REGISTERED NUMBER: 01172728 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

FOR

PAUL MURRAY PLC

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Statement of Comprehensive Income

9

Statement of Financial Position

10

Statement of Changes in Equity

11

Statement of Cash Flows

12

Notes to the Statement of Cash Flows

13

Notes to the Financial Statements

14

DIRECTORS:

P T Murray

K J Murray

M Cox

N B Hayton

L Hadaway

M J Murray

G L Robertson

C Eastwood

T P Eastwood

T Phillips

SECRETARY:

T Phillips

REGISTERED OFFICE:

Wide Lane

Southampton

Hampshire

SO18 2FA

REGISTERED NUMBER:

01172728 (England and Wales)

AUDITORS:

Rothmans Audit LLP

Statutory Auditors

Chartered Accountants

Fryern House

125 Winchester Road

Chandler's Ford

Hampshire

SO53 2DR

The directors present their strategic report for the year ended 31 December 2025.

REVIEW OF BUSINESS

The principal activity of the company continued to be that of a provider of solutions in the distribution of brands of health, beauty and nursery products to the retail, wholesale and online channels. Sales are made predominantly in the United Kingdom and Ireland.

In the year, the company achieved sales of £32,874,659 (2024: £25,894,740), representing strong growth of 27%. Total sales including agency sales increased to £35,141,342 (2024: £28,133,297). The company achieved good growth by focusing on expanding the brand offering and working with partners to offer more premium goods.

The company has continued to strengthen its relationships with major retailers and online platforms, including entering into several new contracts to fulfil Direct to Consumer (DTC) orders via customers' websites. The directors expect this channel to be a key driver of growth in 2026 and beyond.

Profit before tax increased to £2,198,497 (2024: £1,510,938), reflecting the benefit of increased sales volumes, partially offset by a reduction in gross margin from 33.4% to 31.0% due to changes in product and customer mix.

The business has continued to perform strongly despite ongoing economic pressures, supported by its diversified customer base and continued investment in operational infrastructure.

Financial position at year end - The company remained in a strong financial position at the year end. Net assets stood at £7,443,686 (2024: £6,399,735), supported by increased profitability and continued investment in the business.

Cash flow and funding - The company maintains appropriate banking facilities to support operations and future growth. The directors are satisfied that the company is well positioned to meet its financial obligations as they fall due.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors continue to actively review the company's brand portfolio and customer base to ensure the business remains well positioned to capitalise on market opportunities and withstand external economic pressures.

Key risks include changes in consumer demand, margin pressure from supplier pricing and customer terms, and ongoing economic uncertainty. The directors mitigate these risks through regular review of pricing, supplier diversification and close management of customer relationships.

The establishment of Murrays Health and Beauty Europe Limited, a wholly owned Irish subsidiary of Paul Murray plc, has strengthened the company's ability to service customers in Ireland and has significantly mitigated the impact of Brexit on both the company and its customers.

SECTION 172(1) STATEMENT

The directors of the company, as those of all UK companies, must act in accordance with a set of general duties. These duties are set out in section 172 of the Companies Act 2006 and can be summarised as follows:

A director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

- The likely consequences of any decision in the long term

- The interests of the company's employees

- The need to foster the company's business relationships with suppliers, customers and others

- The impact of the company's operations on the community and the environment

- The desirability of the company maintaining a reputation for high standards of business conduct, and

- The need to act fairly as between members of the company.

A new director is briefed on their duties and can access professional advice on these - either through the company or, if they deem it appropriate, through professional advisers.

The company is committed to be a responsible business, and our behaviour is aligned with the expectations of our stakeholders, which include our employees, customers, suppliers, local community and our shareholders. In addition to monthly board meetings, the directors attend off site days annually or whenever the business need arises to discuss the business and its future considering the needs of all its stakeholders.

The directors are committed to supply chain security, and the company holds Authorised Economic Operator (AEO) status with HMRC. This has clear benefits for our employees, suppliers and customers in demonstrating that the company operates a safe working environment with full traceability of all goods.

The company's premises are situated near to some local housing, and the directors take seriously its responsibility to the local community, including a Design Out Crime agreement with Hampshire Constabulary covering site security and build design. The company has a Lorry Routing Management Plan to reduce congestion and its impact on the local road system. In view of its location near to Southampton Airport, it has a Bird Hazard Management Plan agreed with the Civil Aviation Authority to preserve public health and public safety.

The company and its employees have continued to support the Trinity Winchester charity for the care of the homeless.

KEY PERFORMANCE INDICATORS

The key financial highlights of the company's activities are considered to be:

2025

2024

£

£

Turnover reported in the financial statements

32,874,659

25,894,740

Turnover including agency sales

35,141,342

28,133,297

Gross profit margin

31.0%

33.4%

Profit before tax

2,198,497

1,510,938

OTHER PERFORMANCE INDICATORS

The company's strategy is to focus on the distribution of larger, well-established brands across major retail customers, independent retailers and online platforms, including the direct-to-consumer channel. This approach is designed to increase market share across all key channels.

The company remains committed to maintaining strong gross margins while providing a positive and supportive working environment for its employees. Based on current trading and planned initiatives, the directors expect continued growth in 2026.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The company's principal financial instruments comprise bank balances, bank financing, trade creditors and trade debtors. The main purpose of these instruments is to raise funds for, and finance, the company's operations.

The company's approach to managing risks, applicable to the financial statements concerned, is shown below:

In respect of cash management, liquidity risk is managed through the use of invoice financing facilities, allowing the company to align funding with working capital requirements.

Trade debtors are managed, in respect of credit and cash flow risk, by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.

Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.

POLICY ON THE PAYMENT OF CREDITORS

Payment is generally made by the company to its creditors in accordance with agreed terms of business. It is the policy of the company that most suppliers are paid within 30 days following the end of the month in which the invoices are received unless agreements are in place for extended terms. For example, the two largest suppliers in 2025 have agreements in place of 75 and 60 days to match the terms offered by our key customers for these products. The total amount of trade creditors at 31 December 2025 represents 47 days (2024: 31 days) as a proportion of the total supplier invoices for the year.

ON BEHALF OF THE BOARD:

P T Murray - Director

3 June 2026

The directors present their report with the financial statements of the company for the year ended 31 December 2025.

DIVIDENDS

During the year dividends of £618,968 (2024: £697,831) were paid by the company.

FUTURE DEVELOPMENTS

The company has a strong track record of successfully distributing branded goods and continues to expand its portfolio through carefully selected partnerships. Following careful research, the company has secured agreements for the distribution of additional brands across the health, beauty and nursery sectors, with significant success in developing brands in the UK and Ireland markets.

Growth is also being supported by the continued expansion of the company's own brands, which deliver strong margins and enhance profitability, alongside the development of own-label products in collaboration with key customers

The company has recently onboarded three new brands and is actively engaged in discussions with a number of additional partners. The directors remain confident that these initiatives, combined with continued investment in operational infrastructure, position the company well for further growth in the coming year.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2025 to the date of this report.

P T Murray

K J Murray

M Cox

N B Hayton

L Hadaway

M J Murray

G L Robertson

C Eastwood

T P Eastwood

T Phillips

DISCLOSURE IN THE STRATEGIC REPORT

In accordance with the Companies Act 2006, s414C(11), information in respect of business activities and risk are shown within the Strategic Report.

DIRECTORS' RESPONSIBILITIES STATEMENT

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), 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 and then apply them consistently;

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

-	state whether applicable 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 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

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

AUDITORS

The auditors, Rothmans Audit LLP, will be proposed for appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

P T Murray - Director

3 June 2026

Opinion

We have audited the financial statements of Paul Murray PLC (the 'company') for the year ended 31 December 2025 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 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 UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

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

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

Other information

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

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

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

-	adequate accounting records have not been kept, 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 four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the 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.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

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

The objectives of our audit, in respect to fraud, are to identify and assess the risks of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.

In identifying and assessing risk of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures include the following:

-

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

-

We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and those laws and regulations that had a direct effect on the financial statements. The key laws considered are FRS102 and the Companies Act 2006; and

-

We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence. The identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

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

-

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

-

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

We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be within the recognition of income and the override of controls by management. To address the risk of fraud in these areas, we:

-

selected a sample of transactions from material income streams and compared expected income to that recorded within the financial statements;

-

performed analytical procedures to identify any unusual or unexpected relationships;

-

tested journal entries during the year and at the year-end to identify unusual transactions;

-

assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias;

-

investigated the rationale behind significant or unusual transactions.

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

-

agreeing financial statement disclosures to underlying supporting documentation;

-

reading the minutes of meetings of those charged with governance;

-

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

-

reviewing legal and professional expenditure incurred in the year.

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

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

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

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Liz Martyn (Senior Statutory Auditor)

for and on behalf of Rothmans Audit LLP

Statutory Auditors

Chartered Accountants

Fryern House

125 Winchester Road

Chandler's Ford

Hampshire

SO53 2DR

5 June 2026

TURNOVER

3

32,874,659

25,894,740

Cost of sales

22,674,438

17,231,672

GROSS PROFIT

10,200,221

8,663,068

Distribution costs

4,721,037

4,119,445

Administrative expenses

3,157,760

2,877,015

7,878,797

6,996,460

2,321,424

1,666,608

Other operating income

41,307

-

OPERATING PROFIT

5

2,362,731

1,666,608

Interest receivable and similar income

738

-

2,363,469

1,666,608

Interest payable and similar expenses

7

164,972

155,670

PROFIT BEFORE TAXATION

2,198,497

1,510,938

Tax on profit

8

535,578

371,934

PROFIT FOR THE FINANCIAL YEAR

1,662,919

1,139,004

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,662,919

1,139,004

FIXED ASSETS

Tangible assets

10

684,803

826,326

Investments

11

1

1

684,804

826,327

CURRENT ASSETS

Stocks

12

7,900,460

6,499,083

Debtors

13

8,414,355

5,124,703

Cash at bank

18,618

37,838

16,333,433

11,661,624

CREDITORS

Amounts falling due within one year

14

9,470,739

5,958,025

NET CURRENT ASSETS

6,862,694

5,703,599

TOTAL ASSETS LESS CURRENT LIABILITIES

7,547,498

6,529,926

PROVISIONS FOR LIABILITIES

18

103,812

130,191

NET ASSETS

7,443,686

6,399,735

CAPITAL AND RESERVES

Called up share capital

19

100,000

100,000

Retained earnings

20

7,343,686

6,299,735

SHAREHOLDERS' FUNDS

7,443,686

6,399,735

The financial statements were approved by the Board of Directors and authorised for issue on 3 June 2026 and were signed on its behalf by:

P T Murray - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2024

100,000

5,858,562

5,958,562

Changes in equity

Profit for the year

-

1,139,004

1,139,004

Total comprehensive income

-

1,139,004

1,139,004

Dividends

-

(697,831

)

(697,831

)

Balance at 31 December 2024

100,000

6,299,735

6,399,735

Changes in equity

Profit for the year

-

1,662,919

1,662,919

Total comprehensive income

-

1,662,919

1,662,919

Dividends

-

(618,968

)

(618,968

)

Balance at 31 December 2025

100,000

7,343,686

7,443,686

Cash flows from operating activities

Cash generated from operations

1

(83,500

)

1,099,124

Interest paid

(164,972

)

(155,670

)

Tax paid

(471,909

)

(357,480

)

Net cash from operating activities

(720,381

)

585,974

Cash flows from investing activities

Purchase of tangible fixed assets

(56,495

)

(155,476

)

Sale of tangible fixed assets

1,279

-

Loans to related companies

(34,833

)

(38,650

)

Loans repaid by related companies

76,380

60,558

Net cash from investing activities

(13,669

)

(133,568

)

Cash flows from financing activities

Equity dividends paid

(618,968

)

(697,831

)

Net cash from financing activities

(618,968

)

(697,831

)

Decrease in cash and cash equivalents

(1,353,018

)

(245,425

)

Cash and cash equivalents at beginning of year

2

(2,214,057

)

(1,968,632

)

Cash and cash equivalents at end of year

2

(3,567,075

)

(2,214,057

)

1.	RECONCILIATION OF PROFIT FOR THE FINANCIAL YEAR TO CASH GENERATED FROM OPERATIONS

2025

2024

£

£

Profit for the financial year

1,662,919

1,139,004

Depreciation charges

191,038

190,458

Loss on disposal of fixed assets

5,701

-

Finance costs

164,972

155,670

Finance income

(738

)

-

Taxation

535,578

371,934

2,559,470

1,857,066

Increase in stocks

(1,401,377

)

(1,389,383

)

Increase in trade and other debtors

(3,331,200

)

(547,185

)

Increase in trade and other creditors

2,089,607

1,178,626

Cash generated from operations

(83,500

)

1,099,124

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 December 2025

31.12.25

1.1.25

£

£

Cash and cash equivalents

18,618

37,838

Bank overdrafts

(3,585,693

)

(2,251,895

)

(3,567,075

)

(2,214,057

)

Year ended 31 December 2024

31.12.24

1.1.24

£

£

Cash and cash equivalents

37,838

72,035

Bank overdrafts

(2,251,895

)

(2,040,667

)

(2,214,057

)

(1,968,632

)

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.25

Cash flow

At 31.12.25

£

£

£

Net cash

Cash at bank

37,838

(19,220

)

18,618

Bank overdrafts

(2,251,895

)

(1,333,798

)

(3,585,693

)

(2,214,057

)

(1,353,018

)

(3,567,075

)

Total

(2,214,057

)

(1,353,018

)

(3,567,075

)

1.	STATUTORY INFORMATION

Paul Murray PLC is a public unlisted company, limited by shares, registered in England and Wales. The company's registered number and registered office address can be found on the Company Information Page.

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared in accordance with FRS102 "The Financial Reporting Standard applicable to the UK and Republic of Ireland" ("FRS102") and the requirements of the Companies Act 2006 and under the historical cost convention and in accordance with applicable accounting standards.

Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Preparation of consolidated financial statements

These financial statements contain information about Paul Murray PLC as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 402 of the Companies Act 2006 from the requirement to prepare consolidated financial statements as its subsidiary can be excluded from consolidation on the grounds that it is immaterial.

Paul Murray PLC is a subsidiary of Metro Gold Limited and the results of the company and its subsidiary undertaking are included in the consolidated financial statements of Metro Gold Limited whose registered office is Wide Lane, Southampton, England, SO18 2FA.

Significant judgements and estimates

In the application of the company's accounting policies, the directors are required to make judgements estimates and assumptions about the carrying 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 accounting policies requiring the most judgement within the financial statements are those relating to stock valuation and accounting for sales and purchases under agency agreements.

The most significant estimates in the accounts are those relating to the recoverability of debtors and provisions for slow moving and obsolete stock. Stocks of finished goods held at the year-end are disclosed in Note 12 of the accounts and trade debtors are disclosed in Note 13. No material provisions were made against these balances in the current or prior period.

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 revision and future periods where the revision affects both the current and future periods.

Turnover

Turnover is recognised at the fair value of the consideration received or receivable for sale of goods and services to external customers for the sale of non-pharmaceutical products, surgical goods, cosmetics, fragrances, and toiletries in the ordinary nature of the business. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates. Turnover is shown net of Value Added Tax.

The company has entered into agreements with some of its suppliers to act as their agent in the supply of their goods. Commission is receivable in respect of sales made under agency agreements and is recognised within turnover shown in the profit and loss account. Revenue is recognised at the point of dispatch of the product.

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.

Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Tangible fixed assets are stated at cost, being purchase price together with any incidental costs of acquisition, less accumulated depreciation. Depreciation is calculated so as to write off the cost or revaluation of an asset, net of anticipated disposal proceeds, over the useful economic life of that asset as follows:

Tenants improvements

straight line over 15 years

Fixtures and fittings

25% reducing balance and straight line over 3 or 15 years

Equipment

25% straight line

Motor vehicles

25% reducing balance

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 credited or charged to profit or loss.

Impairment of fixed assets

At each reporting end date, the company 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.

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 in at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Impairment losses relating to fixed assets are recognised within administrative expenses in the statement of comprehensive income.

Investments in subsidiaries

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

Impairment of investments

At each reporting end date, the company reviews the carrying amounts of its fixed asset investments 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.

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 in at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks

Stocks are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost basis and provision is made for obsolete and slow moving items.

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

Cash and cash equivalents 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.

Financial instruments

The company 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 when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amount 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

Basic financial assets, which include trade and other receivables 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 financial asset is measured at the present value of the future receipts discounted at a market rate of interest.

Other financial assets

Other financial assets, including trade investments, 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 publically traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

Impairment of financial assets

Financial assets, other than those held at fair value through profit or 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.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when it 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.

Classification of financial liabilities

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 company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including trade and other payables, bank borrowings, 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.

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

Other financial liabilities

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.

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 company after deducting all of its liabilities.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the company's contractual obligations are discharged, cancelled, or they expire.

Equity Instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Taxation

The tax expense represents the sum of the current tax expense and deferred tax expense. Current tax assets are recognised when tax paid exceeds the tax payable.

Current and deferred tax is charged or credited to the profit or loss, except when it relates to items charged or credited to other comprehensive income or equity, when the tax follows the transaction or event it relates to and is also charged or credited to other comprehensive income, or equity.

Current tax assets and current tax liabilities and deferred tax assets and deferred tax liabilities are offset, if and only if, there is a legally enforceable right to set off the amounts and the entity intends either to settle on the net basis or to realise the asset and settle the liability simultaneously.

Current tax is based on taxable profit for the year. Taxable profit differs from total comprehensive income because it excludes items of income or expense that are taxable or deductible in other periods. Current tax assets and liabilities are measured using tax rates that have been enacted or substantively enacted by the reporting period.