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COMPANY REGISTRATION NUMBER: 02587906
MEDICARE CHEMISTS LIMITED
FINANCIAL STATEMENTS
30 September 2023
MEDICARE CHEMISTS LIMITED
FINANCIAL STATEMENTS
YEAR ENDED 30 SEPTEMBER 2023
Contents
Pages
Officers and professional advisers 1
Strategic report 2
Directors' report 3 to 4
Independent auditor's report to the members 5 to 8
Profit and loss account 9
Balance sheet 10
Statement of changes in shareholders funds 11
Statement of cash flows 12
Notes to the financial statements 13 to 23
MEDICARE CHEMISTS LIMITED
OFFICERS AND PROFESSIONAL ADVISERS
The board of directors
Afzal Mohammed Khan
Asghar Mohammed Khan
Company secretary
Naheed Afzal
Registered office
Medicare House
1 Meltham Road
Lockwood
West Yorkshire
HD1 3TJ
Auditor
Wheawill & Sudworth Limited
Chartered accountants & statutory auditor
35 Westgate
Huddersfield
HD1 1PA
Bankers
Handelsbanken
12 Longbow Close
Pennine Business Park
Bradley
Huddersfield
West Yorkshire
HD2 1GQ
MEDICARE CHEMISTS LIMITED
STRATEGIC REPORT
YEAR ENDED 30 SEPTEMBER 2023
The directors present their strategic report for the year ended 30 September 2023. Business review The business achieved another satisfactory trading result despite challenging inflationary conditions. Turnover was maintained despite funding pressures but the operating profit was adversely impacted by increases in the cost of both drugs and labour. Performance and developments during the year The directors are continuing to pursue initiatives to continue turnover growth and improve the gross margin. Principal risks and uncertainties The business remains exposed to a range of risk factors including the sourcing and pricing of products, adequate supply of skilled labour and general economic and political uncertainties. These are managed through careful market and data analysis, sensible planning, maintaining close dialogue with customers and suppliers and early reaction to changes affecting the business. Financial instruments The company's principal financial instruments comprise bank balances, trade debtors and trade creditors. The main purpose of these instruments is to raise funds to finance the company's operations. Due to the nature of the financial instruments used by the company there is no material exposure to price risk. The company's approach to managing other risks applicable to the financial instruments concerned is shown below. In respect of bank balances the liquidity risk is managed by maintaining a balance between the effective use of cash reserves and maintenance of a working capital buffer. Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both length of time and credit limits. Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due. Financial key performance indicators A range of KPIs, including order intake, margin achievement, overhead control and collection of trade receivables will continue to be monitored as part of the ongoing management of the company's operations. Outlook Based on current data, the directors anticipate further progression in the business during 2023/24. Various new initiatives have been introduced to enhance turnover, operational efficiencies and regulatory compliance.
This report was approved by the board of directors on 25 September 2024 and signed on behalf of the board by:
Afzal Mohammed Khan
Director
MEDICARE CHEMISTS LIMITED
DIRECTORS' REPORT
YEAR ENDED 30 SEPTEMBER 2023
The directors present their report and the financial statements of the company for the year ended 30 September 2023 .
Principal activities
The principal activity of the company during the year was that of retail chemists.
Directors
The directors who served the company during the year were as follows:
Afzal Mohammed Khan
Asghar Mohammed Khan
Dividends
The directors do not recommend the payment of a dividend.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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 the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgments and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and 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.
Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This report was approved by the board of directors on 25 September 2024 and signed on behalf of the board by:
Afzal Mohammed Khan
Director
MEDICARE CHEMISTS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MEDICARE CHEMISTS LIMITED
YEAR ENDED 30 SEPTEMBER 2023
Opinion
We have audited the financial statements of Medicare Chemists Limited (the 'company') for the year ended 30 September 2023 which comprise the profit and loss account, balance sheet, statement of changes in shareholders funds, statement of cash flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 30 September 2023 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities 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. 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. In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 the audit:
- the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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: - adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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: Obtained an understanding of the legal and regulatory framework applicable to the entity and how the entity is complying with that framework; Assessment of the susceptibility of the entity’s financial statements to material misstatement, including how fraud might occur; Ensured whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations; Gained clear understanding of the entity’s current activities, the scope of its authorisation and confirmed the effectiveness of its control environment where the entity is a regulated entity; Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 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.
D M Butterworth
(Senior Statutory Auditor)
For and on behalf of
Wheawill & Sudworth Limited
Chartered accountants & statutory auditor
35 Westgate
Huddersfield
HD1 1PA
25 September 2024
MEDICARE CHEMISTS LIMITED
PROFIT AND LOSS ACCOUNT
YEAR ENDED 30 SEPTEMBER 2023
2023
2022
Note
£
£
Turnover
4
9,479,006
9,471,206
Cost of sales
( 6,093,110)
( 5,690,176)
------------
------------
Gross profit
3,385,896
3,781,030
Administrative expenses
( 2,572,563)
( 2,446,298)
Other operating income
5
24,700
2,000
------------
------------
Operating profit
6
838,033
1,336,732
Other interest receivable and similar income
9
31,138
4,421
Interest payable and similar expenses
10
( 15,345)
( 3,991)
------------
------------
Profit before taxation
853,826
1,337,162
Tax on profit
11
( 210,576)
( 303,295)
------------
------------
Profit for the financial year and total comprehensive income
643,250
1,033,867
------------
------------
All the activities of the company are from continuing operations.
MEDICARE CHEMISTS LIMITED
BALANCE SHEET
30 September 2023
2023
2022
Note
£
£
Fixed assets
Intangible assets
12
414,966
487,256
Tangible assets
13
185,577
215,115
Investments
14
300,100
300,101
------------
------------
900,643
1,002,472
Current assets
Stocks
15
363,158
345,411
Debtors
16
5,874,144
5,051,717
Cash at bank and in hand
2,038,473
1,882,189
------------
------------
8,275,775
7,279,317
Creditors: amounts falling due within one year
17
( 2,427,917)
( 2,115,571)
------------
------------
Net current assets
5,847,858
5,163,746
------------
------------
Total assets less current liabilities
6,748,501
6,166,218
Creditors: amounts falling due after more than one year
18
( 6,720)
( 69,187)
Provisions
19
( 17,500)
( 16,000)
------------
------------
Net assets
6,724,281
6,081,031
------------
------------
Capital and reserves
Called up share capital
23
105
105
Profit and loss account
6,724,176
6,080,926
------------
------------
Shareholders funds
6,724,281
6,081,031
------------
------------
These financial statements were approved by the board of directors and authorised for issue on 25 September 2024 , and are signed on behalf of the board by:
Afzal Mohammed Khan
Director
Company registration number: 02587906
MEDICARE CHEMISTS LIMITED
STATEMENT OF CHANGES IN SHAREHOLDERS FUNDS
YEAR ENDED 30 SEPTEMBER 2023
Called up share capital
Profit and loss account
Total
£
£
£
At 1 October 2021
105
5,047,059
5,047,164
Profit for the year
1,033,867
1,033,867
------------
------------
------------
Total comprehensive income for the year
1,033,867
1,033,867
At 30 September 2022
105
6,080,926
6,081,031
Profit for the year
643,250
643,250
------------
------------
------------
Total comprehensive income for the year
643,250
643,250
------------
------------
------------
At 30 September 2023
105
6,724,176
6,724,281
------------
------------
------------
MEDICARE CHEMISTS LIMITED
STATEMENT OF CASH FLOWS
YEAR ENDED 30 SEPTEMBER 2023
2023
2022
£
£
Cash flows from operating activities
Profit for the financial year
643,250
1,033,867
Adjustments for:
Depreciation of tangible assets
31,514
29,712
Amortisation of intangible assets
72,290
72,290
Government grant income
( 9,000)
Other interest receivable and similar income
( 31,138)
( 4,421)
Interest payable and similar expenses
15,345
3,991
Loss on disposal of tangible assets
859
Tax on profit
210,576
303,295
Changes in:
Stocks
( 17,747)
( 427)
Trade and other debtors
( 822,427)
( 113,933)
Trade and other creditors
24,035
( 218,854)
------------
------------
Cash generated from operations
116,698
1,106,379
Interest paid
( 15,345)
( 3,991)
Interest received
31,138
4,421
Tax received/(paid)
16,769
( 83,011)
------------
------------
Net cash from operating activities
149,260
1,023,798
------------
------------
Cash flows from investing activities
Purchase of tangible assets
( 1,976)
( 38,256)
Proceeds from sale of tangible assets
5,250
Proceeds from sale of subsidiaries
1
------------
------------
Net cash used in investing activities
( 1,975)
( 33,006)
------------
------------
Cash flows from financing activities
Proceeds from loans from group undertakings
( 1)
Government grant income
9,000
------------
------------
Net cash from financing activities
8,999
------------
------------
Net increase in cash and cash equivalents
156,284
990,792
Cash and cash equivalents at beginning of year
1,882,189
891,397
------------
------------
Cash and cash equivalents at end of year
2,038,473
1,882,189
------------
------------
MEDICARE CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 SEPTEMBER 2023
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is Medicare House, 1 Meltham Road, Lockwood, West Yorkshire, HD1 3TJ.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably. Revenue from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period provided that the outcome can be reliably estimated. When the outcome cannot be reliably estimated, revenue is recognised only to the extent that it is probable the expenses recognised will be recovered.
Taxation
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Operating leases
Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis. Lease income is recognised in profit or loss on a straight line basis over the lease term. The aggregate cost of lease incentives are recognised as a reduction to income over the lease term on a straight-line basis. Costs, including depreciation, incurred in earning the lease income are recognised as an expense. Any initial direct costs incurred in negotiating and arranging the operating lease are added to the carrying amount of the lease and recognised as an expense over the lease term on the same basis as the lease income.
Goodwill
Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of the acquired business. Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight-line basis over its useful life. Where a reliable estimate of the useful life of goodwill or intangible assets cannot be made, the life is presumed not to exceed ten years.
Intangible assets
Intangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated amortisation and impairment losses. Any intangible assets carried at revalued amounts, are recorded at the fair value at the date of revaluation, as determined by reference to an active market, less any subsequent accumulated amortisation and subsequent accumulated impairment losses. Intangible assets acquired as part of a business combination are only recognised separately from goodwill when they arise from contractual or other legal rights, are separable, the expected future economic benefits are probable and the cost or value can be measured reliably.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Goodwill
-
10 years
Compensation
-
The term of the relevant agreement, currently 10 years
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Long leasehold property
-
2% straight line
Short leasehold property
-
Over the term of the lease
Plant and machinery
-
25% reducing balance
Fixtures and fittings
-
25% reducing balance
Motor vehicles
-
25% reducing balance
Investment properties
Investment property is initially recorded at cost, which includes purchase price and any directly attributable expenditure. Investment property is revalued to its fair value at each reporting date and any changes in fair value are recognised in profit or loss. If a reliable measure of fair value is no longer available without undue cost or effort for an item of investment property, it shall be transferred to tangible assets and treated as such until it is expected that fair value will be reliably measurable on an on-going basis.
Investments
Fixed asset investments are initially recorded at cost, and subsequently stated at cost less any accumulated impairment losses.
Listed investments are measured at fair value with changes in fair value being recognised in profit or loss.
Investments in associates
Investments in associates accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Investments in associates accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value recognised in other comprehensive income/profit or loss. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the associate arising before or after the date of acquisition.
Investments in joint ventures
Investments in jointly controlled entities accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Investments in jointly controlled entities accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value recognised in other comprehensive income/profit or loss. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the joint venture arising before or after the date of acquisition.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.
Government grants
Government grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received. Government grants are recognised using the accrual model and the performance model. Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable. Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset. Under the performance model, where the grant does not impose specified future performance-related conditions on the recipient, it is recognised in income when the grant proceeds are received or receivable. Where the grant does impose specified future performance-related conditions on the recipient, it is recognised in income only when the performance-related conditions have been met. Where grants received are prior to satisfying the revenue recognition criteria, they are recognised as a liability.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the balance sheet and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Debt instruments are subsequently measured at amortised cost. Where investments in non-convertible preference shares and non-puttable ordinary shares or preference shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in profit or loss. All other such investments are subsequently measured at cost less impairment. Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
4. Turnover
Turnover arises from:
2023
2022
£
£
Pharmacy sales
7,410,733
6,826,612
NHS fees
2,068,273
2,644,594
------------
------------
9,479,006
9,471,206
------------
------------
The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
5. Other operating income
2023
2022
£
£
Rental income
15,700
2,000
Government grant income
9,000
------------
------------
24,700
2,000
------------
------------
6. Operating profit
Operating profit or loss is stated after charging:
2023
2022
£
£
Amortisation of intangible assets
72,290
72,290
Depreciation of tangible assets
31,514
29,712
Loss on disposal of tangible assets
859
------------
------------
7. Staff costs
The average number of persons employed by the company during the year, including the directors, amounted to:
2023
2022
No.
No.
Administration and support
63
61
------------
------------
The aggregate payroll costs incurred during the year, relating to the above, were:
2023
2022
£
£
Wages and salaries
1,102,209
999,766
Social security costs
90,928
74,826
Other pension costs
21,908
60,119
------------
------------
1,215,045
1,134,711
------------
------------
8. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2023
2022
£
£
Remuneration
105,210
153,449
Company contributions to defined contribution pension plans
4,543
4,512
------------
------------
109,753
157,961
------------
------------
The number of directors who accrued benefits under company pension plans was as follows:
2023
2022
No.
No.
Defined contribution plans
2
2
------------
------------
9. Other interest receivable and similar income
2023
2022
£
£
Interest on cash and cash equivalents
31,138
4,421
------------
------------
10. Interest payable and similar expenses
2023
2022
£
£
Interest on banks loans and overdrafts
1,720
248
Other interest payable and similar charges
13,625
3,743
------------
------------
15,345
3,991
------------
------------
11. Tax on profit
Major components of tax expense
2023
2022
£
£
Current tax:
UK current tax expense
209,076
264,000
Adjustments in respect of prior periods
35,295
------------
------------
Total current tax
209,076
299,295
------------
------------
Deferred tax:
Origination and reversal of timing differences
1,500
4,000
------------
------------
Tax on profit
210,576
303,295
------------
------------
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is higher than (2022: higher than) the standard rate of corporation tax in the UK of 22.01 % (2022: 19 %).
2023
2022
£
£
Profit on ordinary activities before taxation
853,826
1,337,162
------------
------------
Profit on ordinary activities by rate of tax
187,927
254,061
Adjustment to tax charge in respect of prior periods
25,878
Effect of expenses not deductible for tax purposes
16,917
20,439
Effect of capital allowances and depreciation
5,732
( 397)
Effect of different UK tax rates on some earnings
3,314
------------
------------
Tax on profit
210,576
303,295
------------
------------
12. Intangible assets
Goodwill
Compensation
Total
£
£
£
Cost
At 1 October 2022 and 30 September 2023
1,025,183
330,500
1,355,683
------------
------------
------------
Amortisation
At 1 October 2022
586,227
282,200
868,427
Charge for the year
64,240
8,050
72,290
------------
------------
------------
At 30 September 2023
650,467
290,250
940,717
------------
------------
------------
Carrying amount
At 30 September 2023
374,716
40,250
414,966
------------
------------
------------
At 30 September 2022
438,956
48,300
487,256
------------
------------
------------
13. Tangible assets
Long leasehold property
Short leasehold property
Plant and machinery
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 Oct 2022
122,345
52,930
51,756
195,163
33,023
455,217
Additions
1,483
493
1,976
------------
------------
------------
------------
------------
------------
At 30 Sep 2023
122,345
52,930
53,239
195,656
33,023
457,193
------------
------------
------------
------------
------------
------------
Depreciation
At 1 Oct 2022
41,374
6,616
24,514
162,813
4,785
240,102
Charge for the year
2,402
6,612
7,173
8,271
7,056
31,514
------------
------------
------------
------------
------------
------------
At 30 Sep 2023
43,776
13,228
31,687
171,084
11,841
271,616
------------
------------
------------
------------
------------
------------
Carrying amount
At 30 Sep 2023
78,569
39,702
21,552
24,572
21,182
185,577
------------
------------
------------
------------
------------
------------
At 30 Sep 2022
80,971
46,314
27,242
32,350
28,238
215,115
------------
------------
------------
------------
------------
------------
14. Investments
Shares in group undertakings
Investment property
Total
£
£
£
Cost
At 1 October 2022
101
300,000
300,101
Disposals
( 1)
( 1)
------------
------------
------------
At 30 September 2023
100
300,000
300,100
------------
------------
------------
Impairment
At 1 October 2022 and 30 September 2023
------------
------------
------------
Carrying amount
At 30 September 2023
100
300,000
300,100
------------
------------
------------
At 30 September 2022
101
300,000
300,101
------------
------------
------------
15. Stocks
2023
2022
£
£
Goods for resale and consumables
363,158
345,411
------------
------------
16. Debtors
2023
2022
£
£
Trade debtors
1,007,538
929,908
Prepayments and accrued income
31,603
46,439
VAT repayable
112,711
119,205
Directors loan accounts
3,576,237
3,032,265
Other debtors
1,146,055
923,900
------------
------------
5,874,144
5,051,717
------------
------------
Included in other debtors is an amount of £1,004,807 (2022: £920,295) which is recoverable more than one year after the balance sheet date.
17. Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
1,068,809
1,061,217
Amounts owed to group undertakings
100
101
Accruals and deferred income
333,601
248,801
Corporation tax
826,957
601,112
Social security and other taxes
22,833
23,799
Other creditors
175,617
180,541
------------
------------
2,427,917
2,115,571
------------
------------
18. Creditors: amounts falling due after more than one year
2023
2022
£
£
Other creditors
6,720
69,187
------------
------------
19. Provisions
Deferred tax (note 20)
£
At 1 October 2022
16,000
Additions
1,500
------------
At 30 September 2023
17,500
------------
20. Deferred tax
The deferred tax included in the balance sheet is as follows:
2023
2022
£
£
Included in provisions (note 19)
17,500
16,000
------------
------------
The deferred tax account consists of the tax effect of timing differences in respect of:
2023
2022
£
£
Accelerated capital allowances
17,883
16,614
Pension plan obligations
( 383)
( 614)
------------
------------
17,500
16,000
------------
------------
21. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution pension plans was £ 21,908 (2022: £ 60,119 ).
22. Government grants
The amounts recognised in the financial statements for government grants are as follows:
2023
2022
£
£
Recognised in other operating income:
Government grants recognised directly in income
9,000
------------
------------
23. Called up share capital
Issued, called up and fully paid
2023
2022
No.
£
No.
£
Ordinary shares of £ 0.10 each
1,050
105
1,050
105
------------
------------
------------
------------
24. Analysis of changes in net debt
At 1 Oct 2022
Cash flows
At 30 Sep 2023
£
£
£
Cash at bank and in hand
1,882,189
156,284
2,038,473
Debt due within one year
(101)
1
(100)
------------
------------
------------
1,882,088
156,285
2,038,373
------------
------------
------------
25. Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
2023
2022
£
£
Not later than 1 year
101,712
71,000
Later than 1 year and not later than 5 years
393,848
283,000
Later than 5 years
344,830
114,625
------------
------------
840,390
468,625
------------
------------
MEDICARE CHEMISTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
YEAR ENDED 30 SEPTEMBER 2023
26. Directors' advances, credits and guarantees
During the year the directors entered into the following advances and credits with the company:
2023
Balance brought forward
Advances/ (credits) to the directors
Amounts repaid
Balance outstanding
£
£
£
£
Afzal Mohammed Khan
2,591,167
295,486
( 1,919)
2,884,734
Asghar Mohammed Khan
441,098
250,405
691,503
------------
------------
------------
------------
3,032,265
545,891
( 1,919)
3,576,237
------------
------------
------------
------------
2022
Balance brought forward
Advances/ (credits) to the directors
Amounts repaid
Balance outstanding
£
£
£
£
Afzal Mohammed Khan
2,413,946
213,711
( 36,490)
2,591,167
Asghar Mohammed Khan
298,898
142,200
441,098
------------
------------
------------
------------
2,712,844
355,911
( 36,490)
3,032,265
------------
------------
------------
------------
These loans are unsecured and currently interest-free. There are no fixed repayment terms .
27. Related party transactions
During the year the company paid rents of £65,500 (2022: £65,500) for the use of properties owned by a director. These rental contracts are on normal commercial terms.
28. Controlling party
The company is controlled by the trustees of the A M Khan 2008 Settlement .