A1. 5. 1 - Final Accounts (unsigned)

An analysis of turnover by class of business is as follows:

Caseware UK (AP4) 2021.0.152 2021.0.152 2021-12-312021-12-31442021-01-01falsefalse68false 05292712 2021-01-01 2021-12-31 05292712 2021-12-31 05292712 2020-01-01 2020-12-31 05292712 2020-12-31 05292712 2020-01-01 05292712 1 2021-01-01 2021-12-31 05292712 1 2020-01-01 2020-12-31 05292712 3 2021-01-01 2021-12-31 05292712 3 2020-01-01 2020-12-31 05292712 6 2021-01-01 2021-12-31 05292712 6 2020-01-01 2020-12-31 05292712 1 2021-01-01 2021-12-31 05292712 e:CompanySecretary1 2021-01-01 2021-12-31 05292712 e:Director1 2021-01-01 2021-12-31 05292712 e:Director3 2021-01-01 2021-12-31 05292712 e:Director5 2021-01-01 2021-12-31 05292712 e:Director6 2021-01-01 2021-12-31 05292712 e:RegisteredOffice 2021-01-01 2021-12-31 05292712 d:Buildings d:ShortLeaseholdAssets 2021-01-01 2021-12-31 05292712 d:Buildings d:ShortLeaseholdAssets 2021-12-31 05292712 d:Buildings d:ShortLeaseholdAssets 2020-12-31 05292712 d:LandBuildings 2021-12-31 05292712 d:LandBuildings 2020-12-31 05292712 d:PlantMachinery 2021-01-01 2021-12-31 05292712 d:PlantMachinery 2021-12-31 05292712 d:PlantMachinery 2020-12-31 05292712 d:PlantMachinery d:OwnedOrFreeholdAssets 2021-01-01 2021-12-31 05292712 d:OfficeEquipment 2021-01-01 2021-12-31 05292712 d:OfficeEquipment 2021-12-31 05292712 d:OfficeEquipment 2020-12-31 05292712 d:OfficeEquipment d:OwnedOrFreeholdAssets 2021-01-01 2021-12-31 05292712 d:OwnedOrFreeholdAssets 2021-01-01 2021-12-31 05292712 d:CurrentFinancialInstruments 2021-12-31 05292712 d:CurrentFinancialInstruments 2020-12-31 05292712 d:Non-currentFinancialInstruments 2021-12-31 05292712 d:Non-currentFinancialInstruments 2020-12-31 05292712 d:CurrentFinancialInstruments d:WithinOneYear 2021-12-31 05292712 d:CurrentFinancialInstruments d:WithinOneYear 2020-12-31 05292712 d:Non-currentFinancialInstruments d:AfterOneYear 2021-12-31 05292712 d:Non-currentFinancialInstruments d:AfterOneYear 2020-12-31 05292712 d:Non-currentFinancialInstruments d:BetweenOneTwoYears 2021-12-31 05292712 d:Non-currentFinancialInstruments d:BetweenOneTwoYears 2020-12-31 05292712 d:Non-currentFinancialInstruments d:BetweenTwoFiveYears 2021-12-31 05292712 d:Non-currentFinancialInstruments d:BetweenTwoFiveYears 2020-12-31 05292712 d:Non-currentFinancialInstruments d:MoreThanFiveYears 2021-12-31 05292712 d:Non-currentFinancialInstruments d:MoreThanFiveYears 2020-12-31 05292712 d:ReportableOperatingSegment1 2021-01-01 2021-12-31 05292712 d:ReportableOperatingSegment1 2020-01-01 2020-12-31 05292712 d:ReportableOperatingSegment2 2021-01-01 2021-12-31 05292712 d:ReportableOperatingSegment2 2020-01-01 2020-12-31 05292712 f:UnitedKingdom 2021-01-01 2021-12-31 05292712 f:UnitedKingdom 2020-01-01 2020-12-31 05292712 f:RestEuropeOutsideUK 2021-01-01 2021-12-31 05292712 f:RestEuropeOutsideUK 2020-01-01 2020-12-31 05292712 f:RestWorldOutsideUK 2021-01-01 2021-12-31 05292712 f:RestWorldOutsideUK 2020-01-01 2020-12-31 05292712 d:UKTax 2021-01-01 2021-12-31 05292712 d:UKTax 2020-01-01 2020-12-31 05292712 d:ForeignTax 2021-01-01 2021-12-31 05292712 d:ForeignTax 2020-01-01 2020-12-31 05292712 d:ShareCapital 2021-12-31 05292712 d:ShareCapital 2020-12-31 05292712 d:RetainedEarningsAccumulatedLosses 2021-01-01 2021-12-31 05292712 d:RetainedEarningsAccumulatedLosses 2021-12-31 05292712 d:RetainedEarningsAccumulatedLosses 2020-01-01 2020-12-31 05292712 d:RetainedEarningsAccumulatedLosses 2020-12-31 05292712 d:RetainedEarningsAccumulatedLosses 2020-01-01 05292712 d:FinancialAssetsDesignatedFairValueThroughProfitOrLoss 2021-12-31 05292712 d:FinancialAssetsDesignatedFairValueThroughProfitOrLoss 2020-12-31 05292712 e:OrdinaryShareClass1 2021-01-01 2021-12-31 05292712 e:OrdinaryShareClass1 2021-12-31 05292712 e:OrdinaryShareClass1 2020-12-31 05292712 e:FRS102 2021-01-01 2021-12-31 05292712 e:Audited 2021-01-01 2021-12-31 05292712 e:FullAccounts 2021-01-01 2021-12-31 05292712 e:PrivateLimitedCompanyLtd 2021-01-01 2021-12-31 05292712 d:WithinOneYear 2021-12-31 05292712 d:WithinOneYear 2020-12-31 05292712 d:BetweenOneFiveYears 2021-12-31 05292712 d:BetweenOneFiveYears 2020-12-31 05292712 2 2021-01-01 2021-12-31 05292712 7 2021-01-01 2021-12-31 xbrli:shares iso4217:GBP xbrli:pure

Registered number: 05292712

M-SOLV LTD

AUDITED

DIRECTORS' REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

M-SOLV LTD

COMPANY INFORMATION

Directors	Dr Philip Rumsby
	Mr Charles Hok Hei Chong
	Mr Eddie Wing Cheong Yiu
	Mr Eric Kwong Yeung Chong


Company secretary	Dr Philip Rumsby


Registered number	05292712


Registered office	6 Stanton Harcourt Road
	Eynsham
	Witney
	OX29 4TP


Independent auditors	Wellers
	Accountants & Statutory Auditors
	8 King Edward Street
	Oxford
	OX1 4HL

M-SOLV LTD

CONTENTS

	Page
Strategic report	1 - 2
Directors' report	3 - 4
Independent auditors' report	5 - 8
Statement of income and retained earnings	9
Balance sheet	10
Statement of cash flows	11 - 12
Notes to the financial statements	13 - 30

M-SOLV LTD

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2021

Introduction

The directors present their strategic report on the Company for the year ended 31 December 2021.

Business review

The Company is a world leader in the development of laser materials processing and printed electronics production methods. The business conducted is principally design and build of production Tools, Research and Development, and manufacture of printed electronics devices such as capacitive touch sensors and bio-sensors.
The results of the Company for the year, as set out on pages 9 to 30, show a loss on ordinary activities before tax of £952,869 (2020 - £1,575,567 loss). The shareholders’ funds of the Company total negative £10,254,772 (2020 - negative £9,438,487). The Company started to see a recovery from the significant impact on the Tools business caused by the COVID-19 pandemic and successfully completed on site commissioning of Tools delayed from 2020 as well as securing new Tool orders.
During the year the Board decided to separate the Tool and manufacturing of printed electronics activities into separate businesses to best support growth in each area. The manufacturing activities were spun out into a new 100% owned company named M-Solv Manufacturing UK Ltd. In February 2022 this business was acquired by Axion Bio-Systems, Inc.
Business environment.
M-Solv is a global business, with a particularly strong presence in Asia. Demand for advanced laser micro-processing tools and equipment for the digital printing of functional materials continues to recover in all the markets that M-Solv serves. In particular advances in autonomous vehicles, AI, VR, 5G and advanced ICs has promoted the need for advanced laser tools for drilling micro-vias in the substrates used for IC packaging. Covid 19 has had a major impact on our supply chain with some key subcomponent delivery times doubling and we have responded by sourcing alternative supplies.

The Company’s parent Company advanced financial support through a £1.6m of loans in 2021.
Strategy
During 2021 the Company continued to keep costs low and focus on exploitation and commercialisation of its expertise and intellectual property in the area of direct write, high rate laser micro-via drilling tools for the manufacture of IC Substrates. During 2021, customer engagement in Taiwan was strong allowing us to define our product line and establish M-Solv in this competitive market area. Tools installed at customer premises are performing well and there are a number of prospects for multiple Tool orders. As demand for IC based products expands the Company will expand its existing via drilling tool sales activities into China and introduce new laser based mask imaging technologies for the manufacture of next generation IC substrates.

Principal risks and uncertainties

The process of risk acceptance and risk management is addressed through a framework of policies, procedures and internal controls. Policies are in place to ensure compliance with regulation, legal and ethical standards. All policies are subject to management approval and periodic review.
The principal risks to the business arise are exposure to foreign currencies, unknown technical challenges inherent in developing leading edge Tools and supplier performance.

Page 1

M-SOLV LTD

STRATEGIC REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2021

Financial key performance indicators

The main measures of performance are financial performance compared to detailed budgets and plans. The Company also uses OKRs to provide additional performance monitoring in relation to cashflow performance, order intake, cost and schedule adherence. Management regularly monitors the achievement of OKRs vs targets to inform planning and decision making. The predominant OKRs in use are concerned with sales orders, sales receipts, gross profit margins and operating cost targets.

Other key performance indicators

The primary non financial measure of performance concerns manufacturing quality, efficiency, on time delivery and tool completion and site acceptance compared to targets.

This report was approved by the board and signed on its behalf.

Dr Philip Rumsby

Director

Date: 23 December 2022

Page 2

M-SOLV LTD

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 DECEMBER 2021

The directors present their report and the financial statements for the year ended 31 December 2021.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the company's financial statements and then apply them consistently;

∙make judgments and accounting estimates that are reasonable and prudent;

∙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 to 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.

Principal activity

The company's principal activity continued to be that of research, development and manufacture of special purpose laser micro-machining tools.

Results and dividends

The loss for the year, after taxation, amounted to £816,285 (2020 - loss £1,591,387).

No dividend has been proposed in respect of this financial period (2020 - £Nil).

Directors

The directors who served during the year were:

Dr Philip Rumsby

Mr Charles Hok Hei Chong

Mr Eddie Wing Cheong Yiu

Mr Eric Kwong Yeung Chong

Page 3

M-SOLV LTD

DIRECTORS' REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2021

Future developments

The outlook for the Company is positive as it establishes itself as a Tool supplier for IC Substrate drilling applications supplemented by returning demand for legacy Tools, for example tools for printing perovskite PV inks driven by growing demand for renewable energy. The increase in demand for Tools will unpin a return to revenue and profit growth.

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:

∙so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware, and

∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditors are aware of that information.

Post balance sheet events

The company disposed of its entire 100% shareholding in it's only subsidiary, named M-Solv Manufacturing Limited, on the 2 February 2022.
There are no other significant subsequent events that need to be disclosed or reflected in the annual accounts.

Auditors

The auditors, Wellers, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.

Dr Philip Rumsby

Director

Date: 23 December 2022

Page 4

M-SOLV LTD

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF M-SOLV LTD

Opinion

We have audited the financial statements of M-Solv Ltd (the 'company') for the year ended 31 December 2021, which comprise the Statement of income and retained earnings, the Balance sheet, the Statement of cash flows and the related notes, including a summary of 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 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (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 2021 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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.

Material uncertainty related to going concern

We draw attention to note 2.3 to the financial statements which describes the company's dependence on financial support from it's parent company. The company's parent has confirmed it's financial support in writing until 23 December 2023 and the Director's do not currently foresee any reason why this agreement would not be extended after this date. Our opinion is not modified in respect of this matter.

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.

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

Page 5

M-SOLV LTD

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF M-SOLV LTD (CONTINUED)

Other information

The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.

Opinion on other matters prescribed by the Companies Act 2006

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

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:

∙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.

Responsibilities of directors

As explained more fully in the Directors' responsibilities statement set out on page 3, 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.

Page 6

M-SOLV LTD

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF M-SOLV LTD (CONTINUED)

Auditors' 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 Auditors' 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.

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

Discussions were held with, and enquiries made of, management and those charged with governance with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation, health and safety and employment law.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.

Page 7

M-SOLV LTD

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF M-SOLV LTD (CONTINUED)

Use of our report

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

Ms Christina Nawrocki, FCCA (Senior statutory auditor)

for and on behalf of

Wellers

Accountants

Statutory Auditors

8 King Edward Street

Oxford

OX1 4HL

23 December 2022

Page 8

M-SOLV LTD

STATEMENT OF INCOME AND RETAINED EARNINGS

FOR THE YEAR ENDED 31 DECEMBER 2021

	2021	2020
Note	£	£


Turnover	4	1,827,962	3,786,170
Cost of sales		(1,379,984)	(2,461,425)
Gross profit		447,978	1,324,745
Administrative expenses		(2,166,527)	(3,808,857)
Other operating income	5	474,483	1,152,002
Operating loss	6	(1,244,066)	(1,332,110)
Interest receivable and similar income		101	2,275
Interest payable and similar expenses	10	291,096	(245,732)
Loss before tax		(952,869)	(1,575,567)
Tax on loss	11	136,584	(15,820)
Loss after tax		(816,285)	(1,591,387)



Retained earnings at the beginning of the year	(9,523,487)	(7,932,100)
	(9,523,487)	(7,932,100)
Loss for the year	(816,285)	(1,591,387)
Retained earnings at the end of the year	(10,339,772)	(9,523,487)

The notes on pages 13 to 30 form part of these financial statements.

Page 9

M-SOLV LTD

REGISTERED NUMBER: 05292712

BALANCE SHEET

AS AT 31 DECEMBER 2021

		2021		2020
Note		£		£

Fixed assets
Tangible assets	12		686,991		1,311,821
Investments	13		499,287		2
			1,186,278		1,311,823
Current assets
Stocks	14	1,579,422		859,508
Debtors: amounts falling due within one year	15	631,232		1,586,740
Cash at bank and in hand	16	120,666		3,267,788
		2,331,320		5,714,036
Creditors: amounts falling due within one year	17	(13,729,478)		(16,464,346)
Net current liabilities			(11,398,158)		(10,750,310)
Total assets less current liabilities			(10,211,880)		(9,438,487)
Creditors: amounts falling due after more than one year	18		(42,892)		-

Net liabilities			(10,254,772)		(9,438,487)

Capital and reserves
Called up share capital	21	85,000	85,000
Profit and loss account		(10,339,772)	(9,523,487)
		(10,254,772)	(9,438,487)

The financial statements were approved and authorised for issue by the board and were signed on its behalf by:

Dr Philip Rumsby

Director

Date: 23 December 2022

The notes on pages 13 to 30 form part of these financial statements.

Page 10

M-SOLV LTD

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

			2021	2020
			£	£

Cash flows from operating activities
Loss for the financial year	(816,285)	(1,591,387)
Adjustments for:
Depreciation of tangible assets	265,714	205,540
Loss on disposal of tangible assets	2,468	636
Interest paid	(291,096)	181,356
Interest received	(101)	(2,275)
(Increase)/decrease in stocks	(719,914)	1,058,683
Decrease in debtors	988,075	2,109,317
(Increase)/decrease in amounts owed by groups	(289,570)	365,819
(Decrease) in creditors	(779,651)	(1,489,408)
(Decrease)/increase in amounts owed to groups	(114,394)	132,900
Net cash generated from operating activities	(1,754,754)	971,181

Cash flows from investing activities
Purchase of tangible fixed assets	(63,557)	(704,635)
Sale of tangible fixed assets	443,472	240
Purchase of fixed asset investments	(499,285)	-
Purchase of share in associates	-	(2)
Interest received	101	2,275
Net cash from investing activities	(119,269)	(702,122)
Cash flows from financing activities
New secured loans	50,000	-
Repayment of loans	-	(1,175,214)
New loans from group companies	1,607,000	2,000,000
Interest paid	291,096	(181,356)
Net cash used in financing activities	1,948,096	643,430
Net increase in cash and cash equivalents	74,073	912,489
Cash and cash equivalents at beginning of year	(38,701)	(951,190)
Cash and cash equivalents at the end of year	35,372	(38,701)

Cash and cash equivalents at the end of year comprise:
Cash at bank and in hand	120,666	3,267,788
Bank overdrafts	(85,294)	(3,306,489)

Page 11

M-SOLV LTD

STATEMENT OF CASH FLOWS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2021

		2021	2020
		£	£

	35,372	(38,701)

The notes on pages 13 to 30 form part of these financial statements.

Page 12

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

1.	General information

M-Solv Ltd is a private limited company registered in England and Wales.
The company's registered address is 6 Stanton Harcourt Road, Eynsham, Witney, England, OX29 4TP.
The company's registered number is 05292712.

2.Accounting policies

2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the company's accounting policies (see note 3).

The following principal accounting policies have been applied:

2.2

Exemption from preparing consolidated financial statements

The company is exempt from the requirement to prepare consolidated financial statements as it has considered it's only subsidiary company is held exclusively with a view to subsequent resale and meets the criteria of s405(3)(c) of Companies Act 2006 and in paragraph 9.3 of FRS 102.

2.3

Going concern

The financial statements have been prepared on a going concern basis on the assumption that the company will continue to trade for at least 12 months from the balance sheet date. The validity of this basis is dependent on the continued support from its parent and fellow group companies. The Directors have no reason to believe that this support will not continue or that group companies will seek early repayment of debts and the Directors have received written confirmation of this from it's parent company.

Page 13

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2.Accounting policies (continued)

2.4

Foreign currency translation

Functional and presentation currency

The company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of income and retained earnings within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

Page 14

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2.Accounting policies (continued)

2.5

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:

∙the company has transferred the significant risks and rewards of ownership to the buyer;

∙the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

∙the amount of revenue can be measured reliably;

∙it is probable that the company will receive the consideration due under the transaction; and

∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:

∙the amount of revenue can be measured reliably;

∙it is probable that the company will receive the consideration due under the contract;

∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and

∙the costs incurred and the costs to complete the contract can be measured reliably.

2.6

Operating leases: the company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

Page 15

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2.Accounting policies (continued)

2.7

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.

2.8

Government grants

Grants are accounted for under the accruals model as permitted by FRS 102.
Grants relating to revenue are initially recognised in deferred income and the related costs for which the grant is intended to compensate are recognised in work in progress. The grant is later recognised in income on a systematic basis in the same periods in which the company recognises the related costs.
Grants and related expenditure from UK institutions of a revenue nature are recognised in the Statement of income and retained earnings every 3 months, over the life of the project.
Grants and related expenditure from non-UK institutions of a revenue nature are recognised in the Statement of income and retained earnings upon completion of the grant project.
Grants relating to expenditure on tangible fixed assets are credited to the Statement of income and retained earnings at the same rate as the depreciation on the assets to which the grant relates.

2.9

Interest income

Interest income is recognised in profit or loss using the effective interest method.

2.10

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that 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.

2.11

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

Page 16

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2.Accounting policies (continued)

2.12

Pensions

Defined contribution pension plan

The company contributes into a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the company in independently administered funds.

2.13

Taxation

Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:

∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

2.14

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Page 17

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2.Accounting policies (continued)

2.14

Tangible fixed assets (continued)

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Short-term leasehold property	-	over the lease term
Plant and machinery	-	14.29% and 20%
Office equipment	-	14.29% and 33%

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

2.15

Associates and joint ventures

Associates and Joint Ventures are held at cost less impairment.

2.16

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

2.17

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

2.18

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the company's cash management.

Page 18

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2.Accounting policies (continued)

2.19

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

2.20

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.

2.21

Financial instruments

The company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

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.

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.

3.	Judgments in applying accounting policies and key sources of estimation uncertainty

The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonably foreseeable under the circumstances.
The preparation of statutory financial statements in conformity with FRS 102 requires the use of
accounting estimates and exercise of judgment by the directors while applying the Company's
accounting policies. These estimates are based on the management's best knowledge of the events which existed at the statement of financial position date; however, the actual results may differ from these estimates. Revisions to accounting estimates are recognised in each period in which the estimates are revised and in any future periods affected.

Page 19

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Goods	1,746,659	3,509,184
Services	81,302	276,986
	1,827,961	3,786,170

Analysis of turnover by country of destination:

					2021	2020
					£	£

United Kingdom	729,690	1,506,577
Rest of Europe	243,000	1,310,546
Rest of the world	855,272	969,047
	1,827,962	3,786,170

5.	Other operating income
		2021	2020
		£	£

Coronavirus job retention scheme income	68,629	158,514
Government grants receivable	405,854	775,488
Profit on disposal of fixed asset investments	-	218,000
	474,483	1,152,002

Research & development charged as an expense	1,008,298	1,796,057
Exchange differences	148,019	(906)
Other operating lease rentals	159,395	220,576

Page 20

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Fees payable to the company's auditors for the audit of the company's financial statements

13,400

13,300

8.	Employees
		2021	2020
		£	£

Wages and salaries	1,396,685	2,341,368
Social security costs	145,579	234,403
Cost of defined contribution scheme	117,816	194,775
	1,660,080	2,770,546

The average monthly number of employees, including the directors, during the year was as follows:

	2021	2020
	No.	No.

Employees	40	64
Directors	4	4

	44	68

9.	Directors' remuneration
		2021	2020
		£	£

Directors' emoluments	18,792	116,367
Company contributions to defined contribution pension schemes	-	11,515
	18,792	127,882

During the year retirement benefits were accruing to no directors (2020 - 1) in respect of defined contribution pension schemes.

Page 21

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

10.	Interest payable and similar expenses
		2021	2020
		£	£

Bank interest payable	-	64,376
Interest on loans from group undertakings	(291,096)	181,356
	(291,096)	245,732

Corporation tax
Adjustments in respect of previous periods	(136,584)	(135,068)
	(136,584)	(135,068)
Foreign tax
Foreign tax on income for the year	-	150,888
	-	150,888
Total current tax	(136,584)	15,820

	Deferred tax
	Total deferred tax	-	-


	Taxation on (loss)/profit on ordinary activities	(136,584)	15,820

Page 22

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

11.Taxation (continued)

Loss on ordinary activities before tax

(952,869)

(1,575,567)

Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2020 - 19%)	(181,045)	(299,358)
Effects of:
Capital allowances for year in excess of depreciation	76,497	(104,236)
Tax on current year R&D claim	21,319	32,388
Prior year R&D claim	(136,584)	(135,068)
Double taxation charges	-	122,219
Unrelieved tax losses carried forward	83,229	399,875
Total tax charge for the year	(136,584)	15,820

Factors that may affect future tax charges

The company has carried forward cumulative taxable losses of £8,872,127 (2020 - £8,434,079) which are available to offset against the next available trading profits.

Page 23

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

12.	Tangible fixed assets

	Short-term leasehold property	Plant and machinery	Office equipment	Total
	£	£	£	£
Cost or valuation
At 1 January 2021	453,270	2,411,349	432,191	3,296,810
Additions	5,739	53,188	4,630	63,557
Disposals	(431,870)	(919,308)	(265,061)	(1,616,239)
At 31 December 2021	27,139	1,545,229	171,760	1,744,128
Depreciation
At 1 January 2021	436,576	1,167,653	380,759	1,984,988
Charge for the year on owned assets	11,089	208,282	23,078	242,449
Disposals	(420,933)	(512,454)	(236,913)	(1,170,300)
At 31 December 2021	26,732	863,481	166,924	1,057,137
Net book value
At 31 December 2021	407	681,748	4,836	686,991
At 31 December 2020	16,694	1,243,695	51,432	1,311,821

The net book value of land and buildings may be further analysed as follows:
	2021	2020
	£	£

Short leasehold	408	16,694
	408	16,694

Page 24

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

13.	Fixed asset investments

	Investments in subsidiary companies	Investments in associates	Total
	£	£	£
Cost or valuation
At 1 January 2021	-	2	2
Additions	499,285	-	499,285
At 31 December 2021	499,285	2	499,287

14.	Stocks and Work in Progress
		2021	2020
		£	£

Raw materials and consumables	52,518	126,129
Work in progress (goods to be sold)	1,526,904	733,379
	1,579,422	859,508

The carrying value of stocks and Work in Progress are stated net of impairment losses totaling £286,534 (2020 - £250,598). Impairment loss reversals totaling £35,936 (2020 - £-38,648) were recognised in the profit and loss account.

Page 25

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

15.

Debtors

					2021	2020
					£	£


Trade debtors	317,315	1,117,260
Amounts owed by group undertakings	114,512	81,886
Other debtors	141,145	265,444
Prepayments and accrued income	58,260	122,150
	631,232	1,586,740

16.	Cash and cash equivalents
		2021	2020
		£	£

Cash at bank and in hand	120,666	3,267,788
Less: bank overdrafts	(85,294)	(3,306,489)
	35,372	(38,701)

Page 26

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

17.	Creditors: Amounts falling due within one year
		2021	2020
		£	£

Bank overdrafts	85,294	3,306,489
Bank loans	7,108	-
Trade creditors	1,578,485	1,800,736
Amounts owed to group undertakings	11,280,849	10,045,187
Other taxation and social security	393,690	524,415
Other creditors	2,082	1,200
Accruals and deferred income	381,970	786,319
	13,729,478	16,464,346

The following liabilities were secured:
	2021	2020
	£	£


Bank overdraft	85,294	3,306,489
	85,294	3,306,489

Details of security provided:

The amounts above are secured by way of financial guarantee from the company's parent,
CN Innovations Holdings Limited, in favour of HSBC Bank PLC.

18.	Creditors: Amounts falling due after more than one year
		2021	2020
		£	£

Bank loans	42,892	-
	42,892	-

Page 27

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Amounts falling due within one year
Bank loans	7,108	-
	7,108	-
Amounts falling due 1-2 years
Bank loans	9,687	-
	9,687	-
Amounts falling due 2-5 years
Bank loans	30,555	-
	30,555	-
Amounts falling due after more than 5 years
Bank loans	2,651	-
	2,651	-
	50,001	-

20.	Financial instruments
		2021	2020
		£	£

	Financial assets
	Financial assets measured at fair value through profit or loss	120,666	3,267,788

Financial assets measured at fair value through profit or loss comprise of cash at bank and in hand.

Page 28

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

21.	Share capital
		2021	2020
		£	£

Allotted, called up and fully paid

85,000 (2020 - 85,000) Ordinary shares of £1.00 each	85,000	85,000

22.	Pension commitments

The company contributes into a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £117,816 (2020 - £194,775). Contributions totaling £6,855 (2020 - £13,359) were payable to the fund at the balance sheet date and are included in creditors.

Not later than 1 year	147,275	182,150
Later than 1 year and not later than 5 years	383,850	383,850
	531,125	566,000

The company disposed of all operating leases included in the table above, on the 2 February 2022.

24.	Related party transactions
	The company has taken advantage of the exemption under FRS102 section 33 paragraph 1A and therefore has not reported transactions between fellow wholly-owned group companies.

25.	Post balance sheet events

Page 29

M-SOLV LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

26.	Controlling party

The parent company is M-Solv Holdings Limited, a company registered in the British Virgin Islands. The ultimate holding company is CN Innovations Holdings Limited, based in the Cayman Islands.
The company is dependent upon the continuing financial support of the parent company during the research and development phase of investigative work. The parent company has confirmed its intention to continue its financial support and this is monitored by the local directors on a regular basis.

As mentioned in note 2.2, the company has claimed exemption from the requirement to prepare consolidated financial statements as it has considered it's only subsidiary company is held exclusively with a view to subsequent resale and meets the criteria of s405(3)(c) of Companies Act 2006 and in paragraph 9.3 of FRS 102.

Page 30