Company No: 08900140 (England and Wales)

Contents

• Company Information
• Balance Sheet
• Notes to the Financial Statements

DIRECTORS	P Colbon
	S Noble
	A Round
	M Stewart

SECRETARY

P Colbon

REGISTERED OFFICE	48-52 Penny Lane
	Mossley Hill
	Liverpool
	L18 1DG
	United Kingdom

COMPANY NUMBER

08900140 (England and Wales)

CHARTERED ACCOUNTANTS	Hurst Accountants Ltd
	Lancashire Gate
	21 Tiviot Dale
	Stockport
	SK1 1TD

	Note	2021		2020
		£		£
Fixed assets
Intangible assets	3	39,017		18,321
Tangible assets	4	324,558		69,500
Investments	5	2,795,258		3,208,753
		3,158,833		3,296,574
Current assets
Stocks	6	2,772,848		40,995
Debtors	7	537,334		579,568
Cash at bank and in hand		141,047		224,807
		3,451,229		845,370
Creditors
Amounts falling due within one year	8	( 3,531,165)		( 528,299)
Net current (liabilities)/assets		(79,936)		317,071
Total assets less current liabilities		3,078,897		3,613,645
Creditors
Amounts falling due after more than one year	9	( 143,727)		0
Net assets		2,935,170		3,613,645
Capital and reserves
Called-up share capital	11	53,086		52,147
Share premium account		6,603,041		6,452,035
Profit and loss account		( 3,720,957 )		( 2,890,537 )
Total shareholders' funds		2,935,170		3,613,645

For the financial year ending 31 December 2021 the Company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

Directors' responsibilities:

• The members have not required the Company to obtain an audit of its financial statements for the financial year in accordance with section 476;
• The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements; and
• These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime and a copy of the Statement of Income and Retained Earnings has not been delivered.

The financial statements of Liverpool Chirochem Limited (registered number: 08900140) were approved and authorised for issue by the Board of Directors on 23 September 2022. They were signed on its behalf by:

S Noble Director

1. Accounting policies

The principal accounting policies are summarised below. They have all been applied consistently throughout the financial year and to the preceding financial year, unless otherwise stated.

General information and basis of accounting

Liverpool Chirochem Limited (the Company) is a private company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales. The address of the Company's registered office is 48-52 Penny Lane, Mossley Hill, Liverpool, L18 1DG, United Kingdom.

The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value, and in accordance with Section 1A of Financial Reporting Standard 102 (FRS 102) ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ issued by the Financial Reporting Council and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.

The financial statements are presented in pounds sterling which is the functional currency of the company and rounded to the nearest £.

Going concern

The directors have assessed the Balance Sheet and likely future cash flows at the date of approving these financial statements. The directors note that the business has net current liabilities of £79,936 (2020: £317,071 net current assets). The Company is supported through loans from the shareholders and the future fund. The directors have confirmed that the loan facilities will continue to be available for at least 12 months from the date of signing these financial statements and the shareholders will continue to support the Company. Given the current position, the directors believe that any foreseeable debts can be met for at least 12 months from the date of signing these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Foreign currency

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Balance Sheet date are reported at the rates of exchange prevailing at that date.

Exchange differences are recognised in the Statement of Income and Retained Earnings in the period in which they arise except for exchange differences arising on gains or losses on non-monetary items which are recognised in the Statement of Comprehensive Income.

Interest income

Interest income is recognised when it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

Employee benefits

Defined contribution schemes
The Company operates a defined contribution scheme. The amount charged to the Statement of Income and Retained Earnings in respect of pension costs and other post-retirement benefits is the contributions payable in the financial year. Differences between contributions payable in the financial year and contributions actually paid are included within other creditors in the Balance Sheet.

Finance costs

Finance costs are charged to the Statement of Income and Retained Earnings over the term of the debt using the effective interest method so the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Taxation

Current tax
Current tax is provided at amounts expected to be paid (or recoverable) using the tax rates and laws that have been enacted or substantively enacted at the Balance Sheet date.

Deferred tax
Deferred tax arises as a result of including items of income and expenditure in taxation computations in periods different from those in which they are included in the Company's financial statements. Deferred tax is provided in full on timing differences which result in an obligation to pay more or less tax at a future date, at the average tax rates that are expected to apply when the timing differences reverse, based on current tax rates and laws. Deferred tax assets and liabilities are not discounted.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Revenue

Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

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

Research and development

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 3 to 6 years.

If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.

Intangible assets

Intangible assets are stated at cost or valuation, net of amortisation and any provision for impairment. Amortisation is provided on all intangible assets at rates to write off the cost or valuation of each asset over its expected useful life as follows:

Trademarks, patents and licences

5 years straight line

Tangible fixed assets

Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impairment. Depreciation is provided on all tangible fixed assets, other than investment property and freehold land, at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight-line or reducing balance basis over its expected useful life, as follows:

Plant and machinery	4 years straight line
Office equipment	3 years straight line

Residual value represents the estimated amount which would currently be obtained from disposal of an asset, after deducting estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

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

Leases

The Company as lessee
Assets held under finance leases, hire purchase contracts and other similar arrangements, which confer rights and obligations similar to those attached to owned assets, are capitalised as tangible fixed assets at the fair value of the leased asset (or, if lower, the present value of the minimum lease payments as determined at the inception of the lease) and are depreciated over the shorter of the lease terms and their useful lives. The capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the Statement of Income and Retained Earnings over the period of the leases to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term.

Impairment of assets

Assets, other than those measured at fair value, are assessed for indicators of impairment at each Balance Sheet date. If there is objective evidence of impairment, an impairment loss is recognised in the Statement of Income and Retained Earnings as described below.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to the net realisable value. Cost includes materials, direct labour and an attributable proportion of manufacturing overheads based on normal levels of activity. Cost is calculated using the standard costing method. Provision is made for obsolete, slow-moving or defective items where appropriate.

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

Trade and other debtors

Trade and other debtors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method less impairment losses for bad and doubtful debts, except where the effect of discounting would be immaterial. In such cases the receivables are stated at cost less impairment losses for bad and doubtful debts.

Cash and cash equivalents

Cash is a basic financial asset and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in creditors: amounts falling due within one year.

Trade and other creditors

Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest rate method, unless the effect of discounting would be immaterial, in which case they are stated at cost.

Financial instruments

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or income as appropriate. The company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.

The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangement entered into.

A financial liability exists where there is a contractual obligation to deliver cash or another financial asset to another entity, or to exchange financial assets or financial liabilities under potentially unfavourable conditions.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of income and retained earnings.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.

Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or income as appropriate. The company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.

Loans and borrowings
Loans and borrowings are initially recognised at the transaction price including transaction costs. Subsequently, they are measured at amortised cost using the effective interest rate method, less impairment.

Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, 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 Balance Sheet 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 the effect of the time value of money is material).

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.

2. Employees

	2021		2020
	Number		Number
Monthly average number of persons employed by the Company during the year, including directors	20		14

3. Intangible assets

	Trademarks, patents and licences		Total
	£		£
Cost
At 01 January 2021	22,382		22,382
Additions	22,774		22,774
At 31 December 2021	45,156		45,156
Accumulated amortisation
At 01 January 2021	4,061		4,061
Charge for the financial year	2,078		2,078
At 31 December 2021	6,139		6,139
Net book value
At 31 December 2021	39,017		39,017
At 31 December 2020	18,321		18,321

4. Tangible assets

	Plant and machinery		Office equipment		Total
	£		£		£
Cost
At 01 January 2021	113,160		18,369		131,529
Additions	343,077		12,956		356,033
Disposals	( 39,583)		0		( 39,583)
At 31 December 2021	416,654		31,325		447,979
Accumulated depreciation
At 01 January 2021	47,625		14,404		62,029
Charge for the financial year	66,515		6,422		72,937
Disposals	( 11,545)		0		( 11,545)
At 31 December 2021	102,595		20,826		123,421
Net book value
At 31 December 2021	314,059		10,499		324,558
At 31 December 2020	65,535		3,965		69,500

5. Fixed asset investments

	Other investments		Total
	£		£
Carrying value before impairment
At 01 January 2021	3,208,753		3,208,753
Movement on investment for trade	( 413,495)		( 413,495)
At 31 December 2021	2,795,258		2,795,258
Provisions for impairment
At 01 January 2021	0		0
At 31 December 2021	0		0
Carrying value at 31 December 2021	2,795,258		2,795,258
Carrying value at 31 December 2020	3,208,753		3,208,753

6. Stocks

	2021		2020
	£		£
Stocks	2,772,848		40,995

7. Debtors

	2021		2020
	£		£
Trade debtors	450,942		539,594
Other debtors	86,392		39,974
	537,334		579,568

8. Creditors: amounts falling due within one year

	2021		2020
	£		£
Bank loans	9,646		50,000
Trade creditors	186,685		135,687
Other creditors	305,087		162,016
Convertible loan notes	2,899,105		0
Other taxation and social security	67,191		180,596
Obligations under finance leases and hire purchase contracts (secured)	63,451		0
	3,531,165		528,299

Net obligations under hire purchase contracts were secured against the assets to which they related.

Bank loans represent a loan from a provider which is accredited by the Government-owned British Business Bank to provide business loans under the Recovery Loan Scheme. The loan attracts interest of 5% per annum, is unsecured, and repayable monthly over a 5 year term.

Bank loan £50,000 in the prior year was previously included within other creditors.

9. Creditors: amounts falling due after more than one year

	2021		2020
	£		£
Bank loans	34,837		0
Obligations under finance leases and hire purchase contracts (secured)	108,890		0
	143,727		0

Net obligations under hire purchase contracts were secured against the assets to which they related.

10. Convertible loans

The Company issued £2,000,000 of convertible loan notes. The convertible loan notes are convertible into ordinary shares of the Company at any time between the date of issue of the notes and their settlement date. The directors have exercised judgement in assessing the market rate of non-basic financial instruments held at fair value through the profit and loss. In the case of the loan notes, fair value has been assessed with reference to an estimated probability of the exercise of an option to convert the loan to equity.

11. Called-up share capital

	2021		2020
	£		£
Allotted, called-up and fully-paid
53,086,158 Ordinary shares of £ 0.001 each (2020: 52,146,618 shares of £ 0.001 each)	53,086		52,147

During the year 939,540 Ordinary shares were allotted with an aggregate nominal value of £940. Consideration for the allotted shares was £170,057, resulting in a share premium of £169,117.

12. Financial commitments

Pensions

The Company operates a defined contribution pension scheme for the directors and employees. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost expense represents contributions payable by the Company to the fund and amounted to £24,859 (2020 - £30,244).

	2021		2020
	£		£
Unpaid contributions due to the fund (inc. in other creditors)	3,839		2,892

13. Related party transactions

Transactions with the entity's directors

	2021		2020
	£		£
Dr P Colbon	(2,625)		(2,625)
Dr R Ruan	0		(1,960)
Prof J Xiao	(3,290)		(3,290)

The balances stated above are owed to the Directors at the balance sheet date and are included within other creditors. The balances do not attract interest.

14. Ultimate controlling party

By virtue of the share ownership split of the company, it is the opinion of the directors that there is no ultimate controlling party.