The director presents the strategic report for the year ended 31 December 2024.
The Director aims to present a balanced and comprehensive review of the development and performance of the Group during the year and its position at the year end. The review is consistent with the size and nature of the Company and its subsidiaries and is written in the context of the opportunities, risks and uncertainties faced by the Group. Consideration has been given to key performance indicators, being turnover, profit margin and cash flow, which communicate the financial performance and position of the Group.
The Group’s turnover increased from £13,417,000 in 2023 to £20,355,000 in 2024, representing growth of approximately 52%. This increase reflects expanded activity across both pharmaceutical product distribution and related service offerings, together with a broader and more diversified customer base following the reduction in pandemic-related revenues experienced in 2023.
Overall gross profit increased from £4,340,000 in 2023 to approximately £5,763,000 in 2024. Gross margins decreased slightly year-on-year, reflecting changes in product and service mix and a return to more normalised trading conditions. Administrative expenses increased during the year, resulting in an operating loss of £12,491,000 (2023: loss of £9,763,000).
The annual results have been materially influenced by matters involving judgement and estimation, as outlined in the accompanying notes to the financial statements.
Cash flow management remains a priority. The Group continues to focus on working capital discipline, including the timely collection of receivables and management of supplier terms, and seeks to maintain an appropriate level of liquidity. The classification of a portion of the legal provision as non-current reflects the expected timing of cash outflows and provides a more representative view of the Group’s short-term liquidity position.
As with many businesses of the Group’s size, the operating environment remains subject to uncertainty. The Directors continue to focus on maintaining and developing customer and supplier relationships in order to support sustainable revenue generation.
The Group continues to pursue an effective corporate governance and risk management framework appropriate to its size and complexity.
The exceptional levels of activity associated with the SARS-CoV-2 pandemic have now subsided. As anticipated, revenues declined in 2023 following the reduction in UKHSA-related demand. In 2024, the Group has returned to growth, supported by a more diversified portfolio of customers, suppliers, and service offerings alongside its established product distribution activities.
The principal risks to the business include the potential loss of key customers, changes in supplier relationships or availability of supply, and broader market and demand volatility.
The Group is exposed to commercial credit risk arising from trade receivables. In accordance with its accounting policies, receivables are measured at transaction price and are subject to ongoing impairment review, including the application of expected credit loss principles based on historical experience, customer creditworthiness, and forward-looking information. The Group maintains credit control procedures, including customer due diligence, the establishment of credit limits, and active monitoring of receivable balances; however, delays or defaults in customer payments may adversely impact cash flow.
The Group is also exposed to foreign exchange risk due to transactions denominated in currencies other than sterling. The Group’s functional currency is GBP, and foreign currency transactions are translated at the spot rate on the date of the transaction. The Group monitors currency exposures as part of its financial risk management processes and, where appropriate, may utilise foreign exchange contracts in accordance with its accounting policies. Derivative financial instruments, where used, are measured at fair value through profit or loss.
Given the inherent uncertainty associated with such estimates, the ultimate outcome may differ from the amounts provided. The Directors have exercised judgement in determining the provision and will continue to reassess the estimate as the matter progresses. Users of the financial statements should read this Strategic Report in conjunction with the notes to the financial statements and the Report of the Independent Auditors, including the basis for qualified opinion, in order to understand the key areas of estimation uncertainty.
Further uncertainties arise from the significant judgements required in the preparation of the financial statements, including in relation to provisions and other estimates disclosed in the notes.
Employees
The company is grateful to all the staff who once again for their conurbations to progress. We aim to provide an environment where our employees can thrive and develop.
The directors of the company are required under section 172 of the Companies Act 2006 ('s.172') to act in a way that promotes the success of the company for the benefit of its shareholders as a whole, whilst having regard to the following matters (amongst other things): the likely long term consequences; the interests of the company's employees; the business relationships with suppliers and customers; the impact on the community and the environment; reputation for high standards of business conduct; and acting fairly between shareholders.
The governance framework adopted by Tanner Pharma UK Limited has been applied by the company and its subsidiaries, Tannerlac UK Limited, Tanner Pharma IE Limited and Tanner Pharma CH GmbH, and the matters that the directors of the company are responsible for considering under s.172 have been considered to an appropriate extent by the Board in relation to both the company and its subsidiaries. Further details of how the Board has considered the matters set out in s.172 (for the group and for the company) are set out in the Tanner Pharma UK Limited Annual Report and Accounts, which does not form part of this report. During the year, the directors have also considered, both individually and together, relevant matters where appropriate.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a further dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
In accordance with the company's articles, a resolution proposing that BK Plus Audit Limited be reappointed as auditor of the group will be put at a General Meeting.
United Kingdom company law requires the director to prepare financial statements for each financial year. Under that law, the director has elected to prepare the group and parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and parent company, and of the profit or loss of the group for that period.
In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent company, and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the group and parent company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of Tanner Pharma UK Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 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 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).
Basis for Qualified Opinion
Material uncertainty related to going concern
We draw your attention to note 1.4 of the financial statements, which indicates that the company and group incurred a net comprehensive loss during the year ended 31 December 2024.
As outlined in the Basis of Qualified Opinion section above, there is also an ongoing contractual claim against the company. As stated in note 23, these conditions, along with other matters as set forth in note 1.4 indicate that a material uncertainty exists that may cast significant doubt on the group and company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
The information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the director's report have been prepared in accordance with applicable legal requirements.
From the preliminary stage of the audit, we ensure our understanding of the entity is up to date. This includes, but is not limited to, current knowledge of their activities, the business and control environments, and their compliance with the applicable legal and regulatory frameworks. This information supports our risk identification and the subsequent design of audit procedures to mitigate those risks; ensuring that the audit evidence obtained is sufficient and appropriate to support our opinion.
In response to the risks identified, specific to this entity, we designed procedures which included, but were not limited to:
Enquiry of management and those charged with governance around actual and potential litigation and claims;
Reviewing minutes of meetings of those charged with governance, if available;
Reviewing financial statements disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale for significant transactions outside the normal course of business.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations are from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusions. There is always the unavoidable risks that material misstatements in the financial statements may not be detected despite the audit being properly performed in accordance with UK Auditing standards.
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.
This report is made solely to the parent 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
The notes on pages 15 to 30 form part of these financial statements.
The notes on pages 15 to 30 form part of these financial statements.
The notes on pages 15 to 30 form part of these financial statements.
The notes on pages 15 to 30 form part of these financial statements.
As permitted by section 408 of the Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £11,806,551 (2023 - £8,582,466 loss).
The notes on pages 15 to 30 form part of these financial statements.
The notes on pages 15 to 30 form part of these financial statements.
Tanner Pharma UK Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 2 Adelaide Street, St. Albans, Hertfordshire, AL3 5BH.
The group consists of Tanner Pharma UK Limited and all of its subsidiaries listed in note 11.
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.
The consolidated group financial statements consist of the financial statements of the parent company Tanner Pharma UK Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures.
All financial statements are made up to 31 December 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.
The directors acknowledge that the group incurred a loss of £12,370,801 during the year ended 31 December 2024 (2023: loss of £7,270,828). The company also incurred a loss of £11,806,551 for the year ended 31 December 2024 (2023: loss of £8,582,466). The directors also acknowledge that (not withstanding the multiple dismissals described in note 23 - contingent liabilities) there remains an ongoing contractual claim against the company. These conditions may indicate that a material uncertainty exists that may cast doubt on the group and company's ability to continue as a going concern.
The Board have undertaken a thorough review of the companies financial position, cash flow forecasts, and available facilities, and are satisfied that, taking into account all available information, the company has adequate resources to meet its obligations as they fall due, for a period of at least 12 months from the signing of these financial statements. Therefore, the Board have prepared these financial statements on the going concern basis.
The financial statements do not include any adjustments that would result from the going concern basis of preparation proving inappropriate.
Revenue comprises sales of goods or services provided to customers net of value added tax and other sales taxes, less an appropriate deduction for actual and expected returns and discounts. Revenue is recognised when performance obligations are satisfied and the control of goods or services is transferred to the buyer. Where the performance obligation is satisfied over time, revenue is recognised in accordance with its progress towards complete satisfaction of that performance obligation.
When cash inflows are deferred and represent a financing arrangement, the promised consideration is adjusted for the effects of the time value of money, which 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.
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.
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 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the director is 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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Tangible fixed assets are depreciated to write off the cost of the asset, less any residual value, over its useful life. Estimates of useful lives are based on the nature of the asset and management's experience. The actual useful lives of assets may vary.
The company estimates the recoverable amount of trade and other receivables. In assessing potential impairment, management consider factors including the debtor’s credit rating, the age of outstanding balances, and past collection experience.
The company estimates a provision for obsolete or slow-moving stock based on management’s estimate of the value of stock identified as slow moving or obsolete. The provision represents management’s best estimate of the provision as at the reporting date.
The company estimates a provision for legal fees. The provision represents management’s best estimate of the provision as at the reporting date. This estimate takes into account historic patterns of legal fees incurred, known activity on the case and key case milestones. The Board acknowledge that the use of historic data to forecast future activity and the assumptions made in estimate future legal fees, including the anticipated closure date of such cases, is a source of estimation uncertainty.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge/(credit) for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2024 are as follows:
For the financial year ended 31 December 2024, Tannerlac UK Limited was entitled to exemption from audit under 479A of the Companies Act 2006 as a subsidiary undertaking.
These loans are due to a related party and will not be called until the group is performing well.
Of the total provision, approximately £2,776,000 is expected to be utilised within 12 months of the balance sheet date, with the balance of £8,050,000 expected to be utilised in later periods.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
During the preparation of the financial statements for the year ended 31 December 2024, the company identified three classification errors relating to the prior period.
Provision for professional services adjustment amounting to £8,104,808, which had previously been included within accruals and deferred income, was identified as being incorrectly classified. This amount has been reclassified to provisions.
An amount owed to a related entity, totalling £6,228,395, which had previously been presented within current accruals and deferred income, was identified as being incorrectly classified. This amount has been reclassified to amounts owed to related undertakings over one year.
In addition, foreign currency translation differences of £282,042 arising on consolidation of foreign subsidiaries which had previously been included in the group profit and loss account, was identified as being incorrectly classified. This amount has been reclassified to be included in the group statement of comprehensive income.
The company is involved in an ongoing contractual claim first made by a third party against the company in the United States during the year ended 31 December 2021. This case is active in the courts as at the year ended 31 December 2024, though no conclusion has been reached. Three iterations of the claim have been dismissed in Federal Courts (one in California and two in North Carolina), with the latter dismissals currently subject to appeal. A further re-filed claim in Federal Court has been recommended for dismissal by a magistrate judge, with the third party since bringing a duplicative claim in North Carolina State Court that is likewise the subject of pending motions to dismissal.
The company continues to defend their position on the case. Following discussions with legal counsel, no provision has been made in these financial statements in relation to the outcome of the case. However, associated, anticipated, legal fees have been provided for in these financial statements. The Board consider that disclosure of an estimate of the potential financial impact of any outcome would seriously prejudice the company’s position in the ongoing legal proceedings. Accordingly, this information has not been disclosed, in accordance with section 21 of FRS 102.