Company registration number 03671068 (England and Wales)
SYKES CHEMISTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
SYKES CHEMISTS LIMITED
COMPANY INFORMATION
Directors
C G Patel
U G Patel
S G Patel
Secretary
C G Patel
Company number
03671068
Registered office
328 St Helens Road
Bolton
BL3 3RP
Auditor
Sumer Auditco Limited
The Beehive
City Place
Gatwick
RH6 0PA
Bankers
Lloyds Bank Plc
Manchester Office
PO BOX 349 3rd Floor
53 King Street
Manchester
Lancashire
M60 2LE
SYKES CHEMISTS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 24
SYKES CHEMISTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 1 -

The directors present the strategic report for the year ended 28 February 2023.

Fair review of the business

During the year turnover increased from £12.6 m to £13.1m. The gross profit margin also reduced slightly in the year from 33.42% to 29.29%.

 

The Directors continue to aim to improve business performance going forward whether that be by divestment or investment and acquisition.

Principal risks and uncertainties

The directors have considered the exposure of the company to financial risks, the risks are formally reviewed by the Directors and then the relevant controls are put in place to monitor and reduce the risks. The principal risks are interest rate risk, credit risk and liquidity risk. The company is funded through its retained earnings and borrowings. The directors regularly monitor cash flow projections of the company in order to ensure that it has sufficient available funds for its continuing operations.

 

Interest rate risk

Interest rate risk is split into two different types of risks - cash flow interest rate risk and fair value interest rate risk. Cash flow interest rate risk is the risk that the future cash flows of financial instruments will fluctuate because of changes in market interest rates. As the company has variable rate bank loans, it is exposed to cash flow interest rate risk.

 

As the company finances its operations through bank funding, the company is at potential risk from an increase in interest rates on the facility, and monitors any changes in interest rates so that action can be taken in advance.

 

Credit risk

The company's principal financial assets are bank balances and cash, trade and other receivables and investments.

 

The amount presented in the balance sheet are net of allowances for doubtful debts. The company has no significant credit risk, as the majority of the company's trade receivables balance is with government backed agencies. The company's credit risk is primarily attributable to its trade receivables.

 

Liquidity risk

In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company uses a mixture of long-term and short-term debt finance.

 

The risk is managed by monitoring key ratios such as interest cover, as well as cash flow. The company does not use derivative financial instruments to manage this risk and, as such, no hedge accounting is applied.

 

The company is not exposed to any significant direct currency risk since there are no foreign subsidiaries or balances held in foreign locations, and all of the invoicing is in sterling.

SYKES CHEMISTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 2 -
Developments and Performance

During the year the company has fallen its average number of employees from 151 to 135.

 

The Directors have spent almost £6k on additions to fixtures fittings and equipment and motor vehicles.

Key Performance Indicators

The Key Performance Indicators (KPIs) that the company regards as important are firstly the gross profit margin which decreased in the year from 33.42% to 29.29%. The gross profit margin is considered adequate given the pressures surrounding the pharmaceutical sector such as funding cuts. The other main KPI which is considered equally as important is EBITDA. The EBITDA position of the company has fallen from £1,114,764 in 2022 to £197,697.

Future Developments

The Directors of the business continue to aim to provide the best possible healthcare to all the communities in which there pharmacies operate by constantly training staff to the highest standards possible as the Directors consider the staff to be the greatest asset of the company.

On behalf of the board

C G Patel
Director
4 July 2024
SYKES CHEMISTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 3 -

The directors present their annual report and financial statements for the year ended 28 February 2023.

Principal activities

The principal activity of the company continued to be that of retail dispensing chemists.

Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £30,000.  The directors do not recommend payment of a final dividend.
Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

C G Patel
U G Patel
S G Patel
Auditor

Sumer Auditco Limited were appointed as auditor of the company following the transfer of the audit business from Cowgill Holloway LLP, and are deemed to be reappointed under section 487 (2) of the Companies Act 2006.

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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

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 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.

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 company’s auditor 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 company’s auditor is aware of that information.

SYKES CHEMISTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 4 -
On behalf of the board
C G Patel
Director
4 July 2024
SYKES CHEMISTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SYKES CHEMISTS LIMITED
- 5 -
Opinion

We have audited the financial statements of Sykes Chemists Limited (the 'company') for the year ended 28 February 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's 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 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 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.

Other information

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:

SYKES CHEMISTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SYKES CHEMISTS LIMITED
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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.

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.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the directors (as required by auditing standards) and discussed with the directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

Secondly, the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: laws related to health and safety, employment laws, gender pay gap and consumer protection.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance.

SYKES CHEMISTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SYKES CHEMISTS LIMITED
- 7 -

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some

material misstatements in the financial statements, even though we have properly planned and performed our

audit in accordance with auditing standards. For example, the further removed non-compliance with laws and

regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely

the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit,

there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing noncompliance and cannot be expected to detect non-compliance with all laws and regulations.

We design procedures in line with our responsibilities, outlined below to detect material misstatement due to fraud:

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.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an 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.

Alex Hesketh
Senior Statutory Auditor
For and on behalf of Sumer Auditco Limited
4 July 2024
Statutory Auditor
The Beehive
City Place
Gatwick
RH6 0PA
SYKES CHEMISTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
13,076,868
12,617,674
Cost of sales
(9,246,080)
(8,400,987)
Gross profit
3,830,788
4,216,687
Administrative expenses
(4,135,581)
(3,631,476)
Other operating income
136,031
237,273
Operating (loss)/profit
4
(168,762)
822,484
Interest receivable and similar income
7
5,220
721
Interest payable and similar expenses
8
(167,316)
(81,306)
(Loss)/profit before taxation
(330,858)
741,899
Tax on (loss)/profit
9
(15,557)
(196,197)
(Loss)/profit for the financial year
(346,415)
545,702

The profit and loss account has been prepared on the basis that all operations are continuing operations.

SYKES CHEMISTS LIMITED
BALANCE SHEET
AS AT
28 FEBRUARY 2023
28 February 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
11
1,191,227
1,355,587
Tangible assets
12
1,597,379
1,705,801
Investments
13
377,337
465,240
3,165,943
3,526,628
Current assets
Stocks
15
1,585,711
1,395,831
Debtors
16
2,424,801
1,667,159
Cash at bank and in hand
90,015
1,152,222
4,100,527
4,215,212
Creditors: amounts falling due within one year
17
(2,773,034)
(5,402,608)
Net current assets/(liabilities)
1,327,493
(1,187,396)
Total assets less current liabilities
4,493,436
2,339,232
Creditors: amounts falling due after more than one year
18
(3,777,696)
(1,228,480)
Provisions for liabilities
Deferred tax liability
20
18,324
36,921
(18,324)
(36,921)
Net assets
697,416
1,073,831
Capital and reserves
Called up share capital
22
200,000
200,000
Revaluation reserve
23
227,703
227,703
Profit and loss reserves
269,713
646,128
Total equity
697,416
1,073,831
The financial statements were approved by the board of directors and authorised for issue on 4 July 2024 and are signed on its behalf by:
C G Patel
Director
Company Registration No. 03671068
SYKES CHEMISTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 10 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 March 2021
200,000
227,703
175,426
603,129
Year ended 28 February 2022:
Profit and total comprehensive income for the year
-
-
545,702
545,702
Dividends
10
-
-
(75,000)
(75,000)
Balance at 28 February 2022
200,000
227,703
646,128
1,073,831
Year ended 28 February 2023:
Loss and total comprehensive income for the year
-
-
(346,415)
(346,415)
Dividends
10
-
-
(30,000)
(30,000)
Balance at 28 February 2023
200,000
227,703
269,713
697,416
SYKES CHEMISTS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
86,648
1,460,892
Interest paid
(167,316)
(81,306)
Income taxes paid
(213,483)
(196,360)
Net cash (outflow)/inflow from operating activities
(294,151)
1,183,226
Investing activities
Purchase of tangible fixed assets
(5,775)
(66,564)
Proceeds from disposal of tangible fixed assets
1
15,467
Repayment of loans
(432,781)
18,863
Interest received
5,220
721
Net cash used in investing activities
(433,335)
(31,513)
Financing activities
Repayment of borrowings
-
0
(358,441)
Repayment of bank loans
(324,622)
(288,984)
Dividends paid
(30,000)
(75,000)
Net cash used in financing activities
(354,622)
(722,425)
Net (decrease)/increase in cash and cash equivalents
(1,082,108)
429,288
Cash and cash equivalents at beginning of year
1,152,222
722,934
Cash and cash equivalents at end of year
70,114
1,152,222
Relating to:
Cash at bank and in hand
90,015
1,152,222
Bank overdrafts included in creditors payable within one year
(19,901)
-
0
SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 12 -
1
Accounting policies
Company information

Sykes Chemists Limited is a private company limited by shares incorporated in England and Wales. The registered office is 328 St Helens Road, Bolton, BL3 3RP.

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 investments at fair value. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company 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.

 

The continued going concern status is on the basis that the company banking facilities have been renewed for a 12 month period following the date of signing of these financial statements, although the renewal is subject to specific conditions being in place.

1.3
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.

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.

1.4
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses 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 no more than 10 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.

1.5
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.

SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 13 -

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:

Land & buildings freehold
2% straight line
L&B leasehold & leasehold impr'mts
2% straight line & 20% straight line
Fixtures, fittings & equipment
15% on reducing balance
Motor vehicles
25% on reducing balance

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

1.6
Fixed asset investments

Interests in subsidiaries, associates and jointly controlled entities are measured at fair value. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.7
Impairment of fixed assets

At each reporting period end date, the company 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.

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.

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.

SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 14 -
1.8
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.

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.

1.9
Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.10
Financial instruments

The company 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 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 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.

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.

SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 15 -
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 company 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 company 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.

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 company’s contractual obligations expire or are discharged or cancelled.

1.11
Equity instruments

Equity instruments issued by the company 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 company.

SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 16 -
1.12
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

1.13
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 company’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 is recognised in respect of all timing differences which have originated but not reversed at the balance sheet date. Timing differences are differences between taxable profits and the results as stated in the financial statements which arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

 

A net deferred tax asset is regarded as recoverable and therefore recognised only when it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of underlying timing differences can be deducted.

 

Deferred tax is measured at the average tax rates which are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws which have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non - discounted basis.

1.14
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.

1.15
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.16
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 17 -
2
Judgements and key sources of estimation uncertainty

In the application of the company’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.

 

There are no key estimates to note.

3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Pharmaceutical
13,064,886
12,607,172
Rent receivable
11,982
10,502
13,076,868
12,617,674
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
13,076,868
12,617,674
2023
2022
£
£
Other revenue
Interest income
5,220
721
4
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
12,500
12,500
Depreciation of owned tangible fixed assets
114,196
127,920
Amortisation of intangible assets
164,360
164,360
SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 18 -
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Sales
132
148
Administration
3
3
Total
135
151

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
2,834,155
2,503,609
Social security costs
118,162
110,272
Pension costs
26,197
22,199
2,978,514
2,636,080
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
28,000
42,800
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
384
26
Other interest income
4,836
695
Total income
5,220
721
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
384
26
SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 19 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
167,225
81,213
Other finance costs:
Other interest
91
93
167,316
81,306
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
5,798
185,126
Adjustments in respect of prior periods
28,356
17,143
Total current tax
34,154
202,269
Deferred tax
Origination and reversal of timing differences
(18,597)
(6,072)
Total tax charge
15,557
196,197

The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
(Loss)/profit before taxation
(330,858)
741,899
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
(62,863)
140,961
Tax effect of expenses that are not deductible in determining taxable profit
48,309
31,631
Adjustments in respect of prior years
28,356
-
0
Effect of change in corporation tax rate
(4,199)
-
0
Permanent capital allowances in excess of depreciation
7,053
12,328
Deferred tax adjustments in respect of prior years
(1,099)
-
0
Other tax adjustments
-
0
11,277
Taxation charge for the year
15,557
196,197
SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 20 -
10
Dividends
2023
2022
£
£
Interim paid
30,000
75,000
11
Intangible fixed assets
Goodwill
£
Cost
At 1 March 2022 and 28 February 2023
12,588,153
Amortisation and impairment
At 1 March 2022
11,232,566
Amortisation charged for the year
164,360
At 28 February 2023
11,396,926
Carrying amount
At 28 February 2023
1,191,227
At 28 February 2022
1,355,587
12
Tangible fixed assets
Land & buildings freehold
L&B leasehold & leasehold impr'mts
Leasehold improvements
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 March 2022
1,201,090
615,674
120,911
971,868
155,021
3,064,564
Additions
-
0
-
0
-
0
2,776
2,999
5,775
Disposals
-
0
-
0
-
0
(8,584)
-
0
(8,584)
At 28 February 2023
1,201,090
615,674
120,911
966,060
158,020
3,061,755
Depreciation and impairment
At 1 March 2022
187,110
102,240
113,998
872,269
83,146
1,358,763
Depreciation charged in the year
25,176
12,780
3,956
53,935
18,349
114,196
Eliminated in respect of disposals
-
0
-
0
-
0
(8,583)
-
0
(8,583)
At 28 February 2023
212,286
115,020
117,954
917,621
101,495
1,464,376
Carrying amount
At 28 February 2023
988,804
500,654
2,957
48,439
56,525
1,597,379
At 28 February 2022
1,013,980
513,434
6,913
99,599
71,875
1,705,801
SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 21 -
13
Fixed asset investments
2023
2022
Notes
£
£
Investments in associates
14
377,337
465,240

In the Directors opinion the valuations are materially accurate.

Movements in fixed asset investments
Shares in group and associated undertakings
£
Cost or valuation
At 1 March 2022 & 28 February 2023
465,240
Impairment
At 1 March 2022
-
Impairment losses
87,903
At 28 February 2023
87,903
Carrying amount
At 28 February 2023
377,337
At 28 February 2022
465,240
14
Associates

Details of the company's associates at 28 February 2023 are as follows:

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Nelson (H.C.C.) Limited
England & Wales
Pharmacy
Ordinary A & Ordinary B
34.72
Pharmavon Limited
England & Wales
Pharmacy
Ordinary A & Ordinary B
20.00
15
Stocks
2023
2022
£
£
Finished goods and goods for resale
1,585,711
1,395,831
SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 22 -
16
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,419,587
1,145,558
Corporation tax recoverable
56,486
-
0
Other debtors
630,931
326,291
Prepayments and accrued income
317,797
195,310
2,424,801
1,667,159
17
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
19
125,539
2,979,476
Trade creditors
2,081,764
1,812,469
Corporation tax
62,283
185,126
Other taxation and social security
29,469
22,232
Other creditors
167,479
154,222
Accruals and deferred income
306,500
249,083
2,773,034
5,402,608
18
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
19
3,777,696
1,228,480
19
Loans and overdrafts
2023
2022
£
£
Bank loans
3,883,334
4,207,956
Bank overdrafts
19,901
-
0
3,903,235
4,207,956
Payable within one year
125,539
2,979,476
Payable after one year
3,777,696
1,228,480

Bank loans and overdrafts are secured by way of a mortgage debenture and a first legal charge on the freehold and leasehold property interests of the company.

 

SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 23 -
20
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2023
2022
Balances:
£
£
ACAs
18,324
36,921
2023
Movements in the year:
£
Liability at 1 March 2022
36,921
Credit to profit or loss
(18,597)
Liability at 28 February 2023
18,324
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
26,197
22,199

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

22
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
200,000 Ordinary shares of £1 each
200,000
200,000
23
Revaluation reserve

The revaluation reserve of £227,703 has arisen due to the revaluation of the investments held in associated companies.

24
Related party transactions

During the year a management fee of £125,000 (2022: £132,500) was charged and an additional £nil (2022: £104,773) accrued at the year end, to Pharmavon Limited an associated company of Sykes Chemists Limited due to common control by Mr U G Patel and Mr C G Patel. At the year end a balance of £34,000 (2022: £34,000) was due from Pharmavon Limited and included in other creditors.

 

During the year rental costs totalling £110,268 (2022: £110,268) was charged by C Patel & U Patel Property Partnership, a related company due to common control.

SYKES CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 24 -
25
Directors' transactions

Dividends totalling £30,000 (2022 - £75,000) were paid in the year in respect of shares held by the company's directors.

Description
% Rate
Opening balance
Amounts advanced
Interest charged
Amounts repaid
Closing balance
£
£
£
£
£
Director's loan account
2.00
27,264
557,159
4,836
(129,214)
460,045
27,264
557,159
4,836
(129,214)
460,045
26
Ultimate controlling party

The reporting entity is jointly controlled by the Directors, Mr C G Patel and Mr U G Patel.

27
Cash generated from operations
2023
2022
£
£
(Loss)/profit for the year after tax
(346,415)
545,702
Adjustments for:
Taxation charged
15,557
196,197
Finance costs
167,316
81,306
Investment income
(5,220)
(721)
Amortisation and impairment of intangible assets
164,360
164,360
Depreciation and impairment of tangible fixed assets
202,099
127,920
Movements in working capital:
Increase in stocks
(189,880)
(177,992)
(Increase)/decrease in debtors
(268,375)
821,558
Increase/(decrease) in creditors
347,206
(297,438)
Cash generated from operations
86,648
1,460,892
28
Analysis of changes in net debt
1 March 2022
Cash flows
28 February 2023
£
£
£
Cash at bank and in hand
1,152,222
(1,062,207)
90,015
Bank overdrafts
-
0
(19,901)
(19,901)
1,152,222
(1,082,108)
70,114
Borrowings excluding overdrafts
(4,207,956)
324,622
(3,883,334)
(3,055,734)
(757,486)
(3,813,220)
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