Notes to the financial statements

1.   General information

Vulcan Two Group plc (the "Company") is a public company limited by shares listed on the AIM market of the London Stock Exchange, incorporated and domiciled in England and Wales. The Company's registered office is 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT.

In the reporting period, the principal activity of the Company and its subsidiary (together referred to as the "Group") was the acquisition and subsequent development of assets within a target sector or industry.

2.   Material accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to the periods presented. Amounts are presented in Great British Pounds ("£s") to the nearest whole number.

The Company is newly incorporated and the consolidated financial statements for the current year ended 31 December 2025 are the first set of financial statements for the newly formed Group. The prior period has been presented as the continuation of the subsidiary Vulcan Two Ltd on a consistent basis as if the group reorganisation had taken place at the start of the earliest period presented. The comparatives for the financial year ended 31 December 2024 are those of Vulcan Two Ltd since no substantive economic changes have occurred. Further details can be found in the group reorganisation accounting policies.

a.  Basis of preparation

The financial statements of the Group have been prepared in accordance with UK-adopted international accounting standards ("IFRS") in conformity with the requirements of the Companies Act 2006 as applicable to the companies reporting under those standards.

The financial statements have been prepared on a historical cost basis, as modified for the use of fair value for Share Based Payments.

Certain amounts in the consolidated statement of comprehensive income and the consolidated statement of financial position have been grouped together for clarity, with their breakdown being shown in the notes to the financial statements. The distinction presented in the consolidated statement of financial position between current and non-current entries has been made on the basis of whether the assets and liabilities fall due within more than one year.

b.    Going concern

The financial statements have been prepared on a going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The Directors have considered the financial position of the Group and have reviewed forecasts and budgets for a period of at least 12 months following the approval of the financial statements.

As at 31 December 2025, the Group has net assets of £9,678,857, and a cash balance of £9,548,003. In March 2026, the Company successfully completed a £40 million equity placing and the acquisitions of CloudRx, Webmed, and Hyperdrug. As a result, the Group has transitioned from an investing entity (under AIM rules) to an operating Group with three established, complementary businesses operating across both professional (B2B) and consumer (B2C) channels. On a combined basis, these businesses generated approximately £36 million of revenue in the 12 months to December 2025, with a significant proportion of recurring income. The acquired businesses are profitable, operate within regulated environments, and provide the Group with an established platform for future growth. Following completion of the placing and acquisitions, the Group has significantly strengthened its liquidity position and capital base.

The Directors have prepared updated forecasts for the enlarged group, incorporating the results of the acquired businesses, expected synergies, and ongoing operating costs. These forecasts demonstrate that the Group is expected to have sufficient financial resources to meet its obligations as they fall due for at least 12 months from the date of approval of the financial statements. While the Group may pursue further acquisitions as part of its growth strategy, any such transactions would be subject to securing appropriate funding. The Directors note that the successful March 2026 placing demonstrates access to capital markets; however, future funding availability cannot be guaranteed and remains outside the direct control of the Group.

c.  New and amended standards and interpretations

In the current year, the Group has applied the following amendment to IFRS Accounting Standards issued by the IASB which is mandatorily effective for an accounting period that begins on or after 1 January 2025. Its adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements:

Standards, amendments and interpretations issued but not yet effective and have not been early adopted by the Company:

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 Presentation and Disclosure in Financial Statements ("IFRS 18") was issued by the International Accounting Standards Board in April 2024. IFRS 18 is effective on 1 January 2027 and is required to be applied retrospectively to comparative periods presented, with early adoption permitted. IFRS 18, upon adoption replaces IAS 1 Presentation of Financial Statements ("IAS 1"). IFRS 18 sets out new requirements focused on improving financial reporting by:

IFRS 18 will not impact the recognition or measurement of items in the financial statements, but it might change what an entity reports as its 'operating profit and loss', due to the classification of certain income and expense items between the five categories of the consolidated statement of profit and loss. It might also change what an entity reports as operating activities, investing activities and financing activities within the statement of cash flows, due to the change in classification of certain cash flow items between these three categories of the cash flows statement. The Company is currently assessing the impact of adopting IFRS 18.

Other standards and amendments:

d.    Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2025 and 31 December 2024. Control is achieved when the Group has rights to variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the investor's returns. Specifically, the Group controls an investee if, and only if, the Group has:

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group. When necessary, adjustments are made to the financial statements of the subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intra-group assets and liabilities, equity income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in ownership interest of a subsidiary, without a change in control, is accounted for as an equity transaction.

e.    Group reorganisation

On 21 August 2025, the Company acquired the entire shareholding of Vulcan Two Ltd by way of a share for share exchange. The insertion of the Company on top of the existing subsidiary does not constitute a business combination under IFRS 3 "Business Combinations" and instead has been accounted for as a common control transaction. Merger accounting has been used to account for this transaction. Further details can be found in Note 16.

Under merger accounting principles, the assets and liabilities of the subsidiary are consolidated at book value in the Group financial statements and the consolidated reserves of the Group have been adjusted to reflect the statutory share capital of the Company with the difference presented as the merger reserve.

f.     Finance income

Finance income comprises of interest received on bank balances and is recognised in the statement of comprehensive income when it is earned.

g.    Taxation

Corporation tax for the year presented comprises current and deferred tax.

Current tax

Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense

Deferred tax

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases and is accounted for using the balance sheet liability method.

Deferred tax is calculated at the tax rates that have been enacted or substantively enacted and are expected to apply in the period when the liability is settled, or the asset realised. Deferred tax is charged or credited to the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Judgement is applied in making assumptions about future taxable income, recognition of deferred tax assets, as well as the anticipated timing of the utilisation of the losses of the Company.

h.    Property, plant and equipment

Property, plant and equipment is carried at cost less accumulated depreciation and provision for impairment. Depreciation is calculated to write down the cost of the assets less estimated residual value over its expected useful life on a straight-line basis as follows:

i.    Cash and cash equivalents

Cash and cash equivalents are financial assets and include cash at bank and in hand and short term highly liquid deposits which are subject to an insignificant risk of changes in value.

j.     Financial liabilities

All financial liabilities are recognised in the statement of financial position when the Company becomes a party to the contractual provision of the instrument.

Financial liabilities measured at amortised cost

The Company's financial liabilities measured at amortised cost comprise trade and other payables, and related party borrowings.

These financial liabilities are initially measured at fair value net of any transaction costs directly attributable to the issue of the instrument and are subsequently measured at amortised cost using the effective interest rate method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability to the amortised cost of a financial liability.

k.    Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in stated capital as a deduction from the proceeds.

l.     Share-based payments

The Group has a long-term incentive plan actioned through the issue of Growth Shares.

Equity-settled share-based payments to employees are measured at the fair value of the equity instrument at the grant date. The fair value determined at grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions.

The impact of the revision of the original estimates, if any, is recognised in the profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves. Long term incentive options that have been issued by the Group have been valued under the Monte Carlo model to evaluate any provision that may be required to set against the reserves of the Group. The share-based payment expense has been calculated and detailed per the notes to the financial statements.

3.   Critical accounting estimates and judgements

In the application of the accounting policies, which are described in note 2, the Directors of the Company are required to make judgements, estimates and assumptions which affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. The estimates and associated assumptions are based on historical experience, expectations of future events and other factors that are believed to be reasonable under the circumstances. Actual results in the future could differ from such estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the revision is made.

Valuation of Incentive Scheme

The Company has issued Growth Shares as part of the creation of a long-term incentive scheme which is valued using a Monte Carlo model. This model requires estimation and judgement surrounding the inputs of exercise price, expected volatility, risk free rate, expected dividends, and expected term of the Growth Shares.

Allocation of IPO transaction costs

Judgement has been applied in determining the allocation of IPO related costs between equity and the statement of comprehensive income in accordance with IAS 32. Where costs were not directly able to be attributable solely to the issuance of new shares or to listing activities, management allocated such jointly attributable costs using a ratio based on the proportion of new shares issued as part of the IPO relative to total shares in issue following admission. This approach reflects the relative significance of the capital raise compared to the overall transaction and is considered to provide a rational and consistent basis for allocation in the year.

Assessment of contingent liabilities

Management has exercised judgement in evaluating the Company's contractual obligations under the Chrystal Capital Partners LLP engagement letter, including specifically the interpretation of commission triggers and the applicability of such terms to the IPO and future fundraises. This assessment incorporates external legal advice and consideration of ongoing legal proceedings. Based on this analysis, management has concluded that no commission is payable and that the probability of outflow is remote, therefore, no provision has been recognised.

4.   Segmental reporting

The Board of Directors has been identified as the Company's chief operating decision maker ("CODM"). The CODM reviews the Company's internal reporting in order to assess performance and allocate resources. The CODM has determined that there is one operating segment for the periods presented.

5.   Operating loss

Operating loss is stated after charging:

6.   Auditor's remuneration

7.   Staff costs

The average number of employees (including executive directors) was:

For details of remuneration relating to Directors, please refer to the Directors' Remuneration Report of the Annual Report.

8.   Finance income

9.   Taxation

As at 31 December 2025, cumulative tax losses available to carry forward against future trading profits were £645,577 (2024: £122,577), subject to agreement with HM Revenue & Customs. A deferred tax asset has not been recognised in respect of tax losses in the year ended 31 December 2025 as at the reporting date there was insufficient certainty that future taxable profits would be available against which the losses could be utilised.

10.  Loss per share

Basic loss per ordinary share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. The Growth Shares will be potentially dilutive, once vested and exercisable, however as the entity is currently loss making, these are anti-dilutive and should not be considered. For the comparative year, the weighted average number of shares has been based on the number of shares in issue immediately prior to AIM admission, as the Group did not exist in its current form. This approach has been adopted to provide a meaningful and consistent basis for presentation of loss per share.

11.  Property, plant and equipment

12.  Other receivables

13.  Cash and cash equivalents

14.  Trade and other payables

There is no material difference between the book value and the fair value of the trade and other payables. All trade payables are non-interest bearing and are usually paid within 30 days.

15.  Borrowings

All borrowings are unsecured, do not bear any interest and are repayable on demand.

A maturity analysis of the Company's borrowings is shown below:

16.  Ordinary share capital and share premium

The financial statements have been prepared applying merger accounting principles, under which the share capital is presented as if the Group structure had always been in place. Accordingly, the current year share capital is not directly comparable to the prior period.

In the year ended 31 December 2025 6,000,000 ordinary shares of a nominal value of £0.10 were issued for £2.00 for gross cash proceeds of £12,000,000. Issue costs directly attributable to the issue were £1,170,490, as these costs are deemed incremental to the issue of these shares, this cost has been recognised as a deduction in equity.

Share for share exchange

On 21 August 2025, following a share purchase agreement, Vulcan Two Group plc acquired the entire issued share capital of Vulcan Two Ltd (9,750,400 £0.01 ordinary shares) from the shareholders.

In consideration, Vulcan Two Group plc issued 275,000 £0.10 ordinary shares to the shareholders, pro-rated to their shareholding in Vulcan Two Ltd.

As a result, the share capital of Vulcan Two Group plc increased to £77,500 (775,000 £0.10 ordinary shares) with Michael Kraftman owning 465,000 £0.10 ordinary shares (60%), and Brendan O'Brien owning 310,000 £0.10 ordinary shares (40%).

17.  Reserves

Merger reserve

The difference between the nominal value of shares acquired by the Company in the share for share exchange with Vulcan Two Ltd and the nominal value of shares issued to acquire them on 21 August 2025.

Accumulated losses

Cumulative losses recognised in the Consolidated Statement of Comprehensive Income.

Share based payment reserve

The share-based payment reserve is the cumulative amount recognised in relation to the equity-settled share-based payment scheme as further described in Note 18.

18.  Share-based payments and share schemes

Holdings

Michael Kraftman, Brendan O'Brien and Simon Carter were issued Growth Shares on 2 September 2025. The following shares were in issue at 31 December 2025.

The Growth Shares are subject to the Company's shareholders achieving a Growth Hurdle of 10% per annum on a compounded basis on the capital they have invested between the fourth and sixth anniversary of the date of issue (with dividends and subsequent issues of capital being treated as a reduction in the amount invested at the relevant time) (the "Growth Hurdle"), outside of this time the Holder is entitled to the lower of Share price on the sixth anniversary and the share price on the day of redemption.  

Subject to a number of provisions detailed below, if the Growth Hurdle is met, the holders of the Incentive Shares can give notice to redeem their Growth Shares for Ordinary Shares in the Company ("Ordinary Shares") for an aggregate value equivalent to the last 20 days Volume-Weighted Average Price ("VWAP") times the exercise mechanic. The exercise mechanic is outlined as follows:

Share to be issued= 0.15 x (5 Days VWAP x Shares in Issue at redemption) + Dividends - Proceeds from admission - Subscription proceeds since admission. 

Growth Shares hold no voting rights, rights to attend meetings or any dividend rights.

Valuation

A Monte Carlo model has been used to ascertain the fair value at grant date. Details of the valuation methodology and estimates and judgements used in determining the fair value are noted herewith and were in accordance with IFRS 2 at grant date. 

There are significant estimates and assumptions used in the valuation of the Growth Shares. Management considered at the grant date, and the potential range of values for the Growth Shares, based on the circumstances on the grant date.

The fair value of the Growth Shares granted under the scheme was calculated using a Monte Carlo model with the following inputs:

The Growth Shares are subject to the Growth Hurdle being achieved, which is a market performance condition, and as such has been taken into consideration in determining their fair value.

Expense relating to Growth Shares

An expense of £37,486 (2024: Nil) has been recognised in the Statement of Comprehensive Income in respect of the Incentive Shares in issue during the year. There is a service condition associated with the shares issued to Michael Kraftman, Brendan O'Brien and Simon Carter which requires the fair value charge associated with these shares to be allocated over the minimum vesting period. These vesting periods are estimated to be 6.0 years from the date of grant.

19.  Financial instruments

Financial assets

Financial liabilities      

Financial liabilities measured at amortised cost comprise trade and other payables, and borrowings. It does not include taxation and social security.

Fair value of financial assets and liabilities approximates to their carrying value.

Financial risk management

The Company is exposed through its operation to the following financial risks: credit risk and liquidity risk. The Directors have overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company finances its operations through a mixture of debt finance, cash and liquid resources and various items such as trade debtors and trade payables which arise directly from the Company's operations.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, of which the risk is assessed and managed in accordance with IFRS 9. Credit risk arises principally from the Company's cash balances held at banks.

The Company mitigates credit risk arising on cash balances held at banks by using only reputable financial institutions with a high credit rating, in line with IFRS 9 requirements. The maximum exposure to credit risk is the carrying value of its cash and cash equivalents, which it currently holds at institutions with a minimum Moody's rating of P-1.

Liquidity risk

The Company seeks to maintain sufficient cash balances. Management reviews cash flow forecasts on a regular basis to determine whether the Company has sufficient cash reserves to meet future working capital requirements and to take advantage of business opportunities.

A maturity analysis of the Company's undiscounted cash flows arising from financial liabilities is shown below:

Capital management

The Board's policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future development of the business. Capital includes stated capital, and all other equity reserves attributable to the equity holders of the Company and totals £677,500 as at 31 December 2025 (2024: £9). There were no changes in the Company's approach to capital management during the period covered by the historical financial information and the Company's capital management policy will be revisited once an initial acquisition has been identified.

Changes in liabilities from financing activities:

20.  Related party transactions

In the year to the 31 December 2025, additional cash advances from Michael Kraftman and Brendan O'Brien, each totalling £13,500 and £9,000 respectively were made. Additionally, repayments in cash of £23,998 to each of the former Directors Ashley Mealor and Richard Rust were made representing the settlement of their outstanding loan balances in full. These were interest free and fully discharged on these payments.

On 21 August 2025 Vulcan Two Ltd's outstanding debts of £58,497 to Michael Kraftman and £38,998 to Brendan O'Brien were converted to ordinary shares in the company. No debt was left in respect of these balances. As a result of the conversion, Michael Kraftman was issued 5,849,700 £0.01 ordinary shares and Brendan O'Brien was issued 3,899,800 £0.01 ordinary shares, in full satisfaction of their respective shareholder loans. Accordingly, the subscription price was £0.01 per share. The total issued share capital of Vulcan Two Ltd was 9,750,400 ordinary shares of £0.01 nominal value following the swap, which was held as follows: Michael Kraftman - 5,850,240 £0.01 shares (60%); and Brendan O'Brien - 3,900,160 £0.01 shares (40%).

Certain Directors held interest in the Company in the period, and these interests were as follows:

* 250,000 ordinary shares are held by Mr. Kraftman's personal pension, the Bonsai Founders Pension Scheme, and 700,000 ordinary shares are held by Mr. Kraftman personally.

21.  Ultimate controlling party

No one entity or individual has control over the Group or the Company.

22.  Commitments and contingencies

On 28 February 2025, Vulcan Two Ltd entered into an engagement letter with Chrystal Capital Partners LLP ("CC") in relation to the introduction of potential investors in Vulcan Two plc ("CC Agreement"). The CC Agreement terminated on 28 August 2025. The terms of the CC Agreement, which is governed by English law, provided for a retainer fee of £10,000 per calendar month and a percentage commission if funds are raised by the Company from certain investors, each payable in certain circumstances within a period of 24 months following such termination date, being 28 August 2027.

Between August and December 2025, the Company received correspondence from CC's legal representatives asserting that commission fees may be payable to CC in relation to the IPO and associated placing. The Company has obtained legal advice in relation to its obligations to CC under the CC Agreement. The Company considers that no commission fees are payable to CC in connection with the IPO and the associated Placing; and no commission would be payable to CC in respect of future fundraises unless investors in those fundraises had been introduced by CC to the Group before 28 August 2025. In relation to the CC Agreement, the Company received a draft particulars of claim in December 2025.

Further correspondence from CC was provided post year end, whereby on 5 May 2026 CC issued legal proceedings against both the Company and Vulcan Two Ltd in respect of the above. The Claim is in the amount of approximately £600,000. The Company considers the substance of the Claim to be baseless and without merit and will seek to have it dismissed at the earliest possible opportunity. It is not expected that the defence of the claim will involve a material commitment of time by the Directors, nor create a distraction from the execution of the Company's strategy. The Company has not provided against the legal claim as it believes that the chance of success is remote. Retainer fees payable to CC have been accrued as at 31 December 2025.

23.  Events after the reporting period

On 19 March 2026, the Company completed the acquisition of 100% of the issued share capital of CloudRx Holdings Limited (and its subsidiary CloudRx Ltd), Webmed Pharmacy Limited, and Hyperdrug Pharmaceutical Limited, forming a complementary ePharmacy platform operating across both B2B and B2C channels.

Total consideration for the acquisitions is up to approximately £41.7 million, comprising approximately £37.1 million in cash, £1.0 million settled through the issue of new ordinary shares, and up to £3.6 million of deferred and contingent consideration payable subject to future performance conditions. In conjunction with the acquisitions, the Company completed an institutional placing raising gross proceeds of £40.0 million through the issue of 20,000,000 ordinary shares.

The acquisitions will be accounted for as business combinations under IFRS 3 in the financial statements for the year ending 31 December 2026. At the date of approval of these financial statements, the initial accounting for the business combinations has not yet been completed and the fair values of the identifiable assets acquired and liabilities assumed, together with the resulting goodwill, cannot yet be determined reliably.

This is due to the proximity of the transaction to the reporting date and the complexity of the valuation exercise, including the identification and measurement of intangible assets and contingent consideration. The Group expects to finalise the purchase price allocation within the measurement period permitted.