Registered number:
FOR THE YEAR ENDED 31 OCTOBER 2023
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PEARL CHEMIST LIMITED
COMPANY INFORMATION
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PEARL CHEMIST LIMITED
CONTENTS
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PEARL CHEMIST LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
The directors present the strategic report and the financial statements for the year ended 31 October 2023.The principal activity of the company is the retailing of pharmacies and selling of pharmaceutical products.
Pearl Chemist Ltd is fast growing independent pharmacy chain, with 24 pharmacies owned and managed (at 31 October 2023) across South West London and Surrey borders.
The group was founded in 2012 and remains a family owned entity. Managed by two brothers Vijay Patel and Mayank Patel (Mike). 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 turnover has increased by 3.72% in the year, gross margins has also risen by 2.45% meaning an overall increase in gross profit of 10.12%. The increase in revenue and gross profit can partly be attributed to the continued expansion of the group. Although the company has made a pre tax loss of £289,584 (2022: £803,309 profit) this is mainly due to the amortisation on goodwill relating to acquisitions on pharmacies and borrowing costs in respect of these acquisitions. A better measurement of the company's performance is EBITDA and this has decreased to £3,065,696 (2022: £3,398,320). This shows the company performing very well with the strategic aim of increasing value of the business over a period of time. Pearl Chemist prides itself on its service led approach putting the patient at the heart of its decisions is a key differentiator for the business to build a large base of loyal, recurring customers, evidenced by repeat prescriptions making up to 70% of the Group’s dispensing activities. The Group dispensing 2.2m items which is 9.3% increase from the prior year.
The group monitors its own performance through the use of a variety of measurements in order to maintain effective control over the business.
For the group the main financial KPI’s (Key Performance Indicators) are turnover, gross profit, and EBITDA. 2023 2022 2021 2020 Turnover £47,934,975 £46,213,301 £37,740,977 £30,914,377 Turnover growth/(decline) 3.72% 22.45% 22.08% 4.7% Gross Profit £11,942,970 £10,841,705 £10,545,632 £8,923,497 Gross profit growth/(decline) 10.12% 2.8% 18.18% 70% Gross margin 24.9% 23.46% 27.94% 28.87% EBITDA £3,065,696 £3,398,320 £3,912,520 £2,520,740 EBITDA growth/(decline) (9.79)% (13.14%) 55.2% 141.3%
The directors monitor banking facilities and interest rates on a regular basis to make sure that group is not exposed to material levels of interest rate risk. Majority of our loan facilities are fixed at 5 years fixed terms.
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PEARL CHEMIST LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
Interest bearing assets and liabilities are held at fixed rate to ensure certainty of cash flows.
Maintaining a caring family culture is one of our core values. We actively engage with employees on significant decisions that may impact them. From December 2021, we have introduced Private medical insurance to our staff to ensure their well-being. Colleagues are given the opportunity to reach their full potential. We identify, train and develop the right people in the right role in order to align our people resources to fit our strategic intentions.
This report was approved by the board and signed on its behalf.
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PEARL CHEMIST LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
The directors present their report and the financial statements for the year ended 31 October 2023.
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £730,275 (2022 - profit £698,527).
The company paid interim dividends of £100,000 (2022: £Nil).
The directors who served during the year were:
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PEARL CHEMIST LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
The Company meets the qualifying conditions to report their carbon emissions and energy usage. The GHG Protocol Corporate Standard classifies a company's GHG emissions into three scopes:
*Scope 1 emissions are direct emissions from owned or controlled sources *Scope 2 emissions are indirect emissions from the generation of purchased energy *Scope 3 emissions includes all other indirect emissions that occur at sources which the Company do not own or control. SECR requires that all scope 1 and 2 emissions are reported. The Company has used the UK Government's environmental reporting guidance and has used the 2023 conversion factor of 0.20496 for electricity consumption (scope 2 emissions), the results for the year to 31 October 2023 are as follows: UK energy consumption used to calculate emissions per scope 2 (kWh): 381,470 (2022: 367,272) Greenhouse gas emissions (metric tonnes CO2e): 78,186 (2022: 72,763) Intensity ratio (Metric tonnes CO2e based on head count): 0.41 (2022: 0.37) An intensity ratio is used to determine the carbon emissions relative to a single common business metric and allows the Company's carbon footprint to be compared over time or allow comparison with similar organisations. No scope 1 emissions were identified. The following steps have been taken to become more energy efficient: Switch to electric vehicles Electric vehicles are responsible for considerably lower emissions over their lifetime than conventional internal combustion engine vehicles. In the past two years the company has replaced 5 vehicles to electric vehicles. Reduce waste Traditionally, businesses made, consume and throw away. To reduce carbon emissions, the Company has made a consious effort to reduce waste from every part of their business, from managing packaging and office supplies to building a sustainable supply chain. Switch to renewable forms of energy The company plans to switch to renewable energy upon the expiration of our existing utility contract from next year. Travel less or use alternative forms of transport Employees walk to deliver nearby patients' medication.
A Pharmacy refit at Cobham branch aimed at increasing foot flow can significantly enhance the efficiency and customer experience of the establishment. Cobham refit project is aimed to finish in May’24 and management is forecasting 70% growth in turnover for the Cobham branch. The group continues to achieve growth by seeking and acquiring more pharmacies.
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PEARL CHEMIST LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
Since 31 October 2023 a total of 3 more pharmacies have been purchased, bringing the total number of pharmacies to 27. A total consideration of £3,245,000 was for these three pharmacies.
Under section 487(2) of the Companies Act 2006, MHA will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
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PEARL CHEMIST LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PEARL CHEMIST LIMITED
We have audited the financial statements of Pearl Chemist Limited (the 'Company') for the year ended 31 October 2023, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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PEARL CHEMIST LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PEARL CHEMIST LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
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PEARL CHEMIST LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PEARL CHEMIST LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙Enquiry of management and those charged with governance around actual and potential litigation and claims;
∙Performing audit work over the risk of management 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 bias;
∙Reviewing minutes of meetings of those charged with governance;
∙Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
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PEARL CHEMIST LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PEARL CHEMIST LIMITED (CONTINUED)
for and on behalf of
Statutory Auditors
London
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)
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PEARL CHEMIST LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
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PEARL CHEMIST LIMITED
REGISTERED NUMBER: 07976515
BALANCE SHEET
AS AT 31 OCTOBER 2023
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PEARL CHEMIST LIMITED
REGISTERED NUMBER: 07976515
BALANCE SHEET (CONTINUED)
AS AT 31 OCTOBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 38 form part of these financial statements.
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PEARL CHEMIST LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
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PEARL CHEMIST LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2022
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Pearl Chemist Limited is a company limited by shares incorporated in England & Wales. The address of the registered office is 2 London Wall Place, London, EC2Y 5AU.
2.Accounting policies
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 functional and presentational currency of the Company is GBP and all values are rounded to the nearest £1.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Pearl Chemist Group Limited as at 31 October 2023 and these financial statements may be obtained from Companies House.
The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
The company has net current liabilities at 31 October 2023 of £6,202,961 (2022: £6,133,528). The company's earnings before interest, tax, depreciation and amortisation is £3,065,696 (2022: £3,165,419. The accounts have been prepared on a going concern basis as the directors, who are the ultimate shareholders, have confirmed their willingness to support the company on a continuing basis for the foreseeable future.
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
Goodwill
Other intangible assets
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
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.
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Company's Balance Sheet when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with 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 trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
2.Accounting policies (continued)
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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. Fixed assets Management apply judgement to the estimated useful economic life of each class of fixed asset and their useful lives. This affects the rate at which assets are depreciated. Impairment of goodwill Management establishes a reliable estimate of the useful economic life of goodwill and intangible assets arising from business combinations. They base their estimates on a variety of factors, such as the expected use of the acquired business, the expected useful life of cash generating units to which goodwill is attributed, any legal, regulatory or contractual provisions that can limit the useful economic life of the acquired business and assumptions that market participants would consider relevant in respect of their economic decisions of similar businesses. Provisions for dilapidations Management assess dilapidations on leased properties when the lease is two years from expiry. Dilapidations will be determined with consideration to the terms of the lease and the condition of the property at the balance sheet date.
All sales were generated in the United Kingdom. A split of sales generated by class has not been provided as it would be prejudicial to the business.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
12.Taxation (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
15.Tangible fixed assets (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
Profit and loss account
During the year, the Company had pension costs of £50,215 (2022: £46,704). Contributions totalling £3,416 (2022: £2,407) were payable to the fund at the balance sheet date are included in creditors.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
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PEARL CHEMIST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
The parent undertaking is Pearl Chemist Group Limited, a company registered in England and Wales, whose registered office is 2 London Wall Place, London, EC2Y 5AU.
There is no ultimate controlling party.
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