Company registration number SC029652 (Scotland)
WALTER DAVIDSON & SONS LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
WALTER DAVIDSON & SONS LTD
COMPANY INFORMATION
Directors
A S Gordon
G W I Davidson
Mrs K H Gordon
T H Lonsdale
Mrs K Cowle
Secretary
A S Gordon
Company number
SC029652
Registered office
21-24 Wellmeadow
Blairgowrie
Perthshire
United Kingdom
PH10 6AT
Auditor
Azets Audit Services
5 Whitefriars Crescent
Perth
United Kingdom
PH2 0PA
WALTER DAVIDSON & SONS LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 6
Independent auditor's report
7 - 10
Profit and loss account
11
Group statement of comprehensive income
12
Group balance sheet
13
Company balance sheet
14
Group statement of changes in equity
15
Company statement of changes in equity
16
Group statement of cash flows
17
Company statement of cash flows
18
Notes to the financial statements
19 - 37
WALTER DAVIDSON & SONS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2023
- 1 -
The directors present the strategic report for the year ended 31 January 2023.
Review of the business
The Directors are pleased with the group’s financial results. The business has continued to grow whilst facing strong headwinds from NHS remuneration reductions, staff shortages and significantly rising costs.
The results have shown a significant increase in group turnover to £60,256k but pre-tax profits (excl licence amortisations) have reduced to £4,766k. The company gross profit % saw a reduction due to NHS clawback arrangements and the company experienced staff challenges meaning that payroll costs grew significantly beyond inflation.
The group acquired one new pharmacy in 2022. The pharmacy is based in Dundee and helps the company to expand its interests in the city. The company has looked at several other possible acquisitions during the year, most notably the impending sale of Lloyds Pharmacies in Scotland. A decision was made to concentrate on acquiring suitable Lloyds branches that were strategically important to the company and a deal has recently been concluded to acquire five. The company now has 56 pharmacies providing healthcare services across Scotland.
The company set up a Hub and Spoke model for serial prescriptions during the year. It is operating efficiently but will be further expanded this year to incorporate more of the Davidsons branches. It is having a very positive impact at branch level by helping to alleviate excessive workloads and allowing more patient centred time for our pharmacists.
The Directors expect 2023 to be a more profitable year, although at this time the NHS remuneration for the current year has still to be agreed with the Scottish Government. Staff payroll costs are expected to increase at a level below inflation and we shouldn’t experience any NHS clawbacks, both of these factors helping to improve results this year. The war in Ukraine has pushed up company energy costs and the ongoing uncertainty in that area of Europe and its potential impact on our cost base is being monitored by the Directors.
Principal risks and uncertainties
It is group policy that an ongoing and active interest is taken in evaluating and managing the risks inherent in operating retail pharmacies.
The directors recognise that the main risks are as follows:-
Health & Safety Risk: This is managed through the group's policies and procedures and the quality of their management team. The group's policies and procedures are reviewed frequently.
Credit Risk: The group assesses the credit risk applicable to customers to ensure that credit is not extended where there is a likelihood of default.
Liquidity Risk: Liquidity Risk reflects the risk that the group will have insufficient reserves to meet its financial liabilities as they fall due. The directors' objective is to ensure adequate funding is available within the group to finance the business.
Financial instruments
The group's financial risk management objectives are to ensure sufficient working capital for the group. This is achieved through careful management of cash resources including trade debtors and trade creditors. The use of financial instruments is not material to the assessment of the assets, liabilities, financial position and profit of the group.
WALTER DAVIDSON & SONS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 2 -
Employees
The directors pursue a policy of promoting equality of opportunity to all employees and of developing their involvement and interest in the group. Both formal and informal systems of communication are used and managers have specific responsibility to communicate effectively with the employees.
Training is considered to be a fundamental requirement and the group provides training outlets to ensure staff are trained to an appropriate standard.
Disabled persons
The group will employ disabled persons when they appear to be suitable for a particular vacancy and every effort is made to ensure that they are given full and fair consideration when such vacancies arise.
During employment the group seeks to work with employees, taking into account their personal circumstances, to ensure appropriate training, development and advancement opportunities are available to enable them to reach their full potential.
Future developments
The group is looking to expand through the acquisition of additional properties and pharmacies where appropriate opportunities arise.
A S Gordon
Director
26 July 2023
WALTER DAVIDSON & SONS LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 January 2023.
Principal activities
The principal activity of the company and group continued to be that of retail pharmacy and veterinary chemists.
Results and dividends
The results for the year are set out on page 11.
Ordinary dividends were paid amounting to £565,500. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A S Gordon
G W I Davidson
Mrs K H Gordon
T H Lonsdale
Mrs K Cowle
Employee involvement
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the group's performance.
Auditor
In accordance with the company's articles, a resolution proposing that Azets Audit Services be reappointed as auditor of the group will be put at a General Meeting.
WALTER DAVIDSON & SONS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 4 -
Energy and carbon report
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
- Gas combustion
61,023
- Electricity purchased
943,165
- Fuel consumed for transport
484,830
- Indirect emmissions related to Fuel used in personal/hire cars on business use (including fuel for which the organisation reimburses its employees following claims for business mileage)
228,757
1,717,775
Emissions of CO2 equivalent
Metric tonnes
Metric tonnes
Scope 1 - direct emissions
- Gas combustion
11.14
- Fugitive emissions
2.92
- Fuel consumed for owned transport
115.58
129.64
Scope 2 - indirect emissions
- Electricity purchased
27.31
Scope 3 - indirect emissions
- Indirect emmissions related to Fuel used in personal/hire cars on business use (including fuel for which the organisation reimburses its employees following claims for business mileage)
53.61
Total gross emissions
210.56
Intensity ratio
Tonnes CO2e per full time employee
0.35
Quantification and reporting methodology
The methodology used is the Greenhouse Gas Protocol, using UK Government conversion factors produced by the Department for Business, Energy & Industrial Strategy (BEIS 2022, updated 22nd September 2022).
The report has been prepared in line with the UK Government’s ‘Environmental Reporting Guidelines including Streamlined Energy and Carbon Reporting guidance’ (dated March 2019).
The market-based method for calculating scope 2 electricity emissions has been applied. Our sites were supplied with a mixture of blue & standard (mixed generation) tariffs. A zero-carbon tariff only applied to 9 months of electricity consumption within this reporting period.
Assumptions made in our reporting were as follows:
A previous survey of refrigeration equipment and plant was supplemented with assumptions made on refrigeration plant where no data was available from recent acquisitions. These stores will be reviewed as part of our forthcoming Energy Saving & Opportunities Scheme assessment.
Air conditioning operational emissions have been assumed based upon refrigerant charge, engineering judgement and IPCC/BEIS/DEFRA recommendations.
WALTER DAVIDSON & SONS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 5 -
Intensity measurement
The agreed activity metric chosen was ‘Full-time equivalent’ employees (FTE), with a reference value of 600 FTE in the period.
The intensity ratio for this reporting period is 0.35 tonnes CO2e/FTE.
Measures taken to improve energy efficiency
We continue to use our smart cloud-based energy and carbon monitoring system/portal which has allowed us to measure, manage and monitor our energy and carbon effectively. The management dashboard delivers a clear insight into our energy consumption across our entire portfolio of energy consuming assets, buildings processes and transport.
We have commenced benchmarking our facilities against good practice and developed a consumption league.
In accordance with our ongoing property refit programme, we have continued to replace existing light fittings with LED lighting. During the reference period we carried out one major pharmacy refit which involved the use of LED lighting throughout the building.
We now operate three fully electric vehicles and four hybrid vehicles, to support the gradual decarbonisation of our vehicle fleet.
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group 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 ;
prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.
WALTER DAVIDSON & SONS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 6 -
On behalf of the board
A S Gordon
Director
26 July 2023
WALTER DAVIDSON & SONS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WALTER DAVIDSON & SONS LTD
- 7 -
Opinion
We have audited the financial statements of Walter Davidson & Sons Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent company's affairs as at 31 January 2023 and of the group's profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
WALTER DAVIDSON & SONS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WALTER DAVIDSON & SONS LTD
- 8 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept 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
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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 the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
WALTER DAVIDSON & SONS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WALTER DAVIDSON & SONS LTD
- 9 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
WALTER DAVIDSON & SONS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WALTER DAVIDSON & SONS LTD
- 10 -
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.
Alan Taylor (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
26 July 2023
Chartered Accountants
Statutory Auditor
5 Whitefriars Crescent
Perth
United Kingdom
PH2 0PA
WALTER DAVIDSON & SONS LTD
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JANUARY 2023
- 11 -
2023
2022
Notes
£
£
Turnover
3
60,255,963
52,850,592
Cost of sales
(40,510,306)
(34,303,604)
Gross profit
19,745,657
18,546,988
Distribution costs
(419,621)
(317,453)
Administrative expenses
(16,431,888)
(13,801,889)
Other operating income
214,089
473,559
Profit before taxation
3,108,237
4,901,205
Tax on profit
8
(903,139)
(1,257,630)
Profit for the financial year
24
2,205,098
3,643,575
Profit for the financial year is all attributable to the owners of the parent company.
WALTER DAVIDSON & SONS LTD
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2023
- 12 -
2023
2022
£
£
Profit for the year
2,205,098
3,643,575
Other comprehensive income
-
-
Total comprehensive income for the year
2,205,098
3,643,575
Total comprehensive income for the year is all attributable to the owners of the parent company.
WALTER DAVIDSON & SONS LTD
GROUP BALANCE SHEET
AS AT
31 JANUARY 2023
31 January 2023
- 13 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
10
15,799,837
15,947,567
Other intangible assets
10
2,380,646
2,638,548
Total intangible assets
18,180,483
18,586,115
Tangible assets
11
6,969,657
6,767,424
25,150,140
25,353,539
Current assets
Stocks
13
4,557,387
4,380,842
Debtors
15
5,512,436
5,728,169
Cash at bank and in hand
5,805,344
4,474,721
15,875,167
14,583,732
Creditors: amounts falling due within one year
16
(9,062,344)
(9,706,056)
Net current assets
6,812,823
4,877,676
Total assets less current liabilities
31,962,963
30,231,215
Creditors: amounts falling due after more than one year
17
(24,906)
-
Provisions for liabilities
Deferred tax liability
19
197,042
146,046
(197,042)
(146,046)
Net assets
31,741,015
30,085,169
Capital and reserves
Called up share capital
21
39,000
39,000
Revaluation reserve
22
837,170
837,170
Capital redemption reserve
23
1,000
1,000
Profit and loss reserves
24
30,863,845
29,207,999
Total equity
31,741,015
30,085,169
The financial statements were approved by the board of directors and authorised for issue on 26 July 2023 and are signed on its behalf by:
A S Gordon
Director
Company registration number SC029652 (Scotland)
WALTER DAVIDSON & SONS LTD
COMPANY BALANCE SHEET
AS AT
31 JANUARY 2023
31 January 2023
- 14 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
10
16,507,942
16,613,249
Other intangible assets
10
2,380,646
2,638,548
Total intangible assets
18,888,588
19,251,797
Tangible assets
11
6,916,098
6,750,874
25,804,686
26,002,671
Current assets
Stocks
13
3,053,849
2,715,817
Debtors
15
4,939,311
5,077,961
Cash at bank and in hand
6,350,692
5,173,241
14,343,852
12,967,019
Creditors: amounts falling due within one year
16
(8,427,093)
(8,812,498)
Net current assets
5,916,759
4,154,521
Total assets less current liabilities
31,721,445
30,157,192
Provisions for liabilities
Deferred tax liability
19
187,810
146,046
(187,810)
(146,046)
Net assets
31,533,635
30,011,146
Capital and reserves
Called up share capital
21
39,000
39,000
Revaluation reserve
22
795,095
795,095
Capital redemption reserve
23
1,000
1,000
Profit and loss reserves
24
30,698,540
29,176,051
Total equity
31,533,635
30,011,146
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £2,087,989 (2022 - £3,443,453 profit).
The financial statements were approved by the board of directors and authorised for issue on 26 July 2023 and are signed on its behalf by:
A S Gordon
Director
Company registration number SC029652 (Scotland)
WALTER DAVIDSON & SONS LTD
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2023
- 15 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 February 2021
39,000
837,170
1,000
26,441,924
27,319,094
Year ended 31 January 2022:
Profit and total comprehensive income
-
-
-
3,643,575
3,643,575
Dividends
9
-
-
-
(877,500)
(877,500)
Balance at 31 January 2022
39,000
837,170
1,000
29,207,999
30,085,169
Year ended 31 January 2023:
Profit and total comprehensive income
-
-
-
2,205,098
2,205,098
Dividends
9
-
-
-
(565,500)
(565,500)
Transfers
-
-
-
16,248
16,248
Balance at 31 January 2023
39,000
837,170
1,000
30,863,845
31,741,015
WALTER DAVIDSON & SONS LTD
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2023
- 16 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 February 2021
39,000
795,095
1,000
26,610,098
27,445,193
Year ended 31 January 2022:
Profit and total comprehensive income for the year
-
-
-
3,443,453
3,443,453
Dividends
9
-
-
-
(877,500)
(877,500)
Balance at 31 January 2022
39,000
795,095
1,000
29,176,051
30,011,146
Year ended 31 January 2023:
Profit and total comprehensive income
-
-
-
2,087,989
2,087,989
Dividends
9
-
-
-
(565,500)
(565,500)
Balance at 31 January 2023
39,000
795,095
1,000
30,698,540
31,533,635
WALTER DAVIDSON & SONS LTD
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JANUARY 2023
- 17 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
30
5,396,374
6,702,964
Income taxes paid
(1,769,069)
(995,941)
Net cash inflow from operating activities
3,627,305
5,707,023
Investing activities
Purchase of intangible assets
(1,251,659)
(9,423,474)
Purchase of tangible fixed assets
(508,475)
(531,668)
Proceeds on disposal of tangible fixed assets
35,115
6,301
Net cash used in investing activities
(1,725,019)
(9,948,841)
Financing activities
Repayment of borrowings
(2,078,880)
Payment of finance leases obligations
(6,163)
-
Dividends paid to equity shareholders
(565,500)
(877,500)
Net cash used in financing activities
(571,663)
(2,956,380)
Net increase/(decrease) in cash and cash equivalents
1,330,623
(7,198,198)
Cash and cash equivalents at beginning of year
4,474,721
11,672,919
Cash and cash equivalents at end of year
5,805,344
4,474,721
WALTER DAVIDSON & SONS LTD
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JANUARY 2023
- 18 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
31
5,156,381
6,671,958
Income taxes paid
(1,700,125)
(930,659)
Net cash inflow from operating activities
3,456,256
5,741,299
Investing activities
Purchase of intangible assets
6
(34,120)
Purchase of tangible fixed assets
(496,761)
(531,668)
Proceeds on disposal of tangible fixed assets
35,115
3,500
Purchase of subsidiaries
(1,251,665)
(9,389,354)
Net cash used in investing activities
(1,713,305)
(9,951,642)
Financing activities
Repayment of borrowings
(2,078,880)
Dividends paid to equity shareholders
(565,500)
(877,500)
Net cash used in financing activities
(565,500)
(2,956,380)
Net increase/(decrease) in cash and cash equivalents
1,177,451
(7,166,723)
Cash and cash equivalents at beginning of year
5,173,241
12,339,964
Cash and cash equivalents at end of year
6,350,692
5,173,241
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
- 19 -
1
Accounting policies
Company information
Walter Davidson & Sons Ltd (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 21-24 Wellmeadow, Blairgowrie, Perthshire, United Kingdom, PH10 6AT.
The group consists of Walter Davidson & Sons Ltd and all of its subsidiaries.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Business combinations
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.
Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.
1.3
Basis of consolidation
The consolidated group financial statements consist of the financial statements of the parent company Walter Davidson & Sons Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 January 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
1.4
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
1
Accounting policies
(Continued)
- 20 -
1.5
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.6
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is fifteen years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.7
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Patents & licences
15 years
1.8
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
nil
Fixtures and fittings
20% on reducing balance and 15% on cost
Computers
20% on reducing balance
Motor vehicles
20% on reducing balance
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
1
Accounting policies
(Continued)
- 21 -
Freehold property is valued on a vacant possession basis which in the opinion of the directors is the residual value and therefore no depreciation is charged.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value of the land and buildings is usually considered to be their market value.
Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in profit or loss or a revaluation loss exceeds the accumulated revaluation gains recognised in equity; such gains and loss are recognised in profit or loss.
1.9
Fixed asset investments
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.10
Impairment of fixed assets
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
1
Accounting policies
(Continued)
- 22 -
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.11
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
Cost is measured as follows:
NHS stock is valued using the retail method which measures cost by reducing the sales value of the inventory by the appropriate percentage gross margin. The reduction percentage is calculated based on varying discount levels for branded and generic drugs together with the corresponding reimbursement values.
Over the counter, warehouse and veterinary stock is measured using the most recent purchase price taken from supplier invoices which results in an approximate cost.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.12
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.13
Financial instruments
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally 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.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
1
Accounting policies
(Continued)
- 23 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
1
Accounting policies
(Continued)
- 24 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
1.14
Equity instruments
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
1.15
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
1
Accounting policies
(Continued)
- 25 -
1.16
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.17
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.18
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
2
Judgements and key sources of estimation uncertainty
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
No significant estimates and judgements have been identified which require additional disclosure.
3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Retail Pharmacies
55,357,953
47,860,410
Veterinary Chemists
4,898,010
4,990,182
60,255,963
52,850,592
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
60,255,963
52,850,592
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 26 -
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Depreciation of owned tangible fixed assets
311,711
268,891
Depreciation of tangible fixed assets held under finance leases
7,737
-
(Profit)/loss on disposal of tangible fixed assets
(9,636)
1,852
Amortisation of intangible assets
1,657,297
1,573,848
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
35,420
32,940
Audit of the financial statements of the company's subsidiaries
6,325
5,000
41,745
37,940
6
Employees
The average monthly number of persons (including directors) employed by the group and company during the year was:
Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Administration
18
17
18
17
Sales and marketing
532
408
512
387
Distribution
50
46
50
46
Total
600
471
580
450
Their aggregate remuneration comprised:
Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
11,112,963
9,136,894
10,636,779
8,713,355
Social security costs
839,218
700,956
795,994
660,853
Pension costs
408,295
408,655
367,289
326,184
12,360,476
10,246,505
11,800,062
9,700,392
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 27 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
509,279
477,388
Company pension contributions to defined contribution schemes
53,321
81,101
562,600
558,489
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
198,021
208,754
Company pension contributions to defined contribution schemes
40,000
40,000
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
852,143
1,203,104
Deferred tax
Origination and reversal of timing differences
50,996
54,526
Total tax charge
903,139
1,257,630
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
3,108,237
4,901,205
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
590,565
931,229
Tax effect of expenses that are not deductible in determining taxable profit
381,319
350,489
Capital allowances
(119,741)
(78,614)
Deferred tax movement
50,996
54,526
Taxation charge
903,139
1,257,630
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 28 -
9
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Final paid
331,500
292,500
Interim paid
234,000
585,000
565,500
877,500
10
Intangible fixed assets
Group
Goodwill
Patents & licences
Total
£
£
£
Cost
At 1 February 2022
19,739,583
12,500,544
32,240,127
Additions
1,251,665
1,251,665
At 31 January 2023
20,991,248
12,500,544
33,491,792
Amortisation and impairment
At 1 February 2022
3,792,016
9,861,996
13,654,012
Amortisation charged for the year
1,399,395
257,902
1,657,297
At 31 January 2023
5,191,411
10,119,898
15,311,309
Carrying amount
At 31 January 2023
15,799,837
2,380,646
18,180,483
At 31 January 2022
15,947,567
2,638,548
18,586,115
Company
Goodwill
Negative goodwill
Patents & licences
Total
£
£
£
£
Cost
At 1 February 2022
19,155,174
(157,744)
12,500,544
31,497,974
Additions
1,251,665
1,251,665
At 31 January 2023
20,406,839
(157,744)
12,500,544
32,749,639
Amortisation and impairment
At 1 February 2022
2,541,925
(157,744)
9,861,996
12,246,177
Amortisation charged for the year
1,356,972
257,902
1,614,874
At 31 January 2023
3,898,897
(157,744)
10,119,898
13,861,051
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
10
Intangible fixed assets
(Continued)
- 29 -
Carrying amount
At 31 January 2023
16,507,942
2,380,646
18,888,588
At 31 January 2022
16,613,249
2,638,548
19,251,797
11
Tangible fixed assets
Group
Freehold land and buildings
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 February 2022
5,691,862
3,639,187
57,706
384,718
9,773,473
Additions
319,346
4,660
223,154
547,160
Disposals
(50,742)
(50,742)
At 31 January 2023
5,691,862
3,958,533
62,366
557,130
10,269,891
Depreciation and impairment
At 1 February 2022
2,771,920
37,523
196,606
3,006,049
Depreciation charged in the year
240,683
1,608
77,157
319,448
Eliminated in respect of disposals
(25,263)
(25,263)
At 31 January 2023
3,012,603
39,131
248,500
3,300,234
Carrying amount
At 31 January 2023
5,691,862
945,930
23,235
308,630
6,969,657
At 31 January 2022
5,691,862
867,267
20,183
188,112
6,767,424
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
11
Tangible fixed assets
(Continued)
- 30 -
Company
Freehold land and buildings
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost or valuation
At 1 February 2022
5,691,862
3,528,178
376,583
9,596,623
Additions
317,292
179,469
496,761
Disposals
(50,742)
(50,742)
At 31 January 2023
5,691,862
3,845,470
505,310
10,042,642
Depreciation and impairment
At 1 February 2022
2,654,119
191,630
2,845,749
Depreciation charged in the year
238,270
67,788
306,058
Eliminated in respect of disposals
(25,263)
(25,263)
At 31 January 2023
2,892,389
234,155
3,126,544
Carrying amount
At 31 January 2023
5,691,862
953,081
271,155
6,916,098
At 31 January 2022
5,691,862
874,059
184,953
6,750,874
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Group
Company
2023
2022
2023
2022
£
£
£
£
Motor vehicles
30,948
Land and buildings with a carrying amount of £3,995,000 (group and company) were revalued at 30 April 2019 by J & E Shepherd Chartered Surveyors, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on vacant possession.
If freehold property had not been revalued it would have been included at the following historical cost £5,394,164 (2022 - £4,957,756).
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 31 -
12
Subsidiaries
Details of the company's subsidiaries at 31 January 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Five Mile Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
Drymen Potions Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
Scotpharm Supplies Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
Methven Pharmacy Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
Letham Dispensary Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
Davidsons Farm & Country Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
McPherson Pharmacy Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
Hutchison Healthcare Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
George Ellis Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
Dunblane Healthcare Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
Newfield (Dundonald) Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
John Ross (Dundee) Limited
21-24 Wellmeadow, Blairgowre, PH10 6AT
Ordinary
100.00
Five Mile Limited, Drymen Potions Limited, Methven Pharmacy Limited and Letham Dispensary Limited were all hived up in 2019 into Walter Davidson and Sons Limited. McPherson Pharmacy Limited and Hutchison Healthcare Limited were hived up in 2020 into Walter Davidson and Sons Limited. George Ellis Limited was hived up in 2021 into Walter Davidson and Sons Limited. Dunblane Healthcare Ltd and Newfield (Dundonald) Ltd were hived up into Walter Davidson and Sons Limited in 2021. John Ross (Dundee) Limited was hived up on 1st January 2023.
13
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Finished goods and goods for resale
4,557,387
4,380,842
3,053,849
2,715,817
14
Financial instruments
Group
Company
2023
2022
2023
2022
£
£
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
4,774,280
5,151,185
4,201,155
4,500,977
Carrying amount of financial liabilities
Measured at amortised cost
8,533,857
8,287,517
7,945,394
7,471,497
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 32 -
15
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
4,563,743
4,983,361
4,000,242
4,325,387
Amounts owed by group undertakings
-
-
-
18,667
Other debtors
851,810
667,433
842,186
656,532
Prepayments and accrued income
96,883
77,375
96,883
77,375
5,512,436
5,728,169
4,939,311
5,077,961
16
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
18
7,616
Trade creditors
8,318,552
6,793,475
7,752,056
6,023,753
Amounts owed to group undertakings
40,440
Corporation tax payable
308,642
1,221,134
274,705
1,153,890
Other taxation and social security
244,751
197,405
206,994
187,111
Other creditors
86,125
1,392,280
86,125
1,392,280
Accruals and deferred income
96,658
101,762
66,773
55,464
9,062,344
9,706,056
8,427,093
8,812,498
17
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
18
24,906
18
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
7,616
In two to five years
24,906
32,522
-
-
-
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
18
Finance lease obligations
(Continued)
- 33 -
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Liabilities
Liabilities
2023
2022
Group
£
£
Accelerated capital allowances
197,042
146,046
Liabilities
Liabilities
2023
2022
Company
£
£
Accelerated capital allowances
187,810
146,046
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 February 2022
146,046
146,046
Charge to profit or loss
50,996
41,764
Liability at 31 January 2023
197,042
187,810
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
408,295
408,655
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 34 -
21
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
39,000
39,000
39,000
39,000
22
Revaluation reserve
Group
Company
2023
2022
2023
2022
£
£
£
£
At the beginning and end of the year
837,170
837,170
795,095
795,095
23
Capital redemption reserve
Group
Company
2023
2022
2023
2022
£
£
£
£
At the beginning and end of the year
1,000
1,000
1,000
1,000
24
Profit and loss reserves
Group
Company
2023
2022
2023
2022
£
£
£
£
At the beginning of the year
29,207,999
26,441,924
29,176,051
26,610,098
Profit for the year
2,205,098
3,643,575
2,087,989
3,443,453
Dividends
(565,500)
(877,500)
(565,500)
(877,500)
Transfer to reserves
16,248
-
-
-
At the end of the year
30,863,845
29,207,999
30,698,540
29,176,051
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 35 -
25
Acquisition of a business
On 31 October 2022 the group acquired the business of John Ross (Dundee) Limited.
Book Value
Adjustments
Fair Value
Net assets acquired
£
£
£
Intangible assets
6
-
6
Inventories
36,421
-
36,421
Trade and other receivables
74,217
-
74,217
Cash and cash equivalents
297
-
297
Trade and other payables
(97,046)
-
(97,046)
Tax liabilities
(2,217)
-
(2,217)
Total identifiable net assets
11,678
-
11,678
Goodwill
1,105,493
Total consideration
1,117,171
The consideration was satisfied by:
£
Cash
1,105,500
Deferred consideration
11,671
1,117,171
The goodwill arising on the acquisition of the business is attributable to the expected growth, cost synergies and the value of the workforce. Management has estimated the useful life of goodwill to be 15 years.
26
Operating lease commitments
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
237,142
167,095
196,540
115,585
Between two and five years
614,175
397,724
561,256
329,054
In over five years
574,146
493,760
574,146
493,760
1,425,463
1,058,579
1,331,942
938,399
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 36 -
27
Events after the reporting date
The company entered into an agreement to acquire five pharmacies from Lloyds Pharmacy Limited in June 2023.
28
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2023
2022
£
£
Aggregate compensation
629,737
618,019
29
Controlling party
The group is under the control of the Davidson family by virtue of their cumulative shareholding in the parent company.
30
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
2,205,098
3,643,575
Adjustments for:
Taxation charged
903,139
1,257,630
(Gain)/loss on disposal of tangible fixed assets
(9,636)
1,852
Amortisation and impairment of intangible assets
1,657,297
1,573,848
Depreciation and impairment of tangible fixed assets
319,448
268,891
Decrease in provisions
(11,671)
-
Movements in working capital:
Increase in stocks
(140,124)
(617,958)
Decrease/(increase) in debtors
308,705
(1,079,030)
Increase in creditors
164,118
1,654,156
Cash generated from operations
5,396,374
6,702,964
WALTER DAVIDSON & SONS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
- 37 -
31
Cash generated from operations - company
2023
2022
£
£
Profit for the year after tax
2,087,989
3,443,453
Adjustments for:
Taxation charged
860,487
1,190,391
(Gain)/loss on disposal of tangible fixed assets
(9,636)
165
Amortisation and impairment of intangible assets
1,614,874
1,531,383
Depreciation and impairment of tangible fixed assets
306,058
264,753
Increase in provisions
2,211
-
Movements in working capital:
Increase in stocks
(338,032)
(214,078)
Decrease/(increase) in debtors
138,650
(1,072,681)
Increase in creditors
493,780
1,528,572
Cash generated from operations
5,156,381
6,671,958
32
Analysis of changes in net funds - group
1 February 2022
Cash flows
New finance leases
31 January 2023
£
£
£
£
Cash at bank and in hand
4,474,721
1,330,623
-
5,805,344
Obligations under finance leases
-
6,163
(38,685)
(32,522)
4,474,721
1,336,786
(38,685)
5,772,822
33
Analysis of changes in net funds - company
1 February 2022
Cash flows
31 January 2023
£
£
£
Cash at bank and in hand
5,173,241
1,177,451
6,350,692
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