Company registration number SC567980 (Scotland)
SCOTPHARM (MNA) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
SCOTPHARM (MNA) LIMITED
COMPANY INFORMATION
Directors
Mr M Nickkho-Amiry
Mrs S Nickkho-Amiry
Mr B Dear
Mrs L Dear
Company number
SC567980
Registered office
Norwood
3 Beech Road
Lenzie
G66 4HN
Auditor
Thomson Cooper
3 Castle Court
Carnegie Campus
Dunfermline
Fife
KY11 8PB
Business address
Norwood
3 Beech Road
Lenzie
G66 4HN
Bankers
Santander (Bootle)
Bridle Road
Bootle
Merseryside
L30 4GB
SCOTPHARM (MNA) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Group statement of comprehensive income
8
Group balance sheet
9
Company balance sheet
10
Group statement of changes in equity
11
Company statement of changes in equity
12
Group statement of cash flows
13
Company statement of cash flows
14
Notes to the financial statements
15 - 34
SCOTPHARM (MNA) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 1 -

The directors present the strategic report for the year ended 31 July 2023.

Review of the business

 

The company is a non-trading holding company. The group has a prinicpal trading subsidiary, Barrie Dear limited.

 

The principal activity of the subsidiary is running retail pharmacy and travel clinics trading as Dears Pharmacy and Dears Health & Beauty.

 

The results are set out in the Profit and Loss account on page 8.

 

Trading conditions for the group have been challenging primarily due to the increased demand on pharmacies to deliver an increased range of services and growing prescription volumes with scaling resources up to meet the increased volume.

 

The business has continued to invest in ways to assist with scaling up and has throughout the course of this year set up a spoke and hub dispensing centre for our Pick 2 Prescription work and invested in a further robot to assist with our PillPouch solution. These investments allow the group to maximize all available growth streams and support our teams to deliver the highest level of service at all times through centralised dispensing.

 

The business continues to meet these needs through increased investment in staffing and resources to support training and development. Throughout the year we further invested in automation and technology including more automated collection points and fleet including our transition to greener deliveries with our new electric mopeds as part of the strive to have full green delivery service by 2025.

 

This investment will allow the group to drive improvements and efficiencies for the future with the investment made in the financial year.

 

The group expects trading levels to continue over the next year and will continue with our rolling program of refits and relocations leading to improvements and efficiency savings. Improvement in stock management processes have been made to negate changes due to the pandemic and supply due to ongoing supply challenges overall in the market.

 

Increased revenues from opportunities presented from the NHS Pharmacy Contract and developing our range of private services continue to be adapted and evolved. Our rolling program for staff training and development will facilitate this to ensure continued levels of excellent customer service.

 

During the year the group has formed a new wholly owned subsidiary and has entered into an agreement to purchase a number of retail units from another group to further expand its portfolio of pharmacies within the areas where it currently operates. As a result Barrie Dear Limited, a subsidiary company has paid a non-refundable deposit of £2.2m.

SCOTPHARM (MNA) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 2 -
Key performance indicators

 

The group uses a range of Key Performance Indicators to measure performance which incorporates financial and non-financial metrics. All of these are monitored closely and reviewed throughout the year. 

 

Annualised earnings before interest, tax depreciation and amortisation (EBITDA) is £3,231,711 for the year (2022 - £2,987,718).

 

Financial risk management objectives and policies 

 

The group finances its operations through a mixture of retained profits and where necessary to fund expansion or capital expenditure through bank borrowings. The main objectives are to:

 

  1. Retain sufficient liquid funds to enable to meet day to day obligations 

  2. Minimise company exposure to fluctuations in interest rates when seeking borrowing

  3. Match the repayment schedule of any borrowings with expected future cash flows expected to arise from trading activities 

 

The group does not use any hedge fund accounting. The exposure to price risk, credit risk, liquidity risk and cash flow is minimized where possible. 

On behalf of the board

Mr M Nickkho-Amiry
Director
2 October 2024
SCOTPHARM (MNA) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 July 2023.

Principal activities

The principal activity of the company is that of a holding company. The principal activity of the group is that of a dispensing chemist in specialised stores.

Results and dividends

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

Ordinary dividends were paid amounting to £60,000. 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:

Mr M Nickkho-Amiry
Mrs S Nickkho-Amiry
Mr B Dear
Mrs L Dear
Auditor

Thomson Cooper were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

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:

 

 

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.

SCOTPHARM (MNA) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 4 -
Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
Mr M Nickkho-Amiry
Director
2 October 2024
SCOTPHARM (MNA) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SCOTPHARM (MNA) LIMITED
- 5 -

Qualified Opinion

We have audited the financial statements of Scotpharm (MNA) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 July 2023 which comprise 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, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements::

Basis for qualified opinion

During our course of the audit, we have been unable to verify and support the stock valuation and NHS sale accrual.

 

We have been unable to satisfy ourselves by alternative means regarding the valuation of stock and the completeness of income for the current year in respect of the above limitation. Consequently, we are unable to determine if any adjustment is required to the carrying value of stock or satisfy ourselves over the completeness of NHS sale accrual.

 

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 qualified opinion.

Material uncertainty relating to going concern

We draw attention to note 1.3 in the financial statements. As stated in this note, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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.

 

As described in the Basis for qualified opinion section of our report, our audit opinion is qualified in respect to the stock and NHS sales accrual balance.

SCOTPHARM (MNA) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCOTPHARM (MNA) LIMITED
- 6 -

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

In respect solely of the limitation on our work relating to stock and accrued NHS Sales, described above:

 

 

Except for the matter described in the Basis for qualified section of our report, 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 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Extent to which the audit was capable of detecting irregularities, including fraud

We considered the opportunities and incentives that may exist within the group for fraud and identified the greatest potential for fraud in the following areas: existence and timing of recognition of income, posting of unusual journals along with complex transactions and manipulating the group’s key performance indicators to meet targets. We discussed these risks with management, designed audit procedures to test the timing and existence of revenue, tested a sample of journals to confirm they were appropriate and reviewed areas of judgement for indicators of management bias to address these risks.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience through discussion with the officers and other management (as required by the auditing standards).

SCOTPHARM (MNA) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCOTPHARM (MNA) LIMITED
- 7 -

We reviewed the laws and regulations in areas that directly affect the financial statements including financial and taxation legislation and considered the extent of compliance with those laws and regulations as part of our procedures on the related financial statement items.

With the exception of any known or possible non-compliance with relevant and significant laws and regulations, and as required by the auditing standards, our work in respect of these was limited to enquiry of the officers and management of the group.

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.

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. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

 

These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations.

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.

Alan Mitchell (Senior Statutory Auditor)
For and on behalf of Thomson Cooper, Statutory Auditors
Dunfermline
2 October 2024
SCOTPHARM (MNA) LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
21,474,798
17,671,534
Cost of sales
(11,884,083)
(9,819,446)
Gross profit
9,590,715
7,852,088
Administrative expenses
(7,965,948)
(6,363,793)
Other operating income
603
9,923
Operating profit
4
1,625,370
1,498,218
Interest receivable and similar income
6
1,472
-
0
Interest payable and similar expenses
7
(1,235,802)
(1,078,923)
Profit before taxation
391,040
419,295
Tax on profit
8
(192,715)
(718)
Profit for the financial year
198,325
418,577
Profit for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.
SCOTPHARM (MNA) LIMITED
GROUP BALANCE SHEET
AS AT
31 JULY 2023
31 July 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
10
18,894,281
20,207,877
Other intangible assets
10
17,850
35,700
Total intangible assets
18,912,131
20,243,577
Tangible assets
11
1,648,120
1,533,406
Investment property
12
627,430
545,000
21,187,681
22,321,983
Current assets
Stocks
15
2,406,833
2,092,656
Debtors
16
7,221,478
1,988,708
Cash at bank and in hand
744,889
1,165,020
10,373,200
5,246,384
Creditors: amounts falling due within one year
17
(8,075,189)
(3,674,482)
Net current assets
2,298,011
1,571,902
Total assets less current liabilities
23,485,692
23,893,885
Creditors: amounts falling due after more than one year
18
(20,067,242)
(20,601,150)
Provisions for liabilities
Deferred tax liability
21
192,434
205,044
(192,434)
(205,044)
Net assets
3,226,016
3,087,691
Capital and reserves
Called up share capital
23
50
50
Share premium account
4,044,000
4,044,000
Profit and loss reserves
(818,034)
(956,359)
Total equity
3,226,016
3,087,691

These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.

The financial statements were approved by the board of directors and authorised for issue on 2 October 2024 and are signed on its behalf by:
02 October 2024
Mr M Nickkho-Amiry
Director
Company registration number SC567980 (Scotland)
SCOTPHARM (MNA) LIMITED
COMPANY BALANCE SHEET
AS AT 31 JULY 2023
31 July 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
10
17,850
35,700
Investments
13
13,480,100
13,480,100
13,497,950
13,515,800
Current assets
Debtors
16
8,265,864
9,050,091
Cash at bank and in hand
147,270
24,408
8,413,134
9,074,499
Creditors: amounts falling due within one year
17
(1,259,836)
(1,174,156)
Net current assets
7,153,298
7,900,343
Total assets less current liabilities
20,651,248
21,416,143
Creditors: amounts falling due after more than one year
18
(16,548,460)
(17,370,682)
Net assets
4,102,788
4,045,461
Capital and reserves
Called up share capital
23
50
50
Share premium account
4,044,000
4,044,000
Profit and loss reserves
58,738
1,411
Total equity
4,102,788
4,045,461

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 £117,327 (2022 - £150,101 profit).

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 2 October 2024 and are signed on its behalf by:
02 October 2024
Mr M Nickkho-Amiry
Director
Company registration number SC567980 (Scotland)
SCOTPHARM (MNA) LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2023
- 11 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 August 2021
50
4,044,000
(1,273,604)
2,770,446
Year ended 31 July 2022:
Profit and total comprehensive income
-
-
418,577
418,577
Dividends
9
-
-
(101,332)
(101,332)
Balance at 31 July 2022
50
4,044,000
(956,359)
3,087,691
Year ended 31 July 2023:
Profit and total comprehensive income
-
-
198,325
198,325
Dividends
9
-
-
(60,000)
(60,000)
Balance at 31 July 2023
50
4,044,000
(818,034)
3,226,016
SCOTPHARM (MNA) LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2023
- 12 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 August 2021
50
4,044,000
(47,358)
3,996,692
Year ended 31 July 2022:
Profit and total comprehensive income for the year
-
-
150,101
150,101
Dividends
9
-
-
(101,332)
(101,332)
Balance at 31 July 2022
50
4,044,000
1,411
4,045,461
Year ended 31 July 2023:
Profit and total comprehensive income
-
-
117,327
117,327
Dividends
9
-
-
(60,000)
(60,000)
Balance at 31 July 2023
50
4,044,000
58,738
4,102,788
SCOTPHARM (MNA) LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
27
(392,197)
2,622,615
Interest paid
(1,235,802)
(1,078,923)
Income taxes refunded/(paid)
225,094
(1)
Net cash (outflow)/inflow from operating activities
(1,402,905)
1,543,691
Investing activities
Proceeds from disposal of intangibles
-
25,000
Purchase of tangible fixed assets
(389,609)
(804,244)
Proceeds from disposal of tangible fixed assets
-
11,308
Purchase of investment property
(82,430)
(545,000)
Repayment of loans
-
(3,993)
Interest received
1,472
-
0
Net cash used in investing activities
(470,567)
(1,316,929)
Financing activities
Repayment of borrowings
160,607
306,652
Repayment of directors loan
(183,356)
-
Proceeds from new bank loans
-
538,957
New bank loans
1,347,946
(519,881)
New finance leases obligations
188,144
(36,223)
Dividends paid to equity shareholders
(60,000)
(101,332)
Net cash generated from financing activities
1,453,341
188,173
Net (decrease)/increase in cash and cash equivalents
(420,131)
414,935
Cash and cash equivalents at beginning of year
1,165,020
750,085
Cash and cash equivalents at end of year
744,889
1,165,020
SCOTPHARM (MNA) LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2023
- 14 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
28
833,679
463,166
Interest paid
(889,316)
(909,176)
Net cash outflow from operating activities
(55,637)
(446,010)
Investing activities
Acquisition of subsidiary
-
0
(100)
Repayment of loans
1
(3,993)
Interest received
915,708
909,176
Dividends received
118,226
173,870
Net cash generated from investing activities
1,033,935
1,078,953
Financing activities
Repayment of bank loans
(795,436)
(519,882)
Dividends paid to equity shareholders
(60,000)
(101,332)
Net cash used in financing activities
(855,436)
(621,214)
Net increase in cash and cash equivalents
122,862
11,729
Cash and cash equivalents at beginning of year
24,408
12,679
Cash and cash equivalents at end of year
147,270
24,408
SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
- 15 -
1
Accounting policies
Company information

Scotpharm (MNA) Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is Norwood, 3 Beech Road, Lenzie, G66 4HN.

 

The group consists of Scotpharm (MNA) Limited 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 investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Scotpharm (MNA) Limited 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 July 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.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 16 -
1.3
Going concern

The group reports a pre-tax profit in the year of £391,040 and has net current assets of £2.1m. Excluding the shareholder loans, the group has net assets of £12.1m.

 

During the year a subsidiary of the group had committed to a acquire a number of retail pharmacy units for which a non-refundable deposit of £2.2m has been paid. The group's existing bank funding is also due to be refinanced in November 2024.

 

The current and future cash position of the group has been reviewed by the directors. This included a comprehensive review of the financial projections and cash-flow requirements covering a period of more than twelve months from the date of approval of the financial statements. The projections, which have been prepared based upon the outcome of funding support for the above transaction, make key assumptions around:

 

 

The directors have considered the implications for cash flow if the appropriate funding for the above acquisition transaction is not secured and the resultant loss of the deposit of £2.2m.

 

The directors acknowledge that the group's liquidity position is reliant on the above key assumptions and without this a material uncertainty would exist which may cast doubt over the group's ability to continue as a going concern.

 

After due consideration of the above, including the potential impact of key assumptions not materialising, the directors are satisfied that the group has adequate resources to continue in operational existence for a period of not less than twelve months from the date of approval of the financial statements. Accordingly, the directors consider it appropriate to prepare the financial statements on the going concern basis.

1.4
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.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 17 -
1.5
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 twenty 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.

1.6
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:

Legal fees
20% straight line
1.7
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
10% straight line
Leasehold improvements
10% straight line
Plant and equipment
15% reducing balance
Fixtures and fittings
15% reducing balance
Motor vehicles
25% 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 recognised in the profit and loss account.

1.8
Investment properties

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

 

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 18 -
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.

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 group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

 

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

 

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

 

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

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

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.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 19 -

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.

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
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.

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.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 20 -
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 and loans from fellow group companies, 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 group's contractual obligations expire or are discharged or cancelled.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 21 -
1.13
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.

1.14
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.

1.15
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.

1.16
Retirement benefits

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

1.17
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.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 22 -

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

1.18
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a 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.

Critical judgements

The company has estimated the NHS sales accrual at year end. The estimate is based on the NHS receipts received and is deemed appropriate.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Goodwill

The directors believe an amortisation policy of twenty years to be a reliable estimate of the useful economic life of goodwill arising on consolidation. The estimate is based on a variety of factors and the directors regularly monitor the underlying performance of group companies to satisfy themselves that the twenty year write off policy remains appropriate.

Stock

The Company have established an estimate of the stock valuation based on the lower of cost and net realisable value and taking account of the stock obsolescence.

NHS Sales

The company has estimated the NHS sales accrual at year end. The estimate is based on the NHS receipts received and is deemed appropriate.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 23 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
General Sales
1,924,423
2,524,270
NHS sales
19,550,375
15,147,264
21,474,798
17,671,534
2023
2022
£
£
Other revenue
Interest income
1,472
-
Grants received
-
9,723
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Government grants
-
(9,723)
Fees payable to the group's auditor for the audit of the group's financial statements
7,025
5,500
Depreciation of owned tangible fixed assets
202,609
158,054
Depreciation of tangible fixed assets held under finance leases
72,286
18,854
Profit on disposal of tangible fixed assets
-
(5,965)
Amortisation of intangible assets
1,331,446
1,331,446
Operating lease charges
24,450
9,016
5
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
Pharmaceutical and support staff
219
179
-
0
-
0
SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
5
Employees
(Continued)
- 24 -

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
4,302,268
3,363,682
-
0
-
0
Social security costs
305,555
225,183
-
-
Pension costs
72,169
53,426
-
0
-
0
4,679,992
3,642,291
-
0
-
0
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
1,472
-
0
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
1,472
-
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
368,113
372,236
Other finance costs:
Interest on finance leases and hire purchase contracts
15,071
4,501
Other interest
852,618
702,186
Total finance costs
1,235,802
1,078,923
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
366,907
287,032
Adjustments in respect of prior periods
(161,582)
(407,064)
Total current tax
205,325
(120,032)
SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
8
Taxation
2023
2022
£
£
(Continued)
- 25 -
Deferred tax
Origination and reversal of timing differences
(12,610)
70,660
Changes in tax rates
-
0
50,090
Total deferred tax
(12,610)
120,750
Total tax charge
192,715
718

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
391,040
419,295
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
97,760
79,666
Tax effect of expenses that are not deductible in determining taxable profit
46,850
15,321
Tax effect of income not taxable in determining taxable profit
(36,155)
-
0
Adjustments in respect of prior years
(161,582)
(407,064)
Effect of change in corporation tax rate
(63,985)
-
Group relief
-
0
2,908
Permanent capital allowances in excess of depreciation
(39,982)
(60,446)
Amortisation on assets not qualifying for tax allowances
332,863
249,583
Dividend income
29,556
-
Deferred tax
(12,610)
120,750
Taxation charge
192,715
718
9
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Final paid
60,000
101,332
SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 26 -
10
Intangible fixed assets
Group
Goodwill
Legal fees
Total
£
£
£
Cost
At 1 August 2022 and 31 July 2023
26,153,094
89,250
26,242,344
Amortisation and impairment
At 1 August 2022
5,945,217
53,550
5,998,767
Amortisation charged for the year
1,313,596
17,850
1,331,446
At 31 July 2023
7,258,813
71,400
7,330,213
Carrying amount
At 31 July 2023
18,894,281
17,850
18,912,131
At 31 July 2022
20,207,877
35,700
20,243,577
Company
Legal fees
£
Cost
At 1 August 2022 and 31 July 2023
89,250
Amortisation and impairment
At 1 August 2022
53,550
Amortisation charged for the year
17,850
At 31 July 2023
71,400
Carrying amount
At 31 July 2023
17,850
At 31 July 2022
35,700
SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 27 -
11
Tangible fixed assets
Group
Freehold land and buildings
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 August 2022
517,096
563,845
361,965
514,604
49,191
151,948
2,158,649
Additions
-
0
4,600
207,540
3,784
18,031
155,654
389,609
At 31 July 2023
517,096
568,445
569,505
518,388
67,222
307,602
2,548,258
Depreciation and impairment
At 1 August 2022
72,507
105,092
98,028
283,677
-
0
65,939
625,243
Depreciation charged in the year
51,710
56,845
70,721
35,207
-
0
60,412
274,895
At 31 July 2023
124,217
161,937
168,749
318,884
-
0
126,351
900,138
Carrying amount
At 31 July 2023
392,879
406,508
400,756
199,504
67,222
181,251
1,648,120
At 31 July 2022
444,589
458,753
263,937
230,927
49,191
86,009
1,533,406
The company had no tangible fixed assets at 31 July 2023 or 31 July 2022.
SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 28 -
12
Investment property
Group
Company
2023
2023
£
£
Fair value
At 1 August 2022 and 31 July 2023
545,000
-
Additions
82,430
-
At 31 July 2023
627,430
-

Investment property comprises 2 properties (2022 - 1). In the opinion of the Directors the historical cost approximates to the fair value of the balance sheet date.

13
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
14
-
0
-
0
13,480,100
13,480,100
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 August 2022 and 31 July 2023
13,480,100
Carrying amount
At 31 July 2023
13,480,100
At 31 July 2022
13,480,100
14
Subsidiaries

Details of the company's subsidiaries at 31 July 2023 are as follows:

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Barrie Dear Limited
Scotland
Retail dispensing chemist
Ordinary
100.00
Rosewell Pharmacy Ltd
Scotland
Non-trading
Ordinary
100.00
MSBL Properties Limited
Scotland
Property Rental
Ordinary
100.00
15
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Finished goods and goods for resale
2,406,833
2,092,656
-
0
-
0
SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 29 -
16
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
3,718,157
1,476,091
-
0
-
0
Corporation tax recoverable
164,918
235,165
-
0
-
0
Other debtors
3,283,863
218,509
17,742
17,893
Prepayments and accrued income
54,540
58,943
-
0
-
0
7,221,478
1,988,708
17,742
17,893
Amounts falling due after more than one year:
Amounts owed by group undertakings
-
-
8,248,122
9,032,198
Total debtors
7,221,478
1,988,708
8,265,864
9,050,091

Amounts due from group undertakings are not repayable within 12 months.

17
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans
19
3,015,987
820,041
822,222
795,436
Obligations under finance leases
20
75,384
40,725
-
0
-
0
Other borrowings
19
300,000
300,000
300,000
300,000
Trade creditors
3,435,007
2,020,620
-
0
-
0
Corporation tax payable
647,204
287,032
4,446
-
0
Other taxation and social security
329,097
73,341
-
-
Other creditors
(22,142)
34,756
(36,560)
18,985
Accruals and deferred income
294,652
97,967
169,728
59,735
8,075,189
3,674,482
1,259,836
1,174,156
18
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
19
10,851,035
11,699,035
10,362,460
11,184,682
Obligations under finance leases
20
166,996
13,511
-
0
-
0
Other borrowings
19
9,049,211
8,888,604
6,186,000
6,186,000
20,067,242
20,601,150
16,548,460
17,370,682
SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 30 -
19
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
13,867,022
12,519,076
11,184,682
11,980,118
Other loans
9,349,211
9,188,604
6,486,000
6,486,000
23,216,233
21,707,680
17,670,682
18,466,118
Payable within one year
3,315,987
1,120,041
1,122,222
1,095,436
Payable after one year
19,900,246
20,587,639
16,548,460
17,370,682

All assets of the company are subject to a floating charge held by the company's bank. The company is not allowed to pledge these assets as security for any other borrowings. The bank loan is repayable over 5 years and interest is charged at 2.97%.

Other loans shown above represent loan notes of £5,000,000 with an interest rate of 10% and loan notes of £1,486,000 with an interest rate of 2.85%. The 10% loan notes are repayable by instalments. The first instalment is repayable on demand and is included within creditors due within one year. The remaining instalments are payable at intervals to be agreed. The 2.85% loan notes are also repayable by instalments at intervals to be agreed but no sooner than 30 September 2025. Other loans also incorporates amounts due to directors Barrie and Lesley Dear of £2,863,211 in respect of their directors' loan accounts within Barrie Dear Limited.

20
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
75,384
40,725
-
0
-
0
In two to five years
166,996
13,511
-
0
-
0
242,380
54,236
-
-

Finance lease payments represent rentals payable by the company 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.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 31 -
21
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
192,434
205,044
The company has no deferred tax assets or liabilities.
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 August 2022
205,044
67,853
(Credit)/charge to profit or loss
(12,610)
16,441
Liability at 31 July 2023
192,434
84,294

The deferred tax liability set out above is expected to reverse within 36 months and relates to accelerated capital allowances that are expected to mature within the same period.

22
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
72,169
53,426

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.

23
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of 50p each
70
70
35
35
Ordinary B shares of 50p each
30
30
15
15
100
100
50
50

All classes of shares hold the same voting rights.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 32 -
24
Capital commitments

Amounts contracted for but not provided in the financial statements:

Group
Company
2023
2022
2023
2022
£
£
£
£
Acquisition of tangible fixed assets
-
151,300
-
-
25
Events after the reporting date

Since the year end the group has formed a new wholly owned subsidiary, Barrie Dear Sapphire Limited. This new subsidiary has entered into agreement to acquire a number of retail pharmacy units for £12.3m. As part of these agreements, a fellow subsidiary company, Barrie Dear Limited, has paid a non refundable deposit of £2.2m.

26
Related party transactions

Group

 

Debtors includes £684,152 (2022 - £36,098) in respect of the sale of goods and services to entities in which a director holds an interest. Also included within debtors due within one year is a directors' loan in the name of Mahyar Nickkho-Amiry in the amount of £183,357 (2022 - £(9,971)). This loan is interest free and repayable on demand.

The group paid rent of £53,000 (2022 - £53,000) to an entity in which a director holds an interest.

Included in creditors due within one year is £nil (2022 - £5,800) due to a company in which a director holds an interest.

Included within creditors due after one year are directors' loans in the name of director Barrie Dear in the amount of £1,431,605 ( 2022 - £1,351,302) and director Lesley Dear in the amount of £1,431,605 (2022 - £1,351,302).

 

Company

 

During the year, the company did not transact with related parties out with the group. In accordance with section 33.1A of FRS 102, the company is not required to make disclosure of transactions between members of the group.

SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 33 -
27
Cash (absorbed by)/generated from group operations
2023
2022
£
£
Profit for the year after tax
198,325
418,577
Adjustments for:
Taxation charged
192,715
718
Finance costs
1,235,802
1,078,923
Investment income
(1,472)
-
0
Gain on disposal of tangible fixed assets
-
(5,965)
Amortisation and impairment of intangible assets
1,331,446
1,331,446
Depreciation and impairment of tangible fixed assets
274,895
176,908
Movements in working capital:
Increase in stocks
(314,177)
(871,370)
(Increase)/decrease in debtors
(5,119,661)
11,731
Increase in creditors
1,809,930
481,647
Cash (absorbed by)/generated from operations
(392,197)
2,622,615
28
Cash generated from operations - company
2023
2022
£
£
Profit for the year after tax
117,327
150,101
Adjustments for:
Taxation charged
4,446
-
0
Finance costs
889,316
909,176
Investment income
(1,033,934)
(1,083,046)
Amortisation and impairment of intangible assets
17,850
17,850
Movements in working capital:
Decrease in debtors
784,226
413,365
Increase in creditors
54,448
55,720
Cash generated from operations
833,679
463,166
29
Analysis of changes in net debt - group
1 August 2022
Cash flows
31 July 2023
£
£
£
Cash at bank and in hand
1,165,020
(420,131)
744,889
Borrowings excluding overdrafts
(21,707,680)
(1,508,553)
(23,216,233)
Obligations under finance leases
(54,236)
(188,144)
(242,380)
(20,596,896)
(2,116,828)
(22,713,724)
SCOTPHARM (MNA) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 34 -
30
Analysis of changes in net debt - company
1 August 2022
Cash flows
31 July 2023
£
£
£
Cash at bank and in hand
24,408
122,862
147,270
Borrowings excluding overdrafts
(18,466,118)
795,436
(17,670,682)
(18,441,710)
918,298
(17,523,412)
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