Registered number: 06033065
DEXCEL-PHARMA LABORATORIES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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DEXCEL-PHARMA LABORATORIES LIMITED
COMPANY INFORMATION
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Drayton Fields Industrial Estate
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Chartered Accountants & Statutory Auditors
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DEXCEL-PHARMA LABORATORIES LIMITED
CONTENTS
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Directors' Responsibilities Statement
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Independent Auditors' Report
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Consolidated Statement of Comprehensive Income
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Consolidated Statement of Financial Position
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Company Statement of Financial Position
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Notes to the Financial Statements
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DEXCEL-PHARMA LABORATORIES LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their Strategic Report together with the audited financial statements for the year ended 31 December 2020.
The Group turnover has increased by 23.8% to £14,649,916 (2019 - £11,831,475). Gross profit of £3,505,790 (2019 - £3,239,238) represents a gross profit margin of 23.9% (2019 - 27.4%).
The continued focus on profit margin and sales in a challenging environment continued successfully throughout 2020. Turnover increased overall as a result of continued market opportunity within one product line, coupled with the full year effect of the successful launch of a new over the counter product; additionally an acquisition of a new over the counter product half way through the year had a positive impact on revenue. It is expected that margins will fluctuate dependent on product mix and the market in any given year.
The Group reports net assets at the year end of £14,163,174 (2019 – £14,285,726).
Principal risks and uncertainties
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The principal risks and uncertainties that face the Group are the reliance on related party companies for the supply of product, market pricing and customer demand. In order to minimise these risks, the directors are in regular contact with related party companies, continually monitor the pharmaceutical market for price fluctuations and strive to actively maintain positive relationships with customers.
In 2020 the COVID-19 pandemic brought fast-moving and unexpected variables to deal with. Please refer to the basis of preparation of financial statements accounting policy at 2.1 for further information.
Financial key performance indicators
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The directors consider that turnover, gross profit margin, and operating result are the most reliable indicators for measuring group performance, which is consistent with the size and complexity of the business. These key performance indicators can all be derived from the Consolidated Statement of Comprehensive Income.
Turnover has increased whilst gross profit margin has decreased as explained above. Operating result has declined compared to the prior year, mostly due to exceptional adminstrative expenses/income in both years.
This report was approved by the board and signed on its behalf.
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T Grigg
Director
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DEXCEL-PHARMA LABORATORIES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their report and the financial statements for the year ended 31 December 2020.
The Company continues to be a dormant holding company for the UK Group.
The Group's principal activity is to market, sell and distribute generic medicines to wholesalers, pharmacies and healthcare providers, as well as patented speciality products to dental healthcare professionals.
The loss for the year, after taxation, amounted to £122,552 (2019 - profit £340,472).
The Consolidated Statement of Comprehensive Income is set out on page 11 and shows the loss for the year. The directors do not recommend a dividend.
The directors who served during the year were:
Moving forward into 2022 we will be looking to increase our product lines. Business development will be centred around bringing on these new products and looking at acquisitions. We will also be continuing to develop the new area of the business in over the counter medicine, in order to achieve this the business will need to invest in bringing in additional resources. The focus remains on generating sales with a greater margin and the signs for sustained profitable growth remain promising for 2022 and beyond.
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DEXCEL-PHARMA LABORATORIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Financial risk management objectives and policies
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The UK based director regularly reviews the financial risks associated with the Group. Group operations are primarily financed on extended payment terms provided by related party companies. The Group does not use forward currency contracts or enter into hedging arrangements.
The UK based director monitors the exposure of the Group to price risk, credit risk, liquidity risk and cash flow risk.
Price risk
The Group is exposed to price risk in that it operates within a fluctuating sales market. The directors continually monitor the market prices and make related decisions based on data and experience.
Credit risk
The risk of financial loss due to counterparty’s failure to honour its obligations arises principally in relation to transactions where the Group provides goods or services on deferred credit terms. Group policies are aimed at minimising such losses, and require that deferred terms are granted only to customers who demonstrate an appropriate payment history and satisfy creditworthiness procedures. Individual exposures are monitored with customers subject to credit limits to ensure that the Group's exposure to bad debts is not significant.
Liquidity risk and cash flow risk
The Group aims to mitigate liquidity risk and cash flow risk by managing cash generation by its operations and applying debtor collection targets. The Group also benefits from extended credit terms with related party suppliers.
Disclosure of information to auditors
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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 and the Group'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 and the Group's auditors are aware of that information.
Post balance sheet events
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All businesses have undoubtedly experienced a variety of difficulties as a result of the COVID-19 pandemic which started during the year and has continued post year end. The directors do not consider there to be any long term detrimental effects on the business as a result of the pandemic. Please refer to the basis of preparation of financial statements accounting policy at 2.1 for further information.
There have been no other significant events affecting the Group since the year end.
The auditors, MHA MacIntyre Hudson, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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DEXCEL-PHARMA LABORATORIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
This report was approved by the board and signed on its behalf.
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T Grigg
Director
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DEXCEL-PHARMA LABORATORIES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent; and
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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DEXCEL-PHARMA LABORATORIES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DEXCEL-PHARMA LABORATORIES LIMITED
We have audited the financial statements of Dexcel-Pharma Laboratories Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2020, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company 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).
Except for the possible effects of the matters described in the basis for qualified opinion paragraph below, in our opinion the financial statements:
∙give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2020 and of the Group's loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified opinion
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During our audit, we were unable to obtain the necessary information to confirm the value, origin or classification of a debtor balance amounting to £108,133 which was written off to the Statement of Comprehensive Income as an exceptional expense.
We were unable to satisfy ourselves, through the audit procedures we were able to perform regarding the value, origin or classification of this exceptional expense of £108,133. Consequently, we have not been able to obtain sufficient appropriate audit evidence to determine whether any adjustment to this amount was necessary.
In addition, we were unable to obtain the necessary information to confirm the value, origin or classification of a creditor balance amounting to £475,481 which was written off to the Statement of Comprehensive Income as exceptional income in the prior year. Consequently, we were not able to obtain sufficient appropriate audit evidence to determine whether this amount may also have a consequential effect on the reported profit or net assets for the year ended 31 December 2020. .
In addition, were any adjustments to these exceptional items be required, the Strategic Report and Directors' Report may need to be amended for the same reason..
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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 qualified opinion.
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DEXCEL-PHARMA LABORATORIES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DEXCEL-PHARMA LABORATORIES LIMITED (CONTINUED)
Conclusions relating to going concern
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In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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.
As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning an exceptional expense of £108,133 recognised in the Statement of Comprehensive Income for the year ended 31 December 2020 and exceptional income of £475,481 recognised in the Statement of Comprehensive Income for the year ended 31 December 2019. We have concluded that where the other information refers to amounts within the financial statements, it may be materially misstated for the same reason.
Qualified opinion on other matters prescribed by the Companies Act 2006
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Except for the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of the audit, the information given in the Group 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 Directors' Report have been prepared in accordance with applicable legal requirements.
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DEXCEL-PHARMA LABORATORIES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DEXCEL-PHARMA LABORATORIES LIMITED (CONTINUED)
Matters on which we are required to report by exception
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Except for the material misstatement described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report and the Directors' Report.
Arising solely from the limitation on the scope of our work relating to an exceptional expense, referred to above;
∙we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
∙we were unable to determine whether adequate accounting records have been kept.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the parent Company financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made.
Responsibilities of directors
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As explained more fully in the Directors' Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
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DEXCEL-PHARMA LABORATORIES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DEXCEL-PHARMA LABORATORIES LIMITED (CONTINUED)
Auditors' responsibilities for the audit of the financial statements
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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 Group 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:
- Enquiry of management and those charged with governance around actual, potential or suspected litigation, claims, non-compliance with applicable laws and regulations and fraud.
- Enquiry of entity staff in tax and compliance functions and external advisors to identify any instances of non-compliance with laws and regulations.
- Performing audit work over the risk of management override, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.
- Reviewing of financial statements disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
- Discussing with engagement team in relation to how and where fraud might occur in the financial statements and any potential indicators of fraud.
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.
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DEXCEL-PHARMA LABORATORIES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DEXCEL-PHARMA LABORATORIES LIMITED (CONTINUED)
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.
Shelley Harvey FCCA (Senior Statutory Auditor)
for and on behalf of
MHA MacIntyre Hudson
Statutory Auditors
Leicester, United Kingdom
Date: 23 December 2021
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DEXCEL-PHARMA LABORATORIES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
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Exceptional administrative expenses
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Interest receivable and similar income
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(Loss)/profit before taxation
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(Loss)/profit for the financial year
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(Loss)/profit for the year attributable to:
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Owners of the parent Company
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There were no recognised gains and losses for 2020 or 2019 other than those included in the Consolidated Statement of Comprehensive Income.
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There was no other comprehensive income for 2020 (2019 - £Nil).
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The notes on pages 20 to 40 form part of these financial statements.
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DEXCEL-PHARMA LABORATORIES LIMITED
REGISTERED NUMBER: 06033065
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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DEXCEL-PHARMA LABORATORIES LIMITED
REGISTERED NUMBER: 06033065
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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T Grigg
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The notes on pages 20 to 40 form part of these financial statements.
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DEXCEL-PHARMA LABORATORIES LIMITED
REGISTERED NUMBER: 06033065
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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DEXCEL-PHARMA LABORATORIES LIMITED
REGISTERED NUMBER: 06033065
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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T Grigg
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The notes on pages 20 to 40 form part of these financial statements.
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DEXCEL-PHARMA LABORATORIES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
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Equity attributable to owners of parent Company
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Comprehensive income for the year
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Comprehensive income for the year
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The notes on pages 20 to 40 form part of these financial statements.
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DEXCEL-PHARMA LABORATORIES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
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Comprehensive income for the year
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Comprehensive income for the year
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The notes on pages 20 to 40 form part of these financial statements.
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DEXCEL-PHARMA LABORATORIES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Cash flows from operating activities
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(Loss)/profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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(Increase)/decrease in stocks
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(Increase)/decrease in debtors
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Decrease in amounts owed by groups
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(Decrease)/increase in creditors
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Increase/(decrease)) in amounts owed to groups
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Corporation tax (paid)/received
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Net cash from investing activities
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Net (decrease)/increase in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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The notes on pages 20 to 40 form part of these financial statements.
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DEXCEL-PHARMA LABORATORIES LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2020
The notes on pages 20 to 40 form part of these financial statements.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Dexcel-Pharma Laboratories Limited is a private company, limited by shares, which is registered in England and Wales, registration number 06033065. The registered office is 7 Sopwith Way, Drayton Fields Industrial Estate, Daventry, Northamptonshire, NN11 8PB.
2.Accounting policies
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Basis of preparation of financial statements
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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 Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The Group has taken measures to mitigate against the impact of Covid-19. The Group holds adequate cash and working capital that will allow the Group to continue in operational existence for the foreseeable future. The directors believe the Group has the ability to continue as a going concern for the next 12 months from date of approval of the financial statements and the Group therefore continues to adopt the going concern basis in preparing its financial information.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group 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 Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group 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 Group 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.
Interest income is recognised in profit or loss using the effective interest method.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is British Pound Sterling (£).
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.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
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 reporting date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position 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.
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 reporting date.
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, which range from 3 to 6 years.
If 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.
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Consolidated Statement of Comprehensive Income over its useful economic life.
Other intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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.
Depreciation 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:
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20% straight line basis per annum
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25-33% straight line basis per annum
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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.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Investments in subsidiaries are measured at cost less accumulated impairment.
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 reporting 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.
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.
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Cash and cash equivalents
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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.
In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
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.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Statement of Financial Position date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the Statement of Financial Position date.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group 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 Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Statement of Comprehensive Income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an 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.
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Operating leases: the Group as lessee
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Rentals paid under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the lease term.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Judgements in applying accounting policies and key sources of estimation uncertainty
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Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
i) Useful economic lives of intangible fixed assets
The directors consider that the useful economic life of the goodwill included within these financial statements cannot be reliably measured. As a result, the directors have adopted the maximum useful economic life allowed under FRS 102. See note 14 for the carrying amount of goodwill, and note 2.9 for the useful ecomonic life.
The annual amortisation charge for intangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on future investments and economic utilisation. See note 14 for the carrying amount of the intangible fixed assets and, see note 2.9 for the useful economic lives of each class of assets.
ii) Useful economic lives of tangible fixed assets
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 15 for the carrying amount of the tangible fixed assets, and note 2.10 for the useful economic lives for each class of assets.
iii) Stock provisioning
The Group continues to sell and distribute generic medicines and is exposed to changes in market prices. As a result it is necessary to consider the recoverability of the cost of stocks and the associated provisioning required. When calculating the stocks provision, management considers the nature and condition of the stocks, as well as applying assumptions around anticipated saleability of the goods. See note 17 for the carrying amount of stocks.
iv) Impairment of debtors
The Company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See note 18 for the net carrying amount of the debtors.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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An analysis of turnover by class of business is as follows:
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Analysis of turnover by country of destination:
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The operating (loss)/profit is stated after charging:
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Depreciation of tangible fixed assets
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Amortisation of intangible assets, including goodwill
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Other operating lease rentals
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Defined contribution pension costs
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements
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Fees payable to the Group's auditor and its associates in respect of:
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Taxation compliance services
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Staff costs were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Amounts paid to third parties in respect of directors' services
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Other interest receivable
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Current tax on loss/profits for the year
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Adjustments in respect of previous periods
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Taxation on (loss)/profit on ordinary activities
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
11.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than (2019 - lower than) the standard rate of corporation tax in the UK of 19% (2019 - 19%). The differences are explained below:
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(Loss)/profit on ordinary activities before tax
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(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2019 - 19%)
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Non-tax deductible amortisation of goodwill and impairment
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Capital allowances for year in excess of depreciation
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Utilisation of tax losses
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Changes in provisions leading to an increase (decrease) in the tax charge
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Unrelieved tax losses carried forward
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Total tax charge for the year
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Factors that may affect future tax charges
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No provision has been made for deferred tax on trading losses carried forward of £1,366,646 (2019 - £1,867,360). The total unprovided deferred tax asset is £271,811 (2019 - £354,798). The directors have not recognised an asset on the basis they do not expect the subsidiary to generate sufficient taxable profits to utilise brought forward tax losses for the foreseeable future.
From 1 April 2023, the Corporation Tax main rate will increase to 25% for profits over £250,000. A small profits rate will also be introduced for profits of £50,000 or less, charging Corporation Tax at 19%. Profits between £50,000 and £250,000 will be taxed at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Amounts written off in respect of opening balances/hive up
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On 29 November 2019, Discovery Pharmaceuticals Limited, a wholly owned subsidiary of Dexcel-Pharma Limited, ceased trading and the trade, assets and liabilities were transferred to Dexcel-Pharma Limited. Upon completion of the transfer Dexcel-Pharma Limited recognised an impairment charge in relation to its investment in Discovery Pharmaceuticals Limited and wrote off any amounts due to Discovery Pharmaceuticals Limited. Additionally, there was an unexplained difference arising as a result of the hive up of the trade, assets and liabilities into Dexcel-Pharma Limited and this amount has been written off as an exceptional item noted above. In the 2020 year end, there was an unexplained difference arising as a result of opening balance adjustments and this amount was also written off as an exceptional item noted above.
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Parent company profit for the year
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The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the year was £2,243 (2019 - loss £4,411).
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Investments in subsidiary companies
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Direct subsidiary undertaking
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The following was a direct subsidiary undertaking of the Company:
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7 Sopwith Way, Drayton Fields Industrial Estate, Daventry, Northamptonshire, NN11 8PB.
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Marketing, selling and distribution of generic and patented speciality products.
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Dexcel-Pharma Limited is incorporated in England and Wales.
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Indirect subsidiary undertaking
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The following was an indirect subsidiary undertaking of the Company:
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Discovery Pharmaceuticals Limited
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7 Sopwith Way, Drayton Fields Industrial Estate, Daventry, Northamptonshire, NN11 8PB.
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Marketing and distribution of pharmaceutical preparations.
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Discovery Pharmaceuticals Limited is incorporated in England and Wales.
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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An impairment provision relating to slow-moving and obsolete stock of £521,303 (2019 - £106,502) was reversed to cost of sales during the year.
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Amounts owed by group undertakings
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Prepayments and accrued income
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Cash and cash equivalents
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Allotted, called up and fully paid
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2 (2019 - 2) Ordinary shares of £1.00 each
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Each Ordinary share has equal voting and distribution rights, including repayment of capital in the event of winding up.
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Other reserves
Other reserves represents a capital contribution of the international group to support the trading activities within the UK.
Profit and loss account
Includes all current and prior period retained profit and losses.
The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £52,061 (2019 - £41,302). Contributions totalling £6,174 (2019 - £5,698) were payable to the fund at the reporting date.
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Commitments under operating leases
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At 31 December 2020 the Group had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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DEXCEL-PHARMA LABORATORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Related party transactions
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The Company has taken advantage of the exemption available under FRS 102 33. 1A not to disclose transactions with wholly owned subsidiaries of the Group.
During the period key management personnel were paid remuneration totalling £38,987 (2019 - £77,395).
Transactions and balances with other related parties are as follows:
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Sales to other related parties
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Purchases from other related parties
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Balances due from other related parties
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Balances due to other related parties
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The Group is a wholly owned subsidiary of Dexcel PT Israel Limited, a company incorporated in Israel. The ultimate parent company is Dexcel PT Holdings Limited, incorporated in Mauritius. D Oren is the ultimate controlling party by virtue of holding a controlling interest in Dexcel PT Holdings Limited.
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