SCOTLAND's largest independent pharmacy chain is on the lookout for further acquisitions after posting a 17 per cent increase in underlying profits.

Walter Davidson & Sons will open its latest location on August 1 with an outlet in Drymen, Stirlingshire, which follows launches in Elie, Fife, and Killin, Stirlingshire, in the past year.

Annual accounts filed at Companies House show Walter Davidson, which can trace its roots back to 1897, recorded a rise in turnover from £32.34 million to £33.31 million in the 12 months to January 31 this year.

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Operating profits came in at £1.23million, up from £1.05 million as the company began to see the clear benefits following a switch from its own central distribution to an outsourced provision through Alliance Healthcare.

The closure of the Blairgowrie facility led to the loss of 15 jobs.

However the change in strategy has allowed the family-owned business to target opportunities in towns and villages in central Scotland.

Managing director Allan Gordon said: "The fact we had a central distribution model was holding us back to a certain extent in terms of how quickly we could expand and in terms of our profit.

"It also allowed us to look at opportunities outwith our core geographic area. Our central warehouse in Blairgowrie used to distribute anywhere within 60 miles.

"The fact we did close the warehouse meant we did not have the shackles of self-distribution anymore which allowed us to look at other opportunities which I think we are doing successfully."

The pre-tax profit figure was also £1.23 million, which was down from £1.5 million in the previous year although that was inflated by an additional £475,000 gain related to income from group undertaking. The accounts stated it had net funds in excess of £1.5 million with Mr Gordon suggesting its cash at the moment stands at around £3 million with the strong balance sheet allowing it to target a range of expansion opportunities.

He said: "When we started our acquisition trail back in 1997 you do after a period of time begin to reach saturation point in certain areas. If you look at the geographical spread of our pharmacies we had pretty much got to that point.

"You have to look slightly further afield and that is essentially what we are doing. Our strength is building relationships with villages, local doctors and healthcare professionals."

Mr Gordon acknowledged competition from high-street brands such as Boots and Lloyds Pharmacy but said he is hopeful Walter Davidson can continue to identify opportunities for acquisitions or establishing new sites.

He said: "New pharmacies to create yourself from a standing start are not easy to spot. It would always be nice to spot more of those opportunities in another geographical patch but it is becoming more difficult."

Trading in the current financial year was said to be going well with the Drymen opening taking the store estate to 32. Mr Gordon added: "The board of directors are delighted with the way the company is performing. We are on track to achieve pre-tax [profit] of about £3 million this year."

The accounts stated Douglas Davidson retired as chairman on January 31 but would take up the role of life president. Graeme Davidson moved to be chairman with Terry Lonsdale taking the deputy chairman post.