The directors present the strategic report for the period ended 30 October 2024.

Review of the Business

Barrie Dear Limited is a subsidiary of Scotpharm (MNA) Limited. The Group trades as ‘Dears Pharmacy’ operating in Scotland. Dears Pharmacy has established itself as one of Scotland’s most progressive and resilient community pharmacy groups. The creation of a hub-and-spoke dispensing model in 2022, alongside a Pill Pouch centralised pouching hub, has provided the infrastructure to scale rapidly and achieve sustainable growth.

This forward-thinking model has enabled Dears Pharmacy to expand while delivering consistently high standards of patient care, creating a platform for long-term growth.

Centralised Operations and Investment

To support rapid growth and efficiency, dedicated centralised facilities have been established housing three core functions:

• Pick 2 Prescription Hub & Spoke Dispensing – designed to process up to 70% of dispensing volume centrally;

• Pill Pouch Automated Solution – robotic pouch preparation and automated accuracy checking, replacing traditional monitored dosage systems; and

• Central Warehouse – consolidating procurement and enabling redistribution across the network to strengthen resilience and purchasing power.

These facilities were supported by new team recruitment, robust processes, and significant initial stock investment.

Enhanced Business Management Team

To complement operational infrastructure, the leadership and support functions have been strengthened, to provide stability and control in key areas supporting expansion:

• Head of Finance – robust financial management, forecasting, and funding strategy;

• Field Operations – ensuring consistent branch performance and operational delivery;

• Retail Development – modernise front-of-shop layouts and drive commercial growth; and

• Head of Commercial Purchasing – optimising supplier relationships and procurement efficiency.

Diversification of Services

Predominantly, there has been a shift towards service diversification to reduce reliance on NHS income and meet modern patient expectations. Services launched include:

• Travel health clinics;

• Children’s vaccination services;

• Private blood testing and diagnostics;

• Private prescribing and pharmacy services; and

• Ear health clinics

Furthermore, NHS services have been strengthened by supporting pharmacists training as Independent Prescribers and developing new roles for technicians and accuracy checkers, enabling Pharmacy First Plus delivery.

Technology and Sustainability

Committed to building a technology-enhanced sustainable model, investment has been directed towards development of the following:

• Bespoke Patient App – supporting prescription management, health advice, and patient communication;

• New Website & Online Booking – full digital booking for both NHS and private services;

• 24/7 Automated Collection Points – providing secure and convenient access for patients; and

• Green Fleet Transition – introduction of electric mopeds, with a target of a fully green delivery fleet by 2025.

Retail Development

In partnership alongside a leading pharmacy wholesaler, the retail proposition has been enhanced to:

• Promote health, wellbeing, and self-care purchases;

• Modernise layouts for improved patient journeys; and

• Strengthen commercial performance with a more relevant front-of-shop proposition.

Risk Management

Dears Pharmacy operate in a complex environment. Key risks and mitigations include:

• NHS Funding Risk – mitigated by diversification and financial reserves;

• Supply Chain Risk – addressed by warehouse redistribution and bulk purchasing;

• Regulatory Risk – managed through compliance monitoring and training;

• Technology & Cyber Risk – secure systems and audits in place;

• Workforce Shortages – mitigated through career pathways and retention packages; and

• Reputation & Patient Trust – safeguarded through strong governance and transparent communication.

Financial and Operational Performance

It has been widely established that the NHS changeover to a new computerised system has culminated in delays in the recovery of prescription income by Community Pharmacies.

Whilst acknowledged, recognised and reported monthly by the NHS, an actual payment date for this shortfall has not been established and a contingent asset has been recognised within these financial statements in respect of £2.4m that is expected to be recovered by Barrie Dear Limited.

Significant upfront investment in infrastructure, services, and acquisitions has laid a strong foundation for growth, most notably:

• Outperforming national market share growth, expanding at twice the Scottish average;

• Developing Private services to provide revenues beyond NHS funding; and

• Centralised operating solutions to sustain and improve margin efficiency.

The group grew its turnover to £26.7m and made a loss before tax of £3.6m for the 15 month period ended 30 October 2024.

The group is in the latter stages of discussions with a new lender in respect of the restructure of its borrowing requirements. This refinancing would see all current bank loans refinanced and consolidated with one lender, providing sufficient headroom to continue to support the group in its growth plans. The directors recognise the importance of securing these new facilities in respect of their impact on the going concern status of the group.

Key Performance Indicators

The Board monitors performance using a balanced set of KPIs:

• Turnover Growth – revenue vs. budget and sector benchmarks;

• Gross Profit Margin – procurement efficiency and pricing strategy;

• Market Share Growth – expanding at 2x national average;

• Prescription Volume – hub capacity to handle 70% of dispensing;

• Private Service Revenues – growth across travel, diagnostics, and vaccinations;

• Patient Access Metrics – digital bookings and 24/7 collection usage;

• Sustainability Progress – % of deliveries using the green fleet; and

• Staff Development – number of prescribers trained and qualified technicians (now have 23 technicians of which 20 prescriber trained and 7 doing training whereas last year that number was 13 technicians and 8 prescribers).

Strategic Outlook

The directors remain confident in the long-term strategy, with priorities including:

• Ongoing branch refits and relocations to improve patient experience;

• Expansion of the private services portfolio;

• Continued acquisition activity – two further pharmacies secured post year-end;

• Greater digital engagement through app and online booking; and

• Ongoing staff development and creation of clinical career pathways

Summary

Dears Pharmacy has established a robust platform for growth through strategic acquisitions, centralised operations, enhanced leadership, digital transformation, service diversification, and retail innovation. Despite challenges in NHS funding and transitional complexities, Dears Pharmacy is outperforming the market, delivering strong patient outcomes, and building a reputation as one of the most progressive independent pharmacy operators in Scotland.

Dears Pharmacy is not only expanding but also redefining the future of community pharmacy in Scotland.

The Directors have complied with their duties under Section 172 (1) to promote the success of the business for the benefits of its members as a whole by:

• Assessing the long term consequences of decisions by rigorous consideration and discussion at senior management meetings;

• Putting people at the heart of decision making and giving full consideration to the interests of our employees and by developing a high level of employee engagement by means of open communication at all levels, including the use of Slack – the employee communication and engagement app, and actively encouraging employee feedback;

• Recognising the importance to the success of the business of fostering strong relationships with suppliers, customers and others based on trust and mutual respect;

• Ensuring that all members of the business are treated fairly and respectfully;

• Enhancing and protecting the group's reputation for high standards of conduct and ethics through commitment to strong corporate governance practices; and

• Considering the impact of the group's activities on the community and environment in line with group values.

On behalf of the board

The directors present their annual report and financial statements for the period ended 30 October 2024.

The principal activity of the company and group continued to be that of a dispensing chemist in specialised stores.

The results for the period are set out on page 11.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

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

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.

Azets Audit Services were appointed as auditor to the company in December 2024 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.

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.

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:

• select suitable accounting policies and then apply them consistently;

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

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

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.

We have audited the financial statements of Scotpharm (MNA) Limited (the 'company') and its subsidiaries (the 'group') for the period ended 30 October 2024 which comprise the group profit and loss account, 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 and the 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 possible effects of the matter described in the basis for qualified opinion section of our report, the financial statements:

• give a true and fair view of the state of the group's and the company's affairs as at 30 October 2024 and of the group's loss for the period 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.

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 group and 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.

We were not appointed as auditor of the group until December 2024. The previous auditor was unable to verify and support the valuation of stock as at 31 July 2023 and we were unable to satisfy ourselves by alternative means concerning the inventory quantities held as at 31 July 2023, which are stated in the balance sheet at £2.4m as at 31 July 2023 by using other audit procedures. We were able to verify and support the valuation of stock of £1.3m as at 30 October 2024.

Consequently, we were unable to determine whether any adjustments to this amount at 31 July 2023 was

necessary or whether there was any consequential effect on the cost of sales for the period ended 30 October 2024.

Material uncertainty related to going concern

We draw attention to Note 1.5 in the financial statements, which indicates that the company and the wider group is currently in the process of refinancing its borrowings. If the current refinancing exercise does not complete as expected, then the directors would need to look at alternative lenders and potentially look at the disposal of assets to raise funds. As stated in Note 1.5, these events or conditions, along with other matters as set forth in Note 1.5, indicate that a material uncertainty exists that may cast significant doubt on the company’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, we were unable to satisfy ourselves concerning the inventory quantities of £2.4m held at 31 July 2023. We have concluded that where the other information refers to the inventory balance or related balances such as cost of sales, it may be materially misstated for the same reason.

Opinions on other matters prescribed by the Companies Act 2006

Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the directors' report for the financial period 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.

Except for the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the group and the company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

Arising solely from the limitation on the scope of our work relating to inventory, referred to above:

· we have not obtained all the information and explanations that we considered necessary

· for the purpose of our audit; and

· we were unable to determine whether adequate accounting records have been kept.

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:

· 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.

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 group's and 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 group or the company or to cease operations, or have no realistic alternative but to do so.

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.

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.

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

We obtain and update our understanding of the group and the company, their activities, their control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the group and the company are complying with that framework.  Based on this understanding, we 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.  This includes consideration of the risk of acts by the group and the comapny that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

• Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud; 

• Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the group and the company through enquiry and inspection; 

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias. 

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 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.

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.

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 period was £13,543 (2023: £117,327 profit).

Scotpharm (MNA) Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is .

The group consists of Scotpharm (MNA) Limited and all of its subsidiaries.

The entity extended the reporting period from 31 July to 30 October. The 15 month period reported to 30 October 2024 will therefore not be wholly comparable to future 12 month periods.

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.The principal accounting policies adopted are set out below.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

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 30 October 2024. 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.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

The directors are obliged to prepare statutory financial statements on a going concern basis unless it is inappropriate to assume that the group and the company will continue in business.

The current and future cash position of the group and the company has been reviewed by the directors. This included a comprehensive review of the financial projections and cash-flow requirements, covering a period beyond one year from the date of approval of the financial statements.

The group is in the process of refinancing its borrowings.  At the date of signing these financial statements the group has entered into detailed negotiations with one lender and heads of terms have been agreed on two terms loans and an overdraft facility. The directors, subject to the lender completing its due diligence, expect these loan facilities to be formalised and agreed by early November 2025. With these funds in place, the expected recovery of the monies outstanding from the NHS as detailed in the contingent asset note and the expected future trading performance, the directors have concluded it is appropriate to prepare the group’s and the company’s financial statements on a going concern basis. If the current refinancing exercise does not complete as expected, then the directors would need to look at alternative lenders and potentially look at the disposal of assets to raise funds.

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.

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 20 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.

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:

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:

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.

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.

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.

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.

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.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

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, 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, 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.

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.

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.

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, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

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.

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

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.

The tax expense represents the sum of the tax currently payable and deferred 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 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.

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.

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.

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.

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.

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.

The directors believe an amortisation policy of twenty years to be a reliable estimate of the useful economic life of goodwill. 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.

All turnover arose within the United Kingdom.

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

Their aggregate remuneration comprised:

The actual credit for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:

Details of the company's subsidiaries at 30 October 2024 are as follows:

During the period the company breached the covenants set out by lenders therefore all borrowing is now repayable on demand. 

The long term bank loan is an invoice financing facility with RX Bridge Limited and has interest payable of 1.4% above the base rate and is repayable on demand. RX Bridge Limited has a fixed and floating charge over all assets of the company.

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 35 months. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

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

During the year the company acquired the trade and two pharmacies from Bestway Panacea Holdings Limited.

The implementation of a new computerised NHS system has resulted in delays and discrepancies in the recovery of prescription charge income by the group. The NHS has formally acknowledged the existence of these system-related issues and has confirmed that remedial action is ongoing to rectify the deficiencies and correct the errors identified.

The items being submitted each month do not match with the amounts reimbursed by the NHS. Whilst the volumes submitted are being acknowledged, the values reimbursed do not reconcile with the payments received. The group incurs the cost of purchasing these medicines and supplying them to patients in good faith on the understanding that it will be reimbursed correctly; however, this has not been the case. As the NHS does not provide a precise value for each unpaid item, the group has estimated the shortfall by applying the average ingredient cost to the number of items underpaid. The directors consider this methodology to provide the most reliable estimate of the income ultimately recoverable.

On this basis, the directors have determined that the value of prescription income subject to recovery amounted to £2,354,457 (2023: £464,882) at the balance sheet date. It remains the directors’ view that all prescriptions were administered in accordance with the required standards, and accordingly that the related income will be recovered in full. Resolution of this matter is anticipated by late 2025 or early 2026, at which point the directors expect settlement of the outstanding amounts by the NHS.

As explained in note 22, there are ongoing issues with the recovery of monies from the NHS. In the prior year, the group recognised accrued income of £2.4m as an estimate of the income that is due as at 31 July 2023. This should have been treated as a contingent asset therefore a prior period adjustment has been incorporated in these financial statements to remove this £2.4m of accrued income.

In the prior year, there was a tax charge of £362,461 recognised. As a result of the prior period adjustment to remove £2.4m of accrued income (as noted above), no tax charge is due for the year ended 31 July 2023 and this tax charge has been reversed via a prior period adjustment.

Historically, the property owned by MSBL Property Limited (which is used by a fellow subsidiary in the group Barrie Dear Limited) has been accounted for as an investment property within the company accounts. However, in the year under review, the directors have made a voluntary change to the accounting policy of the company and elected to present the property as Property, plant & equipment in the company financial statements.

This change in accounting policy has led to the reclassification of the property from investment properties to tangible fixed assets as well as a prior period adjustment to recognise the appropriate depreciation charge.

At group level this was recognised incorrectly as an investment property in the 2023 financial statements and this prior year adjustment corrects this.

The previously recognised £2.4m pertained to the shortfall of scripts paid by the NHS in comparison to the number submitted. The total script shortfall was then multiplied by the average prescription value to arrive at the accrued income for the period concerned. This differs from the methodology used in estimating the contingent asset which has been estimated by applying the average ingredient cost to the number of items underpaid. The directors consider this methodology to provide the most reliable estimate of the income ultimately recoverable.

Included in other debtors include £7,921,537 (2023 - £8,261,872) due from companies in which a director holds an interest. Also included in other debtors is a directors loan in the name of the director Mahyar Nickkho-Amiry in the amount of £195,822 (2023 - creditor of £72,487).

Included in creditors due within one year is £43,150 (2023: £12,950) due to companies in which a director holds an interest. Also included within other creditors are directors' loans in the name of the directors Barrie Dear and Lesley Dear of £561,336 (2023: £18,985).

In accordance with section 33.1A of FRS 102, the company is not required to make disclosure of transactions between members of the group.