REGISTERED NUMBER: 08126719 (England and Wales)

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements for the Year Ended 31 December 2024

for

Central Pharma Contract Holdings Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Income Statement

10

Consolidated Other Comprehensive Income

11

Consolidated Balance Sheet

12

Company Balance Sheet

14

Consolidated Statement of Changes in Equity

16

Company Statement of Changes in Equity

17

Consolidated Cash Flow Statement

18

Notes to the Consolidated Cash Flow Statement

19

Notes to the Consolidated Financial Statements

21

DIRECTORS:

Mr A J Smit

Mr J E Derry-Evans

Mrs K Y Nichol

Mr M J Blood

REGISTERED OFFICE:

Caxton Road

Elm Farm Industrial Estate

Bedford

Bedfordshire

MK41 0XZ

REGISTERED NUMBER:

08126719 (England and Wales)

AUDITORS:

WP Audit Limited

Statutory Auditors

TOR

Saint-Cloud Way

Maidenhead

Berkshire

SL6 8BN

The directors present their strategic report of the company and the group for the year ended 31 December 2024.

REVIEW OF BUSINESS

The group's key financial performance indicators during the period were as follows:

2024

£'000s

Group turnover

19,067

Gross profit margin

41.7%

Operating profit / (loss)

279

EBITDA

1,161

Net cash from operating activities

53

Shareholders' funds

(1,968

)

The group's investments made in expanding its service offering has allowed the business to grow its revenue during the year. Pressures on costs as well as activity designed to streamline the business and facilitate additional service offerings have led to a decline in the gross margin and operating result for the year with continued investment made in ensuring that the group's operations meet the needs of its customers across a range of supply chain offerings. This has created challenging conditions for the group but the directors consider that the group remains a going concern and is well placed to move forward. The group continues to be recognised as a leader in its field with the the group being awarded the Best Pharmaceutical Supply Chain Services & Manufacturing Company 2022 at the Global Health & Pharma Global Excellence Awards.

The group's key profit measure is EBITDA, which is calculated as operating profit excluding depreciation,amortisation and intra-group charges. In 2024 the EBITDA profit was £1,160,684. The group's operating profit reported on a statutory basis was £278,593 which includes depreciation and amortisation of £882,091. The loss incurred for the year has affected the balance sheet position compared with last year with net liabilities at the year end of £1,967,744.

Following a challenging year from the perspective of reduced profitability, the group is better placed now to capitalise on operational improvement implemented during 2023. Capital expenditure was £302,791 in the year which was reduced compared with the prior year as the group benefits from the investment made previously. In addition, the group agreed a further equity investment from existing investors to reduce the level of debt and strengthen the balance sheet. The group works closely with its lenders to help fund its investment and this continued support should enable the group to realise the growth opportunities which the investment is designed to capitalise on.

PRINCIPAL RISKS AND UNCERTAINTIES

The market in which the group operates continues to provide opportunities for expansion and our focus on service and quality will allow us to continue to meet the needs of our customers and adapt to any changes in the regulatory environment. However, with substantial fixed costs within the business the primary risk to the business would be a substantial loss of volume. The directors will continue to look to grow the customer base as a way of managing the risk that the loss of a significant customer could present.

ON BEHALF OF THE BOARD:

Mr A J Smit - Director

30 September 2025

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2024.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of contract packing for the pharmaceutical and health supplement industries.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2024.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2024 to the date of this report.

Mr A J Smit

Mr J E Derry-Evans

Mrs K Y Nichol

Mr M J Blood

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

ON BEHALF OF THE BOARD:

Mr A J Smit - Director

30 September 2025

Opinion

We have audited the financial statements of Central Pharma Contract Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 December 2024 and of the group's loss for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

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

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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 group's and 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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:

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlines 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.

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

-The engagement partners ensured that the engagement team collectively had the appropriate competence, capabilities and skill to identify or recognise non-compliance with applicable laws and regulations;

-we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the recruitment sector;

-we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, environmental and health and safety legislation;

-we assessed the extent of compliance with laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

-identified laws and regulations were communicated within the audit team regularly and the team remained alert to instance of non-compliance throughout the audit.

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by;

-making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;

-considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and

-understanding the design of the company's remuneration policies.

To address the risk of fraud through management bias and override of controls, we;

-performed analytical procedures to identify unusual or unexpected relationships;

-tested journal entries to identify unusual transactions;

-assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

-investigated the rationale behind significant or unusual transactions.

Audit response to risks identified

In response to the risk of irregularities and non-compliance with laws and regulations; we designed procedures which included, but were not limited to;

-agreeing financial statement disclosures to underlying supporting documentation;

-enquiring of management as to actual and potential litigation and claims; and

-reviewing correspondence with HMRC, relevant regulators and company's legal advisors.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment of collusion.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

Philippa Duckworth BSc FCCA (Senior Statutory Auditor)

for and on behalf of WP Audit Limited

Statutory Auditors

TOR

Saint-Cloud Way

Maidenhead

Berkshire

SL6 8BN

30 September 2025

TURNOVER

3

19,067,230

19,088,166

Cost of sales

(11,109,063

)

(11,418,683

)

GROSS PROFIT

7,958,167

7,669,483

Administrative expenses

(7,679,574

)

(8,770,433

)

278,593

(1,100,950

)

Other operating income

-

10,700

OPERATING PROFIT/(LOSS)

5

278,593

(1,090,250

)

Interest payable and similar expenses

7

(196,400

)

(251,039

)

PROFIT/(LOSS) BEFORE TAXATION

82,193

(1,341,289

)

Tax on profit/(loss)

8

(122,804

)

162,831

LOSS FOR THE FINANCIAL YEAR

(40,611

)

(1,178,458

)

Loss attributable to:

Owners of the parent

(40,611

)

(1,178,458

)

LOSS FOR THE YEAR

(40,611

)

(1,178,458

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(40,611

)

Prior year adjustment

(77,307

)

TOTAL COMPREHENSIVE INCOME SINCE LAST ANNUAL REPORT

(1,255,765

)

Total comprehensive income attributable to:

Owners of the parent

(40,611

)

(1,255,765

)

FIXED ASSETS

Intangible assets

10

1,203,498

1,362,200

Tangible assets

11

2,718,984

3,483,510

Investments

12

-

-

3,922,482

4,845,710

CURRENT ASSETS

Stocks

13

903,028

1,671,317

Debtors

14

3,048,594

3,659,894

Cash in hand

435

438

3,952,057

5,331,649

CREDITORS

Amounts falling due within one year

15

(8,716,494

)

(10,561,928

)

NET CURRENT LIABILITIES

(4,764,437

)

(5,230,279

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(841,955

)

(384,569

)

CREDITORS

Amounts falling due after more than one year

16

(686,629

)

(1,101,466

)

PROVISIONS FOR LIABILITIES

21

(439,160

)

(441,098

)

NET LIABILITIES

(1,967,744

)

(1,927,133

)

CAPITAL AND RESERVES

Called up share capital

22

272,740

272,740

Share premium

23

1,939,935

1,939,935

Retained earnings

23

(4,180,419

)

(4,139,808

)

SHAREHOLDERS' FUNDS

(1,967,744

)

(1,927,133

)

The financial statements were approved by the Board of Directors and authorised for issue on 30 September 2025 and were signed on its behalf by:

Mr A J Smit - Director

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

-

-

Investments

12

4,500,004

4,500,004

4,500,004

4,500,004

CURRENT ASSETS

Cash at bank

37

92

CREDITORS

Amounts falling due within one year

15

(1,759,613

)

(1,651,469

)

NET CURRENT LIABILITIES

(1,759,576

)

(1,651,377

)

TOTAL ASSETS LESS CURRENT LIABILITIES

2,740,428

2,848,627

CAPITAL AND RESERVES

Called up share capital

22

272,739

272,739

Share premium

23

1,939,935

1,939,935

Retained earnings

23

527,754

635,953

SHAREHOLDERS' FUNDS

2,740,428

2,848,627

Company's loss for the financial year

(108,199

)

(445,934

)

The financial statements were approved by the Board of Directors and authorised for issue on 30 September 2025 and were signed on its behalf by:

Mr A J Smit - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2023

272,740

(2,884,043

)

1,939,935

(671,368

)

Prior year adjustment

-

(77,307

)

-

(77,307

)

As restated

272,740

(2,961,350

)

1,939,935

(748,675

)

Changes in equity

Total comprehensive income

-

(1,178,458

)

-

(1,178,458

)

Balance at 31 December 2023

272,740

(4,139,808

)

1,939,935

(1,927,133

)

Changes in equity

Total comprehensive income

-

(40,611

)

-

(40,611

)

Balance at 31 December 2024

272,740

(4,180,419

)

1,939,935

(1,967,744

)

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2023

272,739

1,081,887

1,939,935

3,294,561

Changes in equity

Total comprehensive income

-

(445,934

)

-

(445,934

)

Balance at 31 December 2023

272,739

635,953

1,939,935

2,848,627

Changes in equity

Total comprehensive income

-

(108,199

)

-

(108,199

)

Balance at 31 December 2024

272,739

527,754

1,939,935

2,740,428

Cash flows from operating activities

Cash generated from operations

1

205,624

1,555,076

Interest paid

(127,511

)

(182,282

)

Interest element of hire purchase payments paid

(68,889

)

(68,757

)

Tax paid

-

3,563

Net cash from operating activities

9,224

1,307,600

Cash flows from investing activities

Purchase of tangible fixed assets

(302,791

)

(199,853

)

Sale of tangible fixed assets

346,902

-

Net cash from investing activities

44,111

(199,853

)

Cash flows from financing activities

Loan repayments in year

(122,762

)

(236,186

)

Invoice financing drawdown / (repayment)

293,018

(217,709

)

Capital repayments in year

(440,588

)

(380,970

)

Amount withdrawn by directors

(531

)

-

Net cash from financing activities

(270,863

)

(834,865

)

(Decrease)/increase in cash and cash equivalents

(217,528

)

272,882

Cash and cash equivalents at beginning of year

2

(183,745

)

(456,627

)

Cash and cash equivalents at end of year

2

(401,273

)

(183,745

)

1.	RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

31.12.24

31.12.23

£

£

Profit/(loss) before taxation

82,193

(1,341,289

)

Depreciation charges

882,091

1,068,614

(Profit)/loss on disposal of fixed assets

(2,974

)

7,466

Finance costs

196,400

251,039

1,157,710

(14,170

)

Decrease/(increase) in stocks

768,289

(309,449

)

Decrease/(increase) in trade and other debtors

611,831

(280,697

)

(Decrease)/increase in trade and other creditors

(2,332,206

)

2,159,392

Cash generated from operations

205,624

1,555,076

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2024

31.12.24

1.1.24

£

£

Cash and cash equivalents

435

438

Bank overdrafts

(401,708

)

(184,183

)

(401,273

)

(183,745

)

Year ended 31 December 2023

31.12.23

1.1.23

£

£

Cash and cash equivalents

438

720

Bank overdrafts

(184,183

)

(457,347

)

(183,745

)

(456,627

)

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.24

Cash flow

At 31.12.24

£

£

£

Net cash

Cash at bank and in hand

438

(3

)

435

Bank overdrafts

(184,183

)

(217,525

)

(401,708

)

(183,745

)

(217,528

)

(401,273

)

Debt

Finance leases

(1,339,602

)

440,588

(899,014

)

Debts falling due within 1 year

(1,548,026

)

(306,223

)

(1,854,249

)

Debts falling due after 1 year

(184,974

)

135,967

(49,007

)

(3,072,602

)

270,332

(2,802,270

)

Total

(3,256,347

)

52,804

(3,203,543

)

1.	STATUTORY INFORMATION

Central Pharma Contract Holdings Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The accounts are prepared on a going concern basis as the directors consider that the group has sufficient funding to meet its obligations as they fall due. The group has invested heavily in machinery to grow the business and capitalise on new opportunities which has increased the funding requirement from lenders. The directors are of the opinion that this investment, together with cost efficiencies being realised through property rationalisation, will enhance operating profit and cash flow available to service debt and manage working capital requirements. The directors have prepared forecasts for the foreseeable future, that is at least 12 months from the date of approval of these accounts, to support the going concern conclusion.

The historical cost convention is modified by the use of fair values for certain financial instruments in accordance with the accounting policies set out below.

Basis of consolidation

The group financial statements consolidate the financial statements of Central Pharma Contract Holdings Limited and all its subsidiary undertakings drawn up to 31 December each year. Subsidiary undertakings are included in the group financial statements using the acquisition method of accounting.

In the parent company financial statements, investments in subsidiaries, joint ventures and associates are accounted for at the lower of cost and net realisable value.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.

Significant judgements and estimates

In the application of the company's accounting policies the directors are required to make judgements, estimates and assumptions about the carrying amounts 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Tangible fixed assets

Tangible fixed are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

Stock provision

On an annual basis the company make an assessment of the stock held and review its aging profile Base on this a provision will be included within the financial statements to reflect what is unlikely to be used. This varies on an annual basis with the directors required to make an estimation on their potential use.

Turnover

Turnover arises from the group's principal activity of contract packing. Turnover is recognised at the fair value of the consideration received or receivable for the provision of packing services which occurs when the product has been packed. Turnover is shown net of Value Added Tax.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2012, is being amortised evenly over its estimated useful life of twenty years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Short leasehold

-

Over the lease term

Plant and machinery

-

20% on cost, 15% on cost, 10% on cost and at varying rates on cost

Fixtures and fittings

-

33% on cost and 20% on cost

Motor vehicles

-

33% on cost, 25% on cost and 20% on cost

Computer equipment

-

33% on cost and 20% on cost

Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impairment.

Stocks

Stocks, which primarily relate to raw materials used in packing, are stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to the net realisable value. Cost is the purchase cost of the materials. Provision is made for obsolete, slow-moving or defective items where appropriate.