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LloydsPharmacy accounts reveal net loss of £66m

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LloydsPharmacy accounts reveal net loss of £66m

LloydsPharmacy made a net loss of £66m in the 12 months to March 31 2022, its latest accounts reveal. 

The multiple’s 2021-22 Companies House filing, which was published last Wednesday (February 22), shows that despite turnover falling by 3.4 per cent to £1.7bn, it reduced its losses from over a third compared to 2021-22, when it made a £100m loss.

Explaining how it managed to reduce its losses year-on-year, company directors said: “We continued to optimise the LloydsPharmacy estate, to enable it to operate sustainably, and worked collaboratively with many landlords to regear our property costs.

“All of these actions had a positive impact on our financial position by reducing losses for the year by 37 per cent. Lower losses were also achieved through lower interest expense, impairment charges and a higher tax benefit.”

The fall in revenue was attributed to “reduced store footfall due to Government lockdown restrictions,” a reduction in store numbers and “changes to Government reimbursement”.

Pharmacy sales accounted for a slightly smaller share of revenue in 2021-22, falling to 87.7 per cent of total sales, compared to 91.4 per cent in the previous year. Retail sales saw a commensurate increase in revenue share.

The report states that as of the close of the 2021-22 financial year the company had 1,275 branches, down from 1,316 in March 2021. In January this year the multiple announced plans to exit from its 237 Sainsbury’s branches, while Pharmacy Network News recently revealed that it is selling a “significant” number of stores across England, Scotland and Wales.

The Companies House report also shows that the staff headcount in stores fell by 1,797 to 11,685, while the administrative staff headcount increased from 917 to 946. Overall staff costs including directors’ remuneration fell from £301m to £263m.

Financed by loan facility

The report shows that the loss-making multiple is “financed through an asset-backed loan facility” taken out by parent company Aurelius Elephant Limited. This allows the group “to borrow up to £358m to April 6 2025 with the interest rate “based on the Bank of England rate plus 3.15 per cent”.

The report notes that previous “store optimisation programmes” (divestments) have been “substantially completed within a year and exceeded budgeted targets,” giving the company directors “confidence that the forecast proceeds will be realised” and that the asset-backed loan "will be repaid before December 2023”.

The directors have carried out a “sensitivity analysis” to consider the impact of possible “downside scenarios” as far ahead as December 2023 in which store proceeds may be lower than expected and store disposals may take longer to complete.

In these scenarios, the multiple’s future as a going concern is still expected to be secure, but mitigating actions could include “rationalising overheads such as bonus and staffing costs” and “delaying/avoiding discretionary expenditure on property, plant and equipment”. 

Growth in digital business

The company forms part of the Admenta UK group under overall parent company Aurelius, an asset management company that bought the group from McKesson in late 2021.

Separate Companies House reports published last week show that despite the challenges faced by LloydsPharmacy and LloydsPharmacy Clinical Homecare – which received an ‘Inadequate’ rating from the Care Quality Commission in February 2022 – Admenta UK made a net profit of £6m in the year to March 31 2022. 

This was partly driven by a healthier performance from digital entities lloydspharmacy.com (which grew by 28 per cent in 2021-22), LloydsPharmacy Online Doctor (three per cent growth) and distance dispenser LloydsDirect (55 per cent growth).

Wholesaler AAH saw its profits fall by 19.5 per cent to £48.8m in the same period “primarily due to lower finance income and to a lesser extent competition in the market”.

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