Registered number: 01202866
DAY LEWIS PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
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COMPANY INFORMATION
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Miss R Patel (appointed 9 May 2022)
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KPMG LLP, Statutory Auditor
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National Westminster Bank Plc
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CONTENTS
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Independent Auditor's Report to the Members of Day Lewis Plc
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Consolidated Profit and Loss Account
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Consolidated Statement of Comprehensive Income
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Consolidated Balance Sheet
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Consolidated Analysis of Net Debt
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Notes to the Financial Statements
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GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2022
Day Lewis is the UK’s second largest independent pharmacy chain, with 266 pharmacies owned or managed (at 31 March 2022) across England.
The group was founded in 1975 and remains a family owned entity, now managed in the second generation by Kirit Patel Jnr (Jay), Rupa Patel and Jayanti Patel Jnr (Sam). Day Lewis has developed strong relationships across the market and has unique insight and influence on factors affecting the pharmacy sector.
The English pharmacy sector represents a secure, growing market, underpinned by an increasing need for dispensing of prescription drugs and a government that wants to see community pharmacies expand and improve the range of services they offer to relieve the burden on an overstretched NHS.
The Group's pharmacies are typically located in local communities, in or near health centres and GP surgeries, delivering increased footfall, developing strong relationships with the local healthcare community and building Day Lewis’s brand as a trusted healthcare provider.
Day Lewis prides itself on its service led approach; putting the patient at the heart of its decisions is a key differentiator for the business enabling it to build a large base of loyal, recurring customers, evidenced by repeat prescriptions making up almost 70% of the Group's dispensing activities.
The year to 31 March 2022 continued to be dominated by the impact of the COVID-19 pandemic. As GP surgeries reopened and prescribing levels returned to pre-pandemic levels, dispensing increased nationally- over the financial year to 31 March 2022 by 2.8% (versus 2.7% decrease in the year to March 2021). Day Lewis continued to outperform the market with the Group dispensing 23.6m prescriptions which is a 5.2% increase from the prior year (22.4m dispensed prescriptions in the year to 31 March 2021).
COVID-19 has continued to cause challenges in the business throughout the financial year. The priority has been to maintain a safe environment for colleagues and customers through constant review of the latest Government guidance. Enhanced Covid sick pay has been maintained and an additional Covid Heroes Bonus paid to frontline colleagues in May 2021..
Pharmacy performance remained strong during the financial year to 31 March 2022. As well as the increase in prescription items, retail (over the counter) sales continued the strong growth seen during the COVID pandemic, and as face-to-face consultations became possible again Day Lewis saw a significant year on year growth in additional patient services such as flu vaccinations, COVID-19 vaccinations and the New Medicine Service (NMS).
The impact of the COVID-19 pandemic and increased associated costs of doing business continued during the financial year to 31 March 2022. The main cost pressure was from increased staff costs to cover for shielding or COVID positive tested colleagues as well as overtime to cover additional opening required during Public Holidays as per Government guidance. As expected, the Pharmacy Funding loan which was issued in the early part of the COVID-19 pandemic was repaid during the financial year to 31 March 2022. The Government also recognised the additional costs borne by the business through the COVID-19 pandemic with an additional COVID Expense Claim payment.
The increased staff costs during the period and lower Business Rates relief have led to an increase in Administrative Expenses in the year to £93.2m (£87.5m in the year to 31 March 2021). This has led to a reduction in Operating Profit to £23.1m in the year to 31 March 2022 (£24.6m in the year to 31 March 2021).
From October 2021, the NHS BSA ended the Pharmacy Earlier Payment Scheme (PEPS). This scheme had been funded by Greensill Capital until they filed for insolvency in March 2021 and was then maintained by the NHS BSA until October 2021. The NHS BSA managed the withdrawal of PEPs with a phased removal (11 months from October 2021) and an agreement for all future payments to be paid earlier than had previously been the case outside of PEPS. Day Lewis are comfortable that the negative cash flow impact will be managed
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
within the headroom retained in the Group’s banking facility.
During the financial year Day Lewis continued its policy of limiting bank debt by pausing acquisitions and focusing on enhancing the existing estate. Actions included relocating branches to superior locations, focusing on added value services, merging multiple pharmacies into larger single sites and disposing of pharmacies with exceptionally low footfall.
The Group maximises margin by focussing heavily on its pharmaceutical distribution operations. Day Lewis holds all relevant MHRA Wholesaler Dealer Authorisations in order to distribute both ethical and over the counter medicines. The Group purchases from multiple pharmaceutical manufacturers and self distributes to its pharmacies in order to maximise margin wherever possible. In addition, Day Lewis distributes medicines in further external channels including the supply of generics to associated pharmacy retail groups and the global supply of medicines to offshore energy businesses, maritime, cruise and ambulance services.
Due to its position in the marketplace, long trading history and strength of relationships Day Lewis has unique access to a wide range of drugs across Europe that it purchases for redistribution. The Day Lewis procurement and distribution teams are highly experienced and knowledgeable providing the Group with an in depth understanding of market dynamics.
The East Midlands Pharma business performed strongly as England came out of the lockdowns seen in the prior year. New sales opportunities and efficiencies within the Group continue to develop with further growth expected in the coming years..
Statement on business relationships
The Day Lewis Group aims to operate fairly, transparently and with integrity in the marketplace. Day Lewis builds strong external networking with representation on key national bodies including the Pharmaceutical Services Negotiating Committee, Centre for Pharmacy Post Graduate Education and the Association of Independent Multiple Pharmacies.
Day Lewis engages with its customers, suppliers and other key stakeholders through multiple channels including face to face, telephone, conferences and social media. All members of the Senior Management Team are expected to maintain relationships with their key partners. This should provide a broad understanding of the wider market and ensure that their views are considered in decision making.
Statement on Employee Engagement
Maintaining a caring family culture is one of our core values. Day Lewis runs a monthly People Board whose goal is to ensure:
∙Our colleagues feel safe and secure whilst working at Day Lewis.
∙Our colleagues add value to society and understand and are committed to how they do that at Day Lewis.
∙We select, train and develop the right people in the right role in order to align our people resources to fit our strategic intentions.
∙Colleagues are given the opportunity to reach their full potential
∙Colleagues feel happy and valued being part of the Day Lewis family.
The above goals are measured in an annual staff engagement survey.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
The Day Lewis Group’s long-term objectives are:
Driving growth
∙To be the pharmacy destination of choice locally for prescriptions and services
∙To maintain a high-quality estate of community pharmacies
∙To grow the business in international markets
∙To diversify investment into other pharmacy related sectors
Enhancing margins
∙To improve purchasing mix of medicines between generic and branded products
∙To maintain efficient stock control and overall cost control
∙To increase professional services income
Principal risks and uncertainties
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Principal risks and uncertainties and risk management objectives and policies
Price risk
The company, through its investments, is exposed to the inherent risks of economic and financial market developments, including recession, inflation, availability of affordable credit and currency fluctuations that could lower revenues. The current system of correcting generic reimbursement prices through the mechanism of "Category M" has continued through the current financial year. Category M was introduced with the new pharmacy contract in 2005 and allows the retail pharmacy industry to retain an amount of £800m of generic procurement profit annually. The system is therefore used retrospectively by the Department of Health to claw back surplus procurement profits or reimburse any shortfall. Through a continual business review process and monitoring of the business environment, the Directors of the company and the wider Group seek to mitigate these potential risks.
Liquidity risk
In September 2020, the company entered into a new long-term financing agreement with its banks. A Revolving Credit Facility (RCF) of £125m being agreed until at least 2023, with options to extend to 2025 (being agreed until September 2024). Despite the withdrawal of the Pharmacy Early Payment Scheme the Directors believe the company has sufficient current and future cash reserves and facilities available to meet its liabilities and financing obligations for at least twelve months from the signing of these financial statements. The confidence in the Group’s funding position was indicated with a reduction of the Revolving Credit Facility to £110m in September 2021.
There is significant headroom in the banking covenants at 31 March 2022. At the year end £75m (2021: £75m) of the £110m facility was drawn down and additionally there were cash balances in the business of £4.6m (2021: £12.8m).
The Directors' assessment of the Group's and the company's ability to adopt the going concern basis of accounting is set out in note 2.
Interest rate risk
The interest rate risk is significantly mitigated by an interest rate swap arrangement that was entered into in September 2020. Under this agreement interest is fixed at a rate of 0.088% for £50m of debt (reducing to £40m in March 2023). The swap instrument is in place until September 2025. The balance of debt (£25m at 31 March
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
2022) is exposed to movements in SONIA.
Macroeconomic, political risk
The Group could be adversely affected by the impact of the current macroeconomic and political environment on key suppliers and customer groups.
The Group views the 5-year pharmacy funding deal agreed in 2019 to have had a positive impact for the industry with security of funding for community pharmacies in the coming years. The COVID-19 pandemic has seen fluctuations in raw drug prices which has required pharmacy funding to keep pace. With additional revenue received by the pharmacy industry during the COVID-19 pandemic the expected clawback was seen in the financial year to 31 March 2022.
The long-term impacts of the COVID-19 pandemic remain to be seen. GPs interactions with patients have changed with less face-to-face consultations and this will especially impact Day Lewis pharmacies based in GP surgeries. Prescribing dynamics and customer circumstances have also changed during the pandemic and Day Lewis expect these changes to continue to drive customer requirements in the future.
Cash flow risk
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group uses interest rate swap contracts to hedge interest rate exposures. Foreign currency rates risk is mitigated by buying currency at spot and one month forward rates.
Interest bearing assets and liabilities are held at fixed rate to ensure certainty of cash flows.
Credit risk
The Group's principal financial assets are bank balances and cash, trade and other receivables. The credit risk on trade and other receivables is limited as the majority of the Group's retail exposure is with the Department of Health. Exposure to credit risk on wholesale customers is mitigated through credit insurance taken out on the wholesale debtors book. The amounts presented in the balance sheet are net of allowances for doubtful receivables. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
Financial key performance indicators
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Day Lewis continued to outperform the market with the Group dispensing 23.6m prescriptions which is a 5.2% increase from the prior year (22.4m dispensed prescriptions in the year to 31 March 2021).
Turnover in the year increased by 2.1% to £435.1m (2021: £426.2m).
Gross profit increased by £4.7m to £115.9m (2021: £111.2m). The gross margin percentage increased by 0.5% to 26.6% (2021: 26.1%) driven by increased professional services performed in Pharmacies.
The total administrative expenses increased by £5.7m to £93.2m (2021: £87.5m). A key driver for this has been the increase in the employee costs associated with operating Pharmacies during the COVID pandemic and lower Business Rates relief during the year.
Overall these actions have enabled the Group to achieve an operating profit of £23.1m (2021: £24.6m)
Net debt has increased by £7m to £73m (2021: £66m) as a result of the repayment of the Pharmacy Funding loan and the withdrawal of the Pharmacy Early Payment Scheme.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
Directors' statement of compliance with duty to promote the success of the Group
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Section 172 of the Companies Act 2006 requires the directors of the Group to act in the way that they consider, in good faith, would most likely promote the success of the Group for the benefit of its owners and stakeholders.
In doing so section 172 requires a director to have regard (amongst other matters) to:
a)The likely consequences of any decisions in the long-term.
b)The interests of the company’s employees.
c)The need to foster the company’s business relationships with suppliers, customers, and others.
d)The impact of the company’s operations on the community and the environment.
e)The desirability of the company maintaining a reputation for high standards of business conduct.
f)The need to act fairly as between members of the company.
Since the sudden passing of Kirit Patel MBE in 2016, the business is led by Jay, Rupa, & Sam as joint Executive Directors. JC Patel is still involved in an advisory role. Day Lewis remains a family owned entity with no plans to change this structure in the short or longer terms.
As any other large organisation, the Executive Directors of Day Lewis delegate authority for the day to day management of the Group to the Senior Management Team and then engage management in setting, approving and overseeing execution of the business strategy and related policies.
The Executive Directors are also supported by a group of senior non-executive advisors with expertise in Finance, Banking, Commercial, HR, IT and Legal giving a wide range of insight and experience. Day Lewis employs one non-executive director.
The Executive Directors and the Senior Management Team provide supervision and guidance to the wider teams, making decisions concerning operational planning, evaluating performance, workforce planning, remuneration, and assessing pharmacy and business acquisitions and international expansion plans.
Day Lewis is regularly recognised as a good place to work and during the year our pharmacy colleagues were recognised for many national awards. In recent years the Executive Directors have been presented with an Entrepreneurship Award at the European Pharmacists Forum, the Day Lewis Group was ranked 49th on the Sunday Times and Grant Thornton Top Track 250 List and individuals have been recognised within the industry for Team Innovation, Healthy Living Advice and a Public Health Pharmacist Award.
Relationships with universities have also developed further with the appointment of Teacher Practitioners at Bath, Reading, UCL, UEA and Sussex. Day Lewis clearly recognise the importance of education for the next generation of pharmacists and healthcare leaders.
As part of Day Lewis' commitment to the community, pharmacies are encouraged to support local charities and sponsor local events and causes. Every year to mark the first day of Kirit & JC buying their first pharmacy, the support office, warehouses, and pharmacies across the country take part in the annual charity fun day, in which all teams are invited to participate. All teams participate in raising money for a local registered charity of their choice, to ensure that the company as a whole is able to support as many charities as possible. Pharmacy teams and the support office raise money through fund-raising activities such as cake sales, raffles and recently throwing pies at directors. Over the last 5 years Day Lewis has donated over £500,000 to various charities.
The KCJC Foundation was set up by the Patel family in memory of the late Kirit Patel MBE. The foundation matches funds raised across the business, pound for pound.
In 2019 Day Lewis became founder patrons of ‘Legacy’, an OnSide Youth Zone providing a 21st century youth club in Croydon. Legacy will provide a safe environment where young people can come and enjoy themselves and will enable young people to raise their aspirations and confidence to create a happier and healthier
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
generation. During the current financial year many events have taken place in order to support this charity such as a Golf Day and sponsored abseil down the Legacy building.
This report was approved by the board and signed on its behalf.
Mr J C Patel Jnr (Sam)
Director
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2022
The Directors present their report and the financial statements for the year ended 31 March 2022.
Directors' responsibilities statement
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The Directors are responsible for preparing theStrategic 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 they have elected to prepare the group and parent compay financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 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 group and parent company and of the profit or loss of the 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;
∙prepare the financial statements on the going concern basis.
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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The principal activity of the company and the group in the year under review continued to be that of retail pharmacy and distribution of pharmaceutical supplies.
The profit for the year, after taxation and minority interests, amounted to £12m (2021 - £18m).
The Directors recommend a final dividend of £nil to be paid for the year (2021: £nil).
The Directors who served during the year were:
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
Neither the Company nor any of its subsidiaries made any political donations or incurred any political expenditure during the year.
Engagement with employees
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The group has undertaken several actions to keep its employees informed of matters affecting them as employees and the financial and economic factors affecting the performance of the group. This is achieved through consultations with the local branch managers and other employee representatives.
Applications for employment by disabled persons are given full and fair consideration for all vacancies in accordance with their particular aptitudes and abilities. In the event of employees becoming disabled, every effort is made to retrain them, in order that their employment with the group may continue. It is the policy of the company that training, career development and promotion opportunities should be available to all employees.
Greenhouse gas emissions, energy consumption and energy efficiency action
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The Group's greenhouse gas emissions and energy consumption are as follows:
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Emissions resulting from activities for which the Group is responsible involving the combustion of gas and consumption of fuel for the purposes of transport (in tonnes of CO2 equivalent)
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Emissions resulting from the purchase of the electricity by the Group for its own use, including the purposes of transport (in tonnes of CO2 equivalent)
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Energy consumed from activities for which the Group is responsible involving the combustion of gas, and the consumption of fuel for the purposes of transport, and the annual quantity of energy consumed resulting from the purchase of electricity by the Group for its own use, including for the purposes of transport, in kWh
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Business metric used
The business metric used for this document is number of sites. The number of sites in 2021/22 was 203. The number of sites in 2020/21 was 188.
Statement
Day Lewis have a long-standing commitment to reducing carbon emissions from our operations and have been improving energy efficiency and minimising fuel use.
The usage of motor vehicles has been reduced by encouraging staff to travel by train and other public transportmodes where possible. In addition, we continue to have a rolling program to install LED lights throughout the retail pharmacies. This has coincided with a switch off memo to all staff both in the field and at head office to switch off lights and computers/office equipment when not in use and at the end of the day. Photocopiers and printers are using the ‘energy saver’ or ‘standby’ mode when not in use.
Due to the pandemic the business has encouraged staff to work from home where possible which has reduced travel throughout the business. Furthermore, there has been a conscious effort to ensure all heating/cooling systems were set correctly (timeclocks and temperatures) and to ensure no systems were left on overnight or when not required. Day Lewis have also put in place measures for all doors and windows were closed when
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
theheating/cooling systems were on. All standalone portable heaters are turned off when the ceiling units were cooling.
Intensity ratio
The intensity ratio for Day Lewis is the total carbon used (using Scopes 1 and 2 data only), 1,470,394 kg CO2e divided by the business metric 203 sites, giving an Intensity Ratio of 7,243 Kg CO2e / site (2021: 8,055 Kg CO2e). Transport carbon usage has increased by 10% but gas and electricity have reduced year on year. The major reduction is gas which has reduced by 57%. The number of sites in the group has increased from 188 in 2021 to 203 in 2022.
An indication of likely future developments in the business, statement of business relationship, employees engagement and particulars of significant events which have occurred since the end of the financial year have been included in the Strategic Report.
Statement of corporate governance arrangements
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For the year to 31 March 2022, the Day Lewis Group has not used any formal Corporate Governance guidelines, although on review and considering the size, scope and future plans of the Group the Directors have plans in place to apply the guidelines from the Wates Corporate Governance Principles for Large Private Companies (“the Wates Principles”) as far as is considered appropriate.
The Group remains committed to ensuring effective governance is in place to deliver its core values as this is the foundation on which it manages and controls its business and provides the platform for sustainable growth and profitability.
The Wates Principles provide a framework for the Group to demonstrate how the Directors make decisions for the long-term success of the business, and also how the Group complies with the requirements of Section 172 of the Companies Act.
The Group have in place many of the controls, processes and procedures that would typically be found in larger organisations. In this regard, while not in a position to assert full compliance in every aspect, the Directors have assessed performance against the Wates Principles:
Principle 1 – Purpose & Leadership
The Group has a family led Executive Leadership team. These siblings have separate skills and experiences outside of the Group, are all highly educated (degree and MBAs) and manage and lead in areas relating to their specific skills.
The Core Purpose of the Group is ‘to help people in the community stay healthy and feel better’ which is achieved through the provision of healthcare through retail, distribution, and manufacturing businesses.
This is driven by the core values:
∙To keep our caring family culture.
∙To look after our customers.
∙To be disciplined and professional.
∙To be different through innovation.
∙To reward, recognise and empower.
∙To have fun.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
Principle 2 – Board Composition
The three Executive Directors are supported by two non-Executive Directors, Carey Edwards who is Managing Director of LMQ, a strategic planning and training consultancy and Heena Patel who has been an employee of the Group from 2011 and is a member of the Institute of Chartered Accountants.
The Day Lewis Group runs monthly board meetings on all separate divisions of the business, and also runs four sub-board committees specifically looking at People, Finance, IT and Risk Management Oversight. These sub-committees bring together the Board, Senior Management, and external expertise.
Principle 3 – Director Responsibilities
The Directors are fully aware of their responsibilities to the Group, the shareholders and wider stakeholders. Various presentations have been delivered to the Directors outlining their legal, fiscal and other obligations. Updates are provided as the environments in which the company operates evolves.
Principle 4 – Opportunity & Risk
The Group looks to optimise commercial opportunities with a fast moving and agile Senior Management team. All commercial risk is managed through the divisional board meetings. Health and Safety, data protection and regulatory compliance is overseen by the Board of Directors via the Risk Management Oversight Committee.
Principle 5 – Remuneration
Remuneration of all Directors is aligned to market rates, irrespective of whether they hold a financial interest in the Group.
Principle 6 – Stakeholder Relationships & Engagement
Covered in Strategic Report under section, Directors' statement of compliance with their duty to promote the success of the Group
Disclosure of information to auditor
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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 and the Group's auditor is 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 and the Group's auditor is aware of that information.
The auditor, KPMG LLP, Statutory Auditor, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
This report was approved by the board and signed on its behalf.
Mr J C Patel Jnr (Sam)
Director
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DAY LEWIS PLC
Opinion
We have audited the financial statements of Day Lewis Plc (“the company”) for the year ended 31 March 2022 which comprise the Consolidated Profit and Loss Account, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows, and related notes, including the accounting policies in note 2.
In our opinion the financial statements:
∙give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 March 2022 and of the Group’s profit for the year then ended;
∙have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; 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 are described below. We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to other entities of public interest. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to its business model and analysed how those risks might affect the Group's and Company's financial resources or ability to continue operations over the going concern period. The risks that we considered most likely to adversely affect the Group's and Company's available financial resources and/or metrics relevant to debt covenants over this period were:
∙Plausible reduction in growth of revenue
∙Ability to repay Government loans/NHS clawbacks
∙Inflationary increases including wages and salaries
∙Inability to comply with their covenants.
We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period by comparing severe, but plausible, downside scenarios that could arise from these risks individually and collectively against the level of available financial resources and covenants indicated by the Group's financial forecasts.
We considered whether the going concern disclosure in note 2.3 to the financial statements gives a full and accurate description of the Directors' assessment of going concern.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DAY LEWIS PLC
Our conclusions based on this work:
∙we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;
∙we have not identified, and concur with the directors' assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the group and company's ability to continue as a going concern for the going concern period;
∙we found the going concern disclosure in note 2.3 to be acceptable.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Company will continue in operation.
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
∙Enquiring of directors and management as to the Group’s high-level policies and procedures to prevent and detect fraud, including the Group’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud.
∙Reading Board minutes.
∙Considering remuneration incentive schemes and performance targets for management.
∙Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk that Group management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition due to the simple nature and low value of revenue transactions.
We did not identify any additional fraud risks.
In determining the audit procedures we took into account the results of our evaluation and testing of the operating effectiveness of some of the Group-wide fraud risk management controls.
We performed procedures including:
∙Identifying journal entries to test for all full scope components based on risk criteria and comparing the identified entries to supporting documentation. These included unexpected pairings with cash accounts or those that affect classification of earnings in the profit and loss account over and above EBITDA.
∙Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards), and discussed with the directors and other
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DAY LEWIS PLC
management the policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation, and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or the loss of the Group’s pharmacy licenses to operate. We identified the following areas as those most likely to have such an effect: Medicines and Healthcare Products Regulatory Agency (MHRA) legislation, PCI legislation, General Pharmaceutical Council (GPhC) legislation, health and safety, data protection laws, anti-bribery, employment law, and certain aspects of company legislation recognising the financial and regulated nature of the Group’s activities. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
Strategic report and directors’ report
The directors are responsible for the strategic report and the directors’ report. Our opinion on the financial statements does not cover those reports and we do not express an audit opinion thereon.
Our responsibility is to read the strategic report and the directors’ report and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:
∙we have not identified material misstatements in the strategic report and the directors’ report;
∙in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
∙in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
∙adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the parent Company financial statements are not in agreement with the accounting records and returns; or
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DAY LEWIS PLC
∙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.
We have nothing to report in these respects.
Directors' responsibilities
As explained more fully in their statement set out on page 7, the directors are responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and parent 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 they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditors' responsibilities
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 our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at
The purpose of our audit work and to whom we owe our responsibilities
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 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 members, as a body, for our audit work, for this report, or for the opinions we have formed.
Timothy Rush (Senior statutory auditor)
for and on behalf of
KPMG LLP, Statutory Auditor
Chartered Accountants
1 Forest Gate
Brighton Road
Crawley
RH11 9PT
12 September 2022
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CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2022
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Reversal of impairment of pharmacy licences
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Income from other participating interests
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Profit (loss) on disposal of subsidiary, associates and unincorporated businesses
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit for the financial year
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Profit for the year attributable to:
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Non-controlling interests
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There were no recognised gains and losses for 2022 or 2021 other than those included in the consolidated profit and loss account.
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The notes on pages 27 to 68 form part of these financial statements.
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2022
Profit for the financial year
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Other comprehensive income
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Total comprehensive income for the year
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Profit for the year attributable to:
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Owners of the parent Company
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The notes on pages 27 to 68 form part of these financial statements.
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DAY LEWIS PLC
REGISTERED NUMBER:01202866
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CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Capital redemption reserve
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Equity attributable to owners of the parent Company
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Non-controlling interests
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DAY LEWIS PLC
REGISTERED NUMBER:01202866
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CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 27 to 68 form part of these financial statements.
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DAY LEWIS PLC
REGISTERED NUMBER:01202866
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COMPANY BALANCE SHEET
AS AT 31 MARCH 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 27 to 68 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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Capital contribution reserve
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Equity attributable to owners of parent Company
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Non-controlling interests
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Comprehensive income for the year
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Other comprehensive income for the year
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Total comprehensive income for the year
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Dividends: Non Equity capital
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Total transactions with owners
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The notes on pages 27 to 68 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
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Capital contribution reserve
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Equity attributable to owners of parent Company
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Non-controlling interests
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Comprehensive income for the year
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Other comprehensive income for the year
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Total comprehensive income for the year
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Dividends: Non Equity capital
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Total transactions with owners
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The notes on pages 27 to 68 form part of these financial statements.
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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Comprehensive income for the year
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Total comprehensive income for the year
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Total transactions with owners
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
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Comprehensive income for the year
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Total comprehensive income for the year
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Total transactions with owners
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The notes on pages 27 to 68 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
Cash flows from operating activities
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Profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Write back of impairments of fixed assets
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(Profit)/loss on disposal of tangible assets
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(Profit)/loss on disposal of subsidiary, associates and unincorporated businesses
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Amortisation of intangible assets held in associates
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(Increase)/decrease in debtors
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Government grant (repaid)/received
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Share of operating profit in associates
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Sale of tangible fixed assets
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Purchase of unlisted and other investments
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Purchase of subsidiary undertakings and unincorporated businesses
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Sale of unincorporated businesses
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Associates income received
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Net cash from investing activities
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CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
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Cash flows from financing activities
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Net movement on the revolving credit facility
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Repayment of/new finance leases
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Non controlling interest dividends paid
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Net cash used in financing activities
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Net (decrease)/increase in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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The notes on pages 27 to 68 form part of these financial statements.
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CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2022
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Acquisition and disposal of subsidiaries
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The notes on pages 27 to 68 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Day Lewis Plc (the “Company”) is a public limited company by shares and incorporated, domiciled and registered in England in the United Kingdom. The address of the registered office is given on company information page. The nature of the company's operations and its principal activities are set out in the strategic report on pages 1 to 6.
2.Accounting policies
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Basis of preparation of financial statements
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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 parent company is included in the consolidated financial statements and is considered to be a qualifying entity under FRS 102 paragraphs 1.8 to 1.12. The following exemptions available under FRS 102 in respect of certain disclosures for the parent company financial statements have been applied:
∙The reconciliation of the number of shares outstanding from the beginning to the end of the period has not been included a third time;
∙No separate parent company Cash Flow Statement with related notes is included; and
∙Key Management Personnel compensation has not been included a sixth time.
∙Certain disclosures required by FRS 102.11 Basic Financial Instruments and FRS 102.12; and,
∙Other Financial Instrument Issues in respect of financial instruments not falling within the fair value accounting rules of Paragraph 36(4) of Schedule 1.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Profit and Loss Account from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 April 2014.
Therefore, the Group continues to recognise a merger reserve which arose on a past business combination that was accounted for as a merger in accordance with UK GAAP as applied at that time.
The company is entitled to merger relief by Section 612 of the Companies Act 2006 in respect of the consideration received in excess of the nominal value of the equity shares issued in connection with the acquisition of the following subsidiary: Cradlecrest Limited
Goodwill arising on consolidation, representing the excess of fair value of the consideration given over the fair values of the identifiable net assets acquired, is capitalised and is amortised on a straight line basis over its estimated useful economic life of 20 years.
In assessing the validity of the going concern basis, and taking account of reasonably plausible downsides covering a period of at least 12 months from the date of approval of theses financial statements, the Directors have considered the cash flow forecasts they have prepared for the period until 31 March 2024. In doing so they have considered the level of bank facilities available to the Company and the Group, and its compliance with bank covenant tests both during the period and for the period ahead. In September 2020, the company refinanced its finance facility with 4 banks and now have in place a RCF facility of £125m (reduced to £110m) until at least September 2023 (being agreed until September 2024).
Having considered the Company’s financial forecasts and investment and financing commitments (including the downside scenario, increase in cost and interest rates), the Directors believe the company has sufficient current and future cash reserves and facilities available for it to meet its liabilities including financing obligations whilst in compliance with its banking covenants for at least twelve months from the signing of the financial statements.
Having considered the above, the Directors conclude that it is appropriate to adopt the going concern basis of accounting because there are no material uncertainties related to events or conditions that may cast significant doubt about the ability of the company to continue as a going concern. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
Turnover comprises revenue recognised by the Company in respect of goods and services supplied to Retail and Distribution market, NHS, private prescriptions and counter services during the year, exclusive of Value Added Tax and trade discounts.
Retail Pharmacy Licences
The difference between amounts paid on the acquisition of a pharmacy business and the fair value of its identifiable assets and liabilities is capitalised as an intangible asset as the retail pharmacy licence. Retail pharmacy licences are grouped into cash generating units as appropriate and are subject to an annual impairment review by the directors in accordance with section 27 of FRS102.
Any deficiency arising from the impairment review is written off to the profit and loss account in the year in which it arises. Any increases in value are not recognised in the financial statements.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Consolidated Profit and Loss Account over its useful economic life.
Other intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any 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.
The estimated useful lives range as follows:
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years on straight-line basis
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years on straight-line basis
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years on straight-line basis
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
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Impairment of fixed assets and goodwill
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Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
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.
Depreciation is charged to allocate the cost of assets less their residual value over their estimated useful lives.
Depreciation is provided on the following basis:
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25% per annum reducing balance
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Fixtures, fittings and equipment
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15% per annum reducing balance
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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 the profit and loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated Profit and Loss Account for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
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Associates and joint ventures
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An entity is treated as a joint venture where the Group is a party to a contractual agreement with one or more parties from outside the Group to undertake an economic activity that is subject to joint control.
An entity is treated as an associated undertaking where the Group exercises significant influence in that it has the power to participate in the operating and financial policy decisions.
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit and loss, other comprehensive income and equity of the associate. The Consolidated Profit and Loss Account includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated Balance Sheet, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition.
Any premium on acquisition is dealt with in accordance with the goodwill policy.
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Operating leases: the Group as lessee
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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.
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Leased assets: the Group as lessee
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Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
Grants are accounted under the accruals model as permitted by FRS 102. 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 Consolidated Profit and Loss Account in the same period as the related expenditure.
Interest income is recognised in the profit and loss using the effective interest method.
Finance costs are charged to the profit and 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.
All borrowing costs are recognised in the profit and loss in the year in which they are incurred.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group 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 Group in independently administered funds.
Investment property is carried at fair value determined annually by external valuers and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in profit or loss.
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 the profit and loss.
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
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.
|
|
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 Consolidated 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 Group's cash management.
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.
|
|
Provisions for liabilities
|
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
Where the unavoidable costs of a lease exceed the economic benefit expected to be received from it, a provision is made for the present value of the obligations under the lease.
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
|
|
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 the profit and 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 Consolidated Profit and Loss Account within 'finance income or costs'. All other foreign exchange gains and losses are presented in the profit and loss within 'other operating income'.
The Group 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.
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 Consolidated Profit and Loss Account.
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.
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
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|
Financial instruments (continued)
|
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 Group 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 the profit and loss in finance costs or income as appropriate. The company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.
|
|
Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. 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 and the Group operate and generate 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;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
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.
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
Judgements in applying accounting policies and key sources of estimation uncertainty
|
In the application of the company's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts 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.
Critical judgements in applying the company's accounting policies
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors have made in the process of applying the company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Key source of estimation uncertainty - impairment of retail pharmacy licences
Determining whether the values of retail pharmacy licenses are impaired requires an estimation of the value in use of the cash-generating units to which retail pharmacy licenses have been allocated. The impairment value is based on applicable discount rate and turnaround plan for cash-generating units that may have been impaired. The carrying amount of retail pharmacy license at the balance sheet date was £169m (2021: £168m) after a gain of £15k (2021: £446k gain) was recognised during the year.
Key source of estimation uncertainty - useful life of retail pharmacy licences
The directors believe that the right for dispensing UK NHS prescriptions, being the pharmacy licence which is attached to a particular pharmacy, have a continuing value. Such rights, conferred by the Department of Health as contracts to dispense prescriptions, are not generally granted to new pharmacies in the same locality. Consequently the directors consider that the value of retail pharmacy licences have a long life of 100 years and therefore are amortised over that period.
The whole of the turnover is attributable to the sale of pharmaceutical products.
Analysis of turnover by country of destination:
|
Turnover is not disclosed by activity due to commercial reasons.
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
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Insurance claims receivable
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The operating profit is stated after charging:
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|
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Depreciation of tangible fixed assets
|
|
|
|
Amortisation of intangible assets, including goodwill
|
|
|
|
Impairment of intangible assets
|
|
|
|
(Profit)/loss on disposal of fixed assets
|
|
|
|
Other operating lease rentals
|
|
|
|
Defined contribution pension cost
|
|
|
|
Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
|
Staff costs, including Directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the Directors, during the year was as follows:
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Management and pharmacists
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Company contributions to defined contribution pension schemes
|
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During the year retirement benefits were accruing to 3 Directors (2021 - 3) in respect of defined contribution pension schemes.
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The highest paid Director received remuneration of £220k (2021 - £198k).
|
|
The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid Director amounted to £NIL (2021 - £NIL).
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
Net changes in fair value of interest rate swap
|
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|
|
Share of associates' interest receivable
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Other interest receivable
|
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Interest payable and similar expenses
|
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Hire purchase interest payable
|
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Current tax on profits for the year
|
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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|
|
|
|
Taxation on profit on ordinary activities
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
12.Taxation (continued)
|
Factors affecting tax charge for the year
|
|
The tax assessed for the year is higher than (2021 - higher than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:
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|
|
|
|
Profit on ordinary activities before tax
|
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|
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
|
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|
|
|
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|
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Non-tax deductible amortisation of goodwill and impairment
|
|
|
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
|
|
|
|
Adjustments to tax charge in respect of prior periods
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Deferred tax not recognised previously
|
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|
|
Deferred tax prior year adjustment
|
|
|
|
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|
|
|
Total tax charge for the year
|
|
|
|
Factors that may affect future tax charges
|
A reduction in the UK corporation tax rate from 19% to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. The March 2020 Budget announced that a rate of 19% would continue to apply with effect from 1 April 2020, and this change was substantively enacted on 17 March 2020. An increase in the UK corporation rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021.
The UK deferred tax asset/(liability) as at 31 March 2022 was calculated at 25% (2021: 19%).
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
|
Pharma Product Development
|
Brands, licences and trademarks
|
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On acquisition of subsidiaries
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Charge for the year on owned assets
|
|
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|
|
Impairment losses written back
|
|
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|
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|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
13.Intangible assets (continued)
|
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On acquisition of subsidiaries
|
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|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
Impairment losses written back
|
|
|
|
|
|
|
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|
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
13.Intangible assets (continued)
|
|
|
Pharma Product Development
|
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Impairment losses written back
|
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|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
|
Short-term leasehold property
|
|
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|
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|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
Acquisition of subsidiary
|
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|
|
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|
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|
|
|
|
|
Disposal of unincorporated business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
Charge for the year on owned assets
|
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|
|
|
|
|
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|
|
Disposal of unincorporated business
|
|
|
|
|
|
|
|
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|
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|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
14.Tangible fixed assets (continued)
|
|
|
Assets under construction
|
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|
|
|
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|
|
|
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|
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|
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|
|
Acquisition of subsidiary
|
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|
Disposal of unincorporated business
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
Disposal of unincorporated business
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
|
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|
|
|
|
|
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|
Furniture, fittings and equipment
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
14.Tangible fixed assets (continued)
|
|
|
|
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|
|
|
|
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|
|
Acquisition of subsidiary
|
|
|
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|
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|
Disposal of unincorporated business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
Disposal of unincorporated business
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
14.Tangible fixed assets (continued)
|
|
Fixtures, fittings and equipment
|
Assets under construction
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
|
Acquisition of subsidiary
|
|
|
|
|
|
|
|
|
|
Disposal of unincorporated business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
Disposal of unincorporated business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture, fittings and equipment
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
Investments in associates
|
|
|
Retail pharmacy licences in associates (net of deferred tax)
|
|
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|
The Group acquired 50% share in an associate Finchampstead Healthcare LLP on 01 May 2021 which was previously 50% indirectly owned by the Group. On completion the assets and trade were hived up into Day Lewis plc. Please see, business combination note 28.
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
Investments in subsidiary companies
|
|
|
|
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|
The company acquired a 100% share in Finchampstead Healthcare LLP on the 01/05/2021, 100% in The Essential Pharmacy Limited on 01/07/2021 and 100% in Axbridge Square Company Limited on 01/02/2022. Please see, business combination note 28.
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
Direct subsidiary undertakings
|
|
The following were direct subsidiary undertakings of the Company:
|
|
|
|
|
|
|
Day Lewis Chemists Limited
|
|
|
|
|
Day Lewis Medical Limited
|
Distribution of Pharmaceuticals
|
|
|
|
|
Distribution of Pharmaceuticals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holding investment in pharmacy companies
|
|
|
|
Healthcare Drugstores Limited
|
Holding investment in pharmacy companies
|
|
|
|
East Midlands Pharma Limited
|
Pharmaceutical products and medical services
|
|
|
|
Narrowcliff Medical Services Limited
|
Holding investment in pharmacy companies
|
|
|
|
Stargazer Drug Stores Limited
|
Holding investment in pharmacy companies
|
|
|
|
Newlands Pharmacies Limited
|
|
|
|
|
|
Holding investment in pharmacy companies
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Direct subsidiary undertakings (continued)
|
Gleadless Valley Pharmacy Limited
|
|
|
|
|
Liptrots (Calverley) Limited
|
Holding investment in pharmacy companies
|
|
|
|
Day Lewis Properties Limited
|
|
|
|
|
Drury's Pharmacies Limited
|
|
|
|
|
|
|
|
|
|
Gnosall Healthcare Limited
|
|
|
|
|
|
Holding investment in pharmacy companies
|
Ordinary shares £0.1 each
|
|
|
Ramsay Enterprises Limited
|
Holding investment in pharmacy companies
|
|
|
|
Readesmoor Healthcare LLP
|
|
|
|
|
|
|
|
|
|
The Essential Pharmacy Limited
|
|
|
|
|
Axbridge Square Company Limited
|
|
|
|
|
Finchampstead Healthcare LLP
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Direct subsidiary undertakings (continued)
|
The above companies only have one class of share capital and were registered at 2 Peterwood Way, Croydon, Surrey, CR0 4UQ except East Midlands Pharma Ltd which is registered at Unit 2a Old Dalby Business Park, Station Road, Old Dalby, Leicestershire, LE14 3NJ.
All companies have accounting year ends of 31 March.
All of the subsidiary undertakings have been consolidated in the group financial statements.
All of the subsidiary undertakings except Day Lewis Medical Limited are exempt from the Companies Act 2006 requirements relating to the audit of their individual accounts by virtue of Section 479A of the Act as this company has guaranteed the subsidiary company under Section 479C of the Act.
|
|
The aggregate of the share capital and reserves as at 31 March 2022 and the profit or loss for the year ended on that date for the subsidiary undertakings were as follows:
|
|
|
Share capital and reserves
|
|
|
|
|
|
|
Day Lewis Chemists Limited
|
|
|
|
Day Lewis Medical Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare Drugstores Limited
|
|
|
|
East Midlands Pharma Limited
|
|
|
|
Narrowcliff Medical Services Limited
|
|
|
|
Stargazer Drug Stores Limited
|
|
|
|
Newlands Pharmacies Limited
|
|
|
|
|
|
|
|
Gleadless Valley Pharmacy Limited
|
|
|
|
Liptrots (Calverley) Limited
|
|
|
|
Day Lewis Properties Limited
|
|
|
|
Drury's Pharmacies Limited
|
|
|
|
|
|
|
|
Gnosall Healthcare Limited
|
|
|
|
|
|
|
|
Ramsay Enterprises Limited
|
|
|
|
Readesmoor Healthcare LLP
|
|
|
|
|
|
|
|
The Essential Pharmacy Limited
|
|
|
|
Axbridge Square Company Limited
|
|
|
|
Finchampstead Healthcare LLP
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
Indirect subsidiary undertakings
|
|
The following were indirect subsidiary undertakings of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
Holding investment in
pharmacy companies
|
|
|
|
|
|
|
|
|
R.S. Marsden (Chemist) Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liptrots (Farsley) Limited
|
|
|
|
|
Community Pharmacies (UK) Ltd
|
Holding investment in
pharmacy companies
|
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Indirect subsidiary undertakings (continued)
|
|
|
|
|
|
Readesmoor Healthcare LLP
|
|
|
|
|
|
|
|
|
|
Finchampstead Healthcare LLP
|
|
|
|
|
|
|
Shares of common stock $0.10 each
|
|
|
The above companies only have one class of share capital and were registered at 2 Peterwood Way, Croydon, Surrey, CR0 4UQ except Budget Pharma UK Ltd, Pollenase Limited, Sem Pharma Limited, HQEMP Pharma Limited, HQEMP Limited and Harlequin BPI Limited which is registered at Unit 2a Old Dalby Business Park, Station Road, Old Dalby, Leicestershire, LE14 3NJ and Cradlecrest USA, Inc registered at 19632 70th Ave South - Suite 4-3, Kent, WA 98032-2176.
All companies have accounting year ends of 31 March.
All of the indirect subsidiary undertakings have been consolidated in the group financial statements.
All of the indirect subsidiary undertakings are exempt from the Companies Act 2006 requirements relating to the audit of their individual accounts by virtue of Section 479A of the Act as this company has guaranteed the subsidiary company under Section 479C of the Act.
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Indirect subsidiary undertakings (continued)
|
The aggregate of the share capital and reserves as at 31 March 2022 and the profit or loss for the year ended on that date for the subsidiary undertakings were as follows:
|
|
|
Share capital and reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.S. Marsden (Chemist) Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liptrots (Farsley) Limited
|
|
|
|
Community Pharmacies (UK) Ltd
|
|
|
|
|
|
|
|
|
|
|
|
Readesmoor Healthcare LLP
|
|
|
|
|
|
|
|
Finchampstead Healthcare LLP
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
|
The following were associates of the Company:
|
|
|
|
|
|
|
Arlington Road Healthcare LLP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denmark Street Healthcare LLP
|
|
|
|
|
Felixstowe Healthcare LLP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newton Place Healthcare LLP
|
|
|
|
|
Priory Fields Healthcare LLP
|
|
|
|
|
Somerset Gardens Healthcare LLP
|
|
|
|
|
South Kirkby Healthcare LLP
|
|
|
|
|
Stockton Heath Healthcare LLP
|
|
|
|
|
The above associates were registered at 2 Peterwood Way, Croydon, Surrey, CR0 4UQ.
All associates have accounting year ends of 31 March.
|
|
Raw materials and consumables
|
|
|
|
|
|
Finished goods and goods for resale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The difference between purchase price or production cost of stocks and their replacement cost is not material.
|
|
Stock recognised in cost of sales during the year as an expense was £319,125k (2021 - £315,016k).
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed by group undertakings
|
|
|
|
|
|
|
|
|
|
|
|
Prepayments and accrued income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
Creditors: Amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed to group undertakings
|
|
|
|
|
|
Amounts owed to other participating interests
|
|
|
|
|
|
|
|
|
|
|
|
Other taxation and social security
|
|
|
|
|
|
Obligations under finance lease and hire purchase contracts
|
|
|
|
|
|
|
|
|
|
|
|
Government grant repayable
|
|
|
|
|
|
Accruals and deferred income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please see Note 21 for details of the terms for the loans
|
|
Creditors: Amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net obligations under finance leases and hire purchase contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There are no loans falling due after more than 5 years. Please see Note 21 for details of the terms for the loans
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
|
The long term RCF facilities have a maturity date of 3 years ending September 2023 (being agreed until September 2024), with options to extend to 2025. The drawn amount is reset monthly and repayable as a final bullet repayment of the outstanding balance due at the end of the term. The loan bears interest between 2.0% and 3.0% per annum above LIBOR depending on the financial leverage.
Bank overdrafts and loans due within one year and after more than one year amounting to £77,663,000 (2021: £77,880,000) as at the year end were secured as follows:
a) Unlimited inter-company guarantees supported by legal charges over various properties and other
respective associated assets.
b) Debentures by the company and certain subsidiaries.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due 1-2 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due 2-5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
Hire purchase and finance leases
|
|
Minimum lease payments under hire purchase fall due as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets measured at fair value
|
|
|
|
|
|
Financial assets measured at amortised cost
|
|
|
|
|
|
Assets measured at fair value through profit and loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortised cost
|
|
|
|
|
|
Fair value of assets and liabilities
Under FRS102 section 11 and 12, the group is required to recognise the fair value of derivative financial instruments in the balance sheet. The following instruments existed at year end.
An interest rate swap on a notional amount of £50m of loan funding (reducing to £40m in March 2023) at a fixed rate of 0.0880% until September 2025. As at 31 March 2022, the fair value of the swap is £2,705,586 asset (2021: £595,936 asset).
|
|
The fair value of interest rate swaps is based on bank valuations.
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit and loss
|
|
|
|
Arising on business combinations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit and loss account
|
|
|
|
Arising on business combinations
|
|
|
|
|
|
|
|
The provision for deferred taxation is made up as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated capital allowances
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax on retail pharmacy licences
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The NHS Reimbursement Provision is to cover clawback of potential over-reimbursement received in the current financial year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The NHS Reimbursement Provision is to cover clawback of potential over-reimbursement received in the current financial year.
In the previous year, other provisions included a provision for inter-company loans which has been released in the year.
|
|
|
Allotted, called up and fully paid
|
|
|
|
|
|
|
|
|
|
100,000 (2021 - 100,000) Ordinary shares of £1.00 each
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
The Group and Company's other reserves are as follows:
Share premium account
The share premium reserve contains the premium arising on issue of equity shares, net of issue expenses.
Merger Reserve
The merger reserve represents the cumulative merger relief on acquisition of subsidiaries.
Profit and loss account
The profit and loss reserve represents cumulative profits or losses, including dividends paid and other adjustments.
There are no changes in statement of changes in equity and reserves at year end.
Group reserves includes reserves from parent company and subsidiary undertakings.
Company reserves are related to the parent company only.
Capital contribution reserves
On 18 February 2016 Day Lewis PLC acquired Healthcare Drugstore Limited at book value from a company wholly owned by its ultimate parent (Day Lewis Holdings Ltd). The difference between the book value and the fair value is treated as a capital contribution as merger accounting in this instance is not allowed.
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
The group acquired the following business during the year.
|
Acquisition of trade and assets of the following unincorporated businesses, using acquisition accounting
1. Pharmacy at Finchampstead Healthcare LLP on 01 May 2021 (Remaining 50% share acquired and hived up into Day Lewis Plc)
2. Pharmacy at The Essential Pharmacy Ltd on 01 July 2021
3. Pharmacy at Selsdon on 30 November 2021
4. Pharmacy at Barton on 06 December 2021
5. Pharmacy at Axbridge Square Company Ltd on 01 February 2022
|
|
Recognised amounts of identifiable assets acquired and liabilities assumed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Identifiable net assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents in unincorporated business acquired
|
|
|
|
|
|
Directly attributable costs
|
|
|
Total purchase consideration
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
28.Business combinations (continued)
|
Cash outflow on acquisition
|
|
|
|
|
|
|
|
|
|
|
Purchase consideration settled in cash, as above
|
|
|
Directly attributable costs
|
|
|
|
|
|
Less: Cash and cash equivalents acquired
|
|
|
Net cash outflow on acquisition
|
|
|
|
|
During the year, the Group disposed of two of its pharmacies. The net proceeds and loss on disposal are
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on disposal before tax
|
|
|
|
The net inflow of cash in respect of the sale of the two disposed pharmacies is as follows:
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group operates two defined contributions pension schemes for the benefit of the eligible employees and directors. The assets of the schemes are held separately from those of the Group in independently administered funds. The pension cost charge represents contributions payable by the Group to the funds and amounted to £1,289k (2021: £1,262k).
|
Commitments under operating leases
|
|
At 31 March 2022 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Later than 1 year and not later than 5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
|
Related party transactions
|
|
During the year the Group had the following transactions with the directors and other related parties.
Rent:
The following companies paid rent for premises owned by Q H Estates Limited, a company in which The KCTP Will Trust, K C Patel Jnr (Jay), Rupa and J C Patel Jnr (Sam) have an interest:
Day Lewis Plc £457,058 (2021: £309,917)
Day Lewis Medical Limited £739,669 (2021: £545,377)
ABC Drug Stores Limited £Nil (2021: £3,500)
In addition the Group paid rentals to the following entities:
Day Lewis Pension Fund £241,727 (2021: £260,154)
Ms R Patel, a director £52,000 (2021: £52,000)
Tayzana Pension Fund £33,675 (2021:£22,800)
Loans:
During the year, the Group purchased goods totalling £200,456 (2021: £167,327) from Quadrant Pharmaceuticals. The KCTP Will Trust has interest in this company. At the year end the balance outstanding to Quadrant Pharmaceuticals was £12,462 (2021: £17,710).
During the year, the Group purchased goods totalling £229,922 (2021: £1,689,037) from Maxearn Limited. The KCTP Will Trust has a material interest in the company. At the year end the balance outstanding to Maxearn Limited was £47,586 (2021: £30,207).
During the year, the Group sold goods totalling £2,909,540 (2021: £3,609,059) to Health Counter Limited, and recharged expenses of £79,602 (2021: £199,636). Health Counter Limited recharged £nil (2021: £nil) of expenses paid on behalf of the group. Health Counter Limited is a subsidiary of ultimate parent company, Day Lewis Holdings Limited and has common control. Included in the trade debtors as an amount owed to the group is £209,332 (2021: £125,015). Included in the creditors as an amount owed by the Group is £13,976 (2021: £3,544).
During the year, the Group made a contribution to the Day Lewis Pension Fund of £12,000 (2021: £12,000). The pension fund has been set up for the benefit of the directors and their families.
As at 31 March 2022 Heversham Holdings Limited owed £5,542 (2021: £5,542) to the Group. Heversham Holdings Limited is a subsidiary of the ultimate parent company, Day Lewis Holdings Limited.
The ultimate parent company, Day Lewis Holdings Limited was owed by the Group £367,452 (2021: £3,375,056) as at 31 March 2022.
During the year, the Group sold goods totalling £6,944,002 (2021: £6,518,080) to the associates, purchased goods totalling £Nil (2021: £91,636), recharged expenses of £430,570 (2021: £444,945), management fees of £204,200 (2021: £214,549) and interest £68,942 (2021: £165,385). The associates recharged £Nil. (2021: £Nil) to the Group. Included in trade creditors as an amount owed to the Group is £1,166,117 (2021: £1,027,018). The associates owed £664,034 (2021: £1,315,365) to the Group in respect of loan made available.
|
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
33.Related party transactions (continued)
The ultimate parent company is Day Lewis Holdings Limited, a company registered in Cyprus and controlled by the trustees of the KCTP Will Trust.
Copies of the ultimate parent and of its group financial statements are not publicly available.
|