly accounted for as assets under an operating lease to right of use assets.

At the 1 January 2023 the NBV of the right of use asset was £468,089 and the corresponsing lease liability was £766,252. Under FRS 102, a dilapidation accrual had been made in relation to the lease of £192,472. This amount was capitalised as part of the right of use asset. The net effect of the adjustments required on retained profit was a decrease £105,691.

The net effect of the adjustments required to the income statement for the comparative period was an increase in profit of £45,325. This resulted in a total decrease to retained earnings for the comparative period of £60,366.