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Registered number: 01594795 DERMAL LABORATORIES LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025
DERMAL LABORATORIES LIMITED COMPANY INFORMATION
Directors | M J Yarrow
| N I Yarrow
Registered number | 01594795
Registered office | Haslers
| Old Station Road
| Loughton
| Essex
| IG10 4PL
Independent auditors | Haslers
| Chartered Accountants & Statutory Auditor
| Old Station Road
| Loughton
| Essex
| IG10 4PL
DERMAL LABORATORIES LIMITED CONTENTS
| Page
Strategic Report | 1 - 2
Directors' Report | 3 - 5
Directors' Responsibilities Statement | 6
Independent Auditors' Report | 7 - 10
Statement of Comprehensive Income | 11
Balance Sheet | 12
Statement of Changes in Equity | 13
Notes to the Financial Statements | 14 - 25
DERMAL LABORATORIES LIMITED STRATEGIC REPORT FOR THE YEAR ENDED 31 MAY 2025
Introduction
The principal activities of the company continue to be the research, development, manufacture, marketing, and distribution of pharmaceutical products.
Business review
The year’s performance built on the stability achieved in the prior year, allowing the company to focus on growth. Sales increased by around 8% in 2024/25. While manufacturing, material, and energy costs remain high and continue to erode gross margins, effective cost control of overheads has delivered a significant improvement in net profit. Central to this progress has been the productivity and commitment of staff, who have responded positively to change and adopted more efficient working practices, supported by enhanced systems. The senior leadership team also worked collectively on the long-term direction of the business, reinforcing the company’s focus on stability and continuity while preparing for future challenges.
Principal risks and uncertainties
The company continues to monitor risks from supply chain pressures, including component shortages and price volatility, though these have eased compared with recent years. Rising input costs remain a concern, as does the need to remain competitive in the face of potential new entrants and pricing pressure. Compliance with evolving regulatory requirements is a continuing priority. External factors such as geopolitical uncertainty, government fiscal policy, and ongoing pressures on the NHS also create risks across finance, taxation, employment, and the environment. .
Financial key performance indicators
Sales of the company’s medicines and medical devices, whether NHS-prescribed or purchased directly by patients, increased by around 8% compared with the previous year. Gross profit grew in absolute terms but declined as a percentage, reflecting inflationary pressure on raw materials, components, energy, and manufacturing costs. Net profit, however, improved through effective control of overheads
Other key performance indicators
As part of the drive to improve productivity, staff numbers have remained unchanged, with output achieved through efficiency gains and resourcefulness.
Directors' statement of compliance with duty to promote the success of the Company
The board of directors of Dermal Laboratories Limited, both individually and collectively, confirm that they have acted in good faith and in a manner most likely to promote the success of the company for the benefit of its members as a whole, having regard to the following matters: • the likely long-term consequences of decisions; • the interests of the company’s employees; • the need to foster the company’s business relationships with customers, suppliers, and others; • the impact of the company’s operations on the community and the environment; and • the desirability of maintaining the company’s reputation for high standards of business conduct. • Long-term stability remains a central consideration in strategic decision-making. This has been demonstrated by substantial investment in in-house manufacturing facilities, strengthening the security and resilience of product supply. The success of the company’s relationships with staff, customers, and suppliers is evidenced by the longevity of many such relationships, often measured in decades. Page 1
DERMAL LABORATORIES LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 MAY 2025 The company remains committed to the communities and environments in which it operates, seeking to have a positive impact on local economic and social life. Its reputation is also recognised among healthcare professionals and other key opinion leaders, who value the quality and clinical usefulness of the company’s products, as well as the ethical standards it maintains in all its dealings. This report was approved by the board on 25 November 2025 and signed on its behalf.
M J Yarrow Director
Page 2
DERMAL LABORATORIES LIMITED DIRECTORS' REPORT FOR THE YEAR ENDED 31 MAY 2025 The directors present their report and the financial statements for the year ended 31 May 2025.
Results and dividends
The profit for the year, after taxation, amounted to £2,378,917 (2024 - £1,429,801). The director does not recommend the payment of a dividend (2024 : £nil)
Directors
The directors who served during the year were:
M J Yarrow
N I Yarrow
Future developments
The company continues an extensive programme of New Product Development to extend the Company's portfolio and renew the momentum for growth in both domestic and overseas markets.
Financial instruments
Treasury operations and financial instruments The company's principal financial instruments include bank accounts, the main purpose of which is to raise finance for the company's operations. In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from operations Liquidity risk The company manages its cash requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business. Foreign currency risk The company's principal foreign currency exposure arise from trading with overseas companies. The company does not hedge against this risk as the director considers that the volume of transactions does not warrant this. Credit risk Investments of cash surpluses and borrowings are made through banks and companies which must fulfil credit rating criteria approved by the board. All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are reviewed on a regular basis and provision is made for doubtful debts when necessary.
Research and development activities
The Company continues to invest heavily in research and development to provide our next generation of brand leading medicines and medical devices. Page 3
DERMAL LABORATORIES LIMITED DIRECTORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 MAY 2025
Engagement with employees
The Company places considerable value on the involvement of its employees and keeps them informed on matters affecting their work and future interests. Information is shared regularly through the intranet, with updates on staff appointments, product launches, marketing activities, and improvements to facilities across offices, laboratories, factories, and warehouses. The Company continues to host team-building events, which this year saw record attendance, comparable to pre-pandemic levels. The senior leadership team also encourages interaction across departments, helping to foster strong working relationships and a collaborative culture.
Engagement with suppliers, customers and others
The Board recognises that the long-term success of the business depends on its relationships with a wide range of stakeholders and takes these into account when making decisions, in line with directors’ duties under section 172 of the Companies Act. Customers include patients who use the Company’s products, healthcare professionals who prescribe or recommend them, and retail trade customers such as supermarkets, pharmacies, and online retailers. Engagement is maintained through dedicated product websites, liaison with trade buyers and prescribers, the provision of educational materials, and prompt responses to enquiries and complaints. Continuous engagement also takes place with regulatory authorities to ensure full compliance with evolving requirements for medicines and medical devices. Suppliers include providers of raw materials, packaging, and professional services such as legal, financial, and technical support. Many of these relationships are long-standing, built on mutual trust and understanding, and are managed by appropriately qualified staff. The Board remains committed to environmental responsibility. This is reflected in the choice and reformulation of products where appropriate, selection of packaging materials, reduction of waste, prevention of local pollution, adoption of improved working practices, and measures to preserve natural habitats and biodiversity at Company sites.
Qualifying third party indemnity provisions
During the year the company paid for third party indemnity insurance on behalf of the director.
Disclosure of information to auditors
Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that: ∙so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and ∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
Post balance sheet events
Since the balance sheet date, there have been no events requiring adjustment to the financial statements. The Board continues to monitor the wider economic and political environment following the change of government in July 2024, and any new measures introduced will be assessed for their potential impact on the business. Page 4
DERMAL LABORATORIES LIMITED DIRECTORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 MAY 2025
Auditors
The auditors, Haslers, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006. This report was approved by the board on 25 November 2025 and signed on its behalf.
M J Yarrow Director
Page 5
DERMAL LABORATORIES LIMITED DIRECTORS' RESPONSIBILITIES STATEMENT FOR THE YEAR ENDED 31 MAY 2025 The directors are responsible for preparing the Strategic Report, the 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to: ∙select suitable accounting policies for the Company's financial statements 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 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 to 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. Page 6
DERMAL LABORATORIES LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DERMAL LABORATORIES LIMITED
Opinion
We have audited the financial statements of Dermal Laboratories Limited (the 'Company') for the year ended 31 May 2025, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity 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 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 Company's affairs as at 31 May 2025 and of its profit 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 Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 Auditors' 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. Page 7
DERMAL LABORATORIES LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DERMAL LABORATORIES LIMITED (CONTINUED) We have nothing to report in this regard.
Opinion 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 set out on page 6, 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. Page 8
DERMAL LABORATORIES LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DERMAL LABORATORIES LIMITED (CONTINUED)
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 an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We obtained an understanding of the legal and regulatory frameworks that are applicable to the entity and determined that the most significant are those that: • had a direct effect on the determination of material amounts and disclosures in the financial statements. These included the UK Companies Act and tax legislation etc; and • do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty. These include those rules governing the pharmaceutical industry. We obtained an understanding of how the company are complying with those legal and regulatory frameworks by making inquiries to the management and the company’s head of regulatory department. We corroborated our inquiries through our review of documentation generated and assessing the extent of compliance with the relevant laws and regulations. We discussed among the audit engagement team regarding the opportunities and incentives, including management override of controls, that may exist within the organisation for fraud and how and where fraud might occur in the financial statements. As a result of performing the above, we identified the greatest potential for fraud in the following areas, and our specific procedures performed to address it are described below: The principal risks related to inappropriate journal entries to impact the profit for the year and management bias in accounting estimates. Procedures performed to address these were as follows: • Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud, • Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process, • Challenging assumptions and judgements made by management in its significant accounting estimates: and • Identifying and testing journal entries, in particular any unusual journal entries posted around the year- end and journal entries posted by infrequent system users. Page 9
DERMAL LABORATORIES LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DERMAL LABORATORIES LIMITED (CONTINUED) 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. 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 Auditors' Report.
Use of our report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' 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. Charalambos Patsalides ACA FCCA (Senior Statutory Auditor) for and on behalf of Haslers Chartered Accountants Statutory Auditor Old Station Road Loughton Essex IG10 4PL 25 November 2025 Page 10
DERMAL LABORATORIES LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MAY 2025
| 2025 | 2024
Note | £ | £
Turnover | 4 | 45,713,215 | 42,124,318
Cost of sales |  | (20,350,478) | (18,686,388)
Gross profit |  | 25,362,737 | 23,437,930
Distribution costs |  | (3,127,774) | (3,084,887)
Administrative expenses |  | (20,070,897) | (19,007,301)
Operating profit | 5 | 2,164,066 | 1,345,742
Interest receivable and similar income | 9 | 215,380 | 84,441
Interest payable and similar expenses | 10 | (529) | (382)
Profit before tax |  | 2,378,917 | 1,429,801
Profit for the financial year |  | 2,378,917 | 1,429,801
There were no recognised gains and losses for 2025 or 2024 other than those included in the statement of comprehensive income.
There was no other comprehensive income for 2025 (2024:£NIL).
The notes on pages 14 to 25 form part of these financial statements.
Page 11
DERMAL LABORATORIES LIMITED REGISTERED NUMBER: 01594795 BALANCE SHEET AS AT 31 MAY 2025
| 2025 | 2025 | 2024 | 2024
Note | £ | £ | £ | £
Fixed assets |  |  |  |  |
Tangible assets | 12 |  | 18,677,894 |  | 18,212,770
|  |  | 18,677,894 |  | 18,212,770
Current assets |  |  |  |  |
Stocks | 13 | 8,006,285 |  | 7,849,203 |
Debtors: amounts falling due within one year | 14 | 17,891,721 |  | 16,214,160 |
Cash at bank and in hand | 15 | 6,527,581 |  | 6,427,385 |
|  | 32,425,587 |  | 30,490,748 |
Creditors: amounts falling due within one year | 16 | (6,459,931) |  | (6,438,885) |
Net current assets |  |  | 25,965,656 |  | 24,051,863
Total assets less current liabilities |  |  | 44,643,550 |  | 42,264,633
Net assets |  |  | 44,643,550 |  | 42,264,633
Capital and reserves |  |  |  |  |
Called up share capital | 17 |  | 100 |  | 100
Profit and loss account | 18 |  | 44,643,450 |  | 42,264,533
|  |  | 44,643,550 |  | 42,264,633
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 25 November 2025.
M J Yarrow
Director
The notes on pages 14 to 25 form part of these financial statements. Page 12
DERMAL LABORATORIES LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MAY 2025
| Called up share capital | Profit and loss account | Total equity
| £ | £ | £
At 1 June 2024 | 100 | 42,264,533 | 42,264,633
Comprehensive income for the year |  |  |
Profit for the year | - | 2,378,917 | 2,378,917
Total comprehensive income for the year | - | 2,378,917 | 2,378,917
At 31 May 2025 | 100 | 44,643,450 | 44,643,550
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MAY 2024
| Called up share capital | Profit and loss account | Total equity
| £ | £ | £
At 1 June 2023 | 100 | 40,834,732 | 40,834,832
Comprehensive income for the year |  |  |
Profit for the year | - | 1,429,801 | 1,429,801
Total comprehensive income for the year | - | 1,429,801 | 1,429,801
At 31 May 2024 | 100 | 42,264,533 | 42,264,633
| The notes on pages 14 to 25 form part of these financial statements.
Page 13
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025
1. | General information
Dermal Laboratories Limited is a private company, limited by shares and incorporated in England and Wales, United Kingdom, with a registration number 01594795. The address of the registered office is Haslers, Old Station Road, Loughton, Essex, IG10 4PL and the principal place of business is Tatmore Place, Gosmore, Hitchin, Hertfordshire, SG4 7QR. The nature of the company's operations and principal activities are the distribution of pharmaceutical products. 2.Accounting policies
| 2.1 | Basis of preparation of financial statements
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006. The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3). The following principal accounting policies have been applied:
| 2.2 | Financial Reporting Standard 102 - reduced disclosure exemptions
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland": ∙the requirements of Section 7 Statement of Cash Flows; ∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d); ∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c); ∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A; ∙the requirements of Section 33 Related Party Disclosures paragraph 33.7. This information is included in the consolidated financial statements of Diomed Group Holdings Limited as at 31 May 2025 and these financial statements may be obtained from Companies House. Page 14
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025 2.Accounting policies (continued)
| 2.3 | Foreign currency translation
Functional and presentation currency The Company's functional and presentational currency is GBP. Transactions and balances Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions. At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined. Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
| 2.4 | Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised: Sale of goods Revenue from the sale of goods is recognised when all of the following conditions are satisfied: ∙the Company has transferred the significant risks and rewards of ownership to the buyer; ∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; ∙the amount of revenue can be measured reliably; ∙it is probable that the Company will receive the consideration due under the transaction; and ∙the costs incurred or to be incurred in respect of the transaction can be measured reliably. Page 15
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025 2.Accounting policies (continued)
| 2.5 | Research and development
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives. Where it is not possible to distinguish between the research phase and the development phase of an internal project. The expenditure is treated as if it were all incurred in the research phase only.
| 2.6 | Interest income
Interest income is recognised in profit or loss using the effective interest method.
| 2.7 | Pensions
Defined contribution pension plan The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations. The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.
| 2.8 | Taxation
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income. Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that: ∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and ∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met. Page 16
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025 2.Accounting policies (continued)
| 2.8 | Taxation (continued)
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
| 2.9 | Tangible fixed assets
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount. Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method. Depreciation is provided on the following basis:
|  |  |  | Freehold property | - | 2% | straight line
|  |  |  | Motor vehicles | - | 20% | straight line
|  |  |  | Fixtures and fittings | - | 10% | straight line
|  |  |  | Office equipment | - | 20% | straight line
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
| 2.10 | Stocks
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads. At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
| 2.11 | Debtors
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment. Page 17
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025 2.Accounting policies (continued)
| 2.12 | Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
| 2.13 | Creditors
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
| 2.14 | Holiday pay accrual
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.
| 2.15 | Financial instruments
Financial instruments are recognised in the Company's Balance Sheet when the Company becomes party to the contractual provisions of the instrument. Basic financial assets Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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. Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments. Impairment of financial assets At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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. Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate. If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss. Page 18
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025 2.Accounting policies (continued)
| 2.15 | Financial instruments (continued)
Derecognition of financial instruments Derecognition of financial assets Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained. Derecognition of financial liabilities Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
3. | Judgements in applying accounting policies and key sources of estimation uncertainty
In applying the Company's accounting policies, the director is required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The director's judgements, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made, and are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ. 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. The director does not believe that there have been judgements (apart from those involving estimates) made in the process of applying the above accounting policies that have had a significant effect on amounts recognised in the financial statements.
4. | Turnover
Analysis of turnover by country of destination:
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| United Kingdom | 43,265,919 | 40,147,949
| Rest of Europe | 2,269,020 | 1,670,553
| Rest of the world | 178,276 | 305,816
|  | 45,713,215 | 42,124,318
Page 19
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025
5. | Operating profit
| The operating profit is stated after charging:
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Research & development charged as an expense | 2,416,985 | 2,520,925
| Exchange differences | 57,363 | 40,728
6. | Auditors' remuneration
| During the year, the Company obtained the following services from the Company's auditors and their associates:
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Fees payable to the Company's auditors and their associates for the audit of the Company's financial statements | 62,000 | 60,800
| The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.
7. | Employees
| Staff costs, including directors' remuneration, were as follows:
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Wages and salaries | 9,792,843 | 9,256,237
| Social security costs | 1,148,906 | 1,065,467
| Cost of defined contribution scheme | 1,569,028 | 1,564,330
|  | 12,510,777 | 11,886,034
| The average monthly number of employees, including the directors, during the year was as follows:
|  |  | 2025 | 2024
|  |  | No. | No.
|  | Management and administration | 89 | 86
|  | Laboratory, manufacture and packing | 60 | 59
|  | Sales | 22 | 23
|  |  | 171 | 168
Page 20
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025
8. | Directors' remuneration
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Directors' emoluments | 353,922 | 207,831
| Company contributions to defined contribution pension schemes | 10,000 | -
|  | 363,922 | 207,831
| During the year retirement benefits were accruing to 1 director (2024 - NIL) in respect of defined contribution pension schemes.
| The highest paid director received remuneration of £208,651 (2024 - £207,831).
9. | Interest receivable
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Other interest receivable | 215,380 | 84,441
|  | 215,380 | 84,441
10. | Interest payable and similar expenses
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Bank interest payable | 529 | 382
|  | 529 | 382
Page 21
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025
11. | Taxation
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Total current tax | - | -
| Deferred tax |  |
| Total deferred tax | - | -
|  | - | -
| Factors affecting tax charge for the year
| The tax assessed for the year is the same as (2024 - the same as) the standard rate of corporation tax in the UK of 25% (2024 - 25%) as set out below:
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Profit on ordinary activities before tax | 2,378,917 | 1,429,801
| Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2024 - 25%) | 594,729 | 357,450
| Effects of: |  |
| Expenses not deductible for tax purposes, other than goodwill amortisation and impairment | - | 6,971
| Capital allowances for year in excess of depreciation | - | 82,221
| Other timing differences leading to an increase (decrease) in taxation | - | (419,972)
| Adjustment in research and development tax credit leading to an increase (decrease) in the tax charge | (594,729) | (172,257)
| Unrelieved tax losses carried forward | - | 145,587
| Total tax charge for the year | - | -
| Factors that may affect future tax charges
There were no factors that may affect future tax charges. Page 22
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025
12. | Tangible fixed assets
|  | Freehold property | Motor vehicles | Fixtures and fittings | Total
|  | £ | £ | £ | £
| Cost or valuation |  |  |  |
| At 1 June 2024 | 19,065,033 | 1,318,506 | 7,068,937 | 27,452,476
| Additions | 910,745 | 351,288 | 389,466 | 1,651,499
| Disposals | - | (370,647) | (20,623) | (391,270)
| At 31 May 2025 | 19,975,778 | 1,299,147 | 7,437,780 | 28,712,705
| Depreciation |  |  |  |
| At 1 June 2024 | 3,628,351 | 598,125 | 5,013,230 | 9,239,706
| Charge for the year on owned assets | 375,570 | 225,535 | 519,639 | 1,120,744
| Disposals | - | (325,639) | - | (325,639)
| At 31 May 2025 | 4,003,921 | 498,021 | 5,532,869 | 10,034,811
| Net book value |  |  |  |
| At 31 May 2025 | 15,971,857 | 801,126 | 1,904,911 | 18,677,894
| At 31 May 2024 | 15,436,682 | 720,381 | 2,055,706 | 18,212,769
13. | Stocks
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Raw materials and consumables | 2,156,075 | 2,284,543
| Finished goods and goods for resale | 5,850,210 | 5,564,660
|  | 8,006,285 | 7,849,203
Page 23
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025
14. | Debtors
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Trade debtors | 10,066,928 | 9,848,576
| Amounts owed by group undertakings | 6,335,285 | 5,441,240
| Other debtors | 26,795 | -
| Prepayments and accrued income | 1,462,713 | 924,344
|  | 17,891,721 | 16,214,160
15. | Cash and cash equivalents
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Cash at bank and in hand | 6,527,581 | 6,427,385
|  | 6,527,581 | 6,427,385
16. | Creditors: Amounts falling due within one year
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Trade creditors | 3,116,217 | 3,774,965
| Other taxation and social security | 1,288,203 | 1,575,280
| Other creditors | 555,942 | 175,168
| Accruals and deferred income | 1,499,569 | 913,472
|  | 6,459,931 | 6,438,885
17. | Share capital
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
|  | Allotted, called up and fully paid |  |
|  | 100 (2024 - 100) Ordinary shares of £1.00 each | 100 | 100
Page 24
DERMAL LABORATORIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2025
18. | Reserves
Profit and loss account The profit and loss account represents cumulative profits and losses net of dividends and other adjustments.
19. | Capital commitments
| At 31 May 2025 the Company had capital commitments as follows:
|  |  |  |  | 2025 | 2024
|  |  |  |  | £ | £
| Contracted for but not provided in these financial statements | - | 811,682
|  | - | 811,682
20. | Pension commitment
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £1,569,028 (2024: £1,564,330). There were no contributions payable to the fund at the balance sheet date.
21. | Related party transactions
| The company has taken advantage of the exemption in Financial Reporting Standard Number 102 from the requirement to disclose transactions with group companies on the grounds that consolidated financial statements are prepared by the ultimate parent company and are publicly available.
22. | Controlling party
The ultimate parent undertaking is Diomed Group Holdings Limited, a company incorporated in England and Wales. Diomed Group Holdings Limited prepares consolidated group financial statements and copies can be obtained from its registered office. The ultimate controlling party is M J Yarrow, by virtue of his majority shareholding in the parent company.
Page 25