The director presents the strategic report for the year ended 30 September 2024.

Pegasus Couriers Scotland Limited operate a well established courier service, operating multiple contracts including the world's largest online retailer. The company has an excellent reputation within the courier industry and continues to look at opportunities for expansion.

Operating with the slogan ‘We deliver parcels & promises every day’, the provision of an industry-leading delivery service has been at the forefront of the business aims since inception.

Pegasus Couriers Scotland Limited pride ourselves on continuing to be leaders in the logistics industry. To achieve this we aim to provide:

1. Exceptional customer service;

2. Efficient and reliable delivery solutions;

3. Advanced technology integration;

4. Sustainable and cost-effective operations

Pegasus Couriers Scotland Limited service offerings are portraying passion for delivering every parcel right first time, on time for all customers.

A capital reduction demerger took place in the year ended 30 September 2024. This was approved by HMRC and saw the two main customers of the company split into separate companies. Pegasus Couriers Scotland Limited retained the Amazon contracts and a new company was set up to operate the UPS contracts.

Trading Results

Total turnover was £11.2m in the 12 months to 30th September 2024 (22/23: £17.2m). This decrease in turnover was a direct result of the company making decision to close depots that were less profitable or loss making as well as the company going through a demerger in November 2023.

EBITDA after non-recurring items increased to profit of £30,335 (22/23: loss of £93,902).

The director considers the trading results to be in line with expectations amidst a challenging wider economic climate.

Financial Position

At the balance sheet date, shareholder funds decreased to £150,396 (22/23: £997,148), representing an decrease of 84.92% during the reporting period.

The director considers the company to be performing well financially and project a return to profitability in the year to 30 September 2025.

The directors of the company confirm they have carried out a robust assessment of the principal risks facing the company, including those that would threaten its business model, future performance, solvency, or liquidity. These include the points outlined below, though these should not be considered to be a complete set of all potential risks and uncertainties.

Changes in end customer preferences and shopping behaviour

End customers have increasingly been looking to shop more online in recent years as a result of being ‘time-poor’ and finding online shopping to be more cash efficient in times of cost of living pressures. The key impending challenge to the company has been around adapting its logistics and delivery services to meet the growing demand for fast and reliable online shopping experiences. This includes investing in technology to optimize delivery routes, expanding the delivery network, and ensuring that customer service can handle increased volumes of inquiries and support requests.

Competition

The company is encountering growing competition from both longstanding competitors and new entrants within the courier and delivery sector. To sustain its competitive edge, the company is continually innovating its service offerings, prioritizing customer satisfaction. Additionally, leveraging the data gathered to attract the most effective self-employed drivers is crucial in maintaining operational excellence and service reliability. Furthermore, the company is committed to maintaining strong relationships with loyal, long-standing staff members, whose expertise fosters stable operations, plays a key role in sustaining business success and customer trust.

Recruitment, Development and Retention of Key People

Recruiting, developing, and retaining key talent is crucial for maintaining operational efficiency and ensuring high-quality service. This risk is mitigated by offering competitive salaries and benefits, investing in employee training and development programs, fostering a positive workplace culture, and providing clear career advancement opportunities.

Suppliers

Maintaining strong relationships with suppliers is essential to ensure the timely and cost-effective procurement of goods and services. This is mitigated by expanding supplier base, negotiating favourable long-term contracts, and implementing supplier performance management systems to monitor and improve supplier reliability.

Liquidity & Financing

Liquidity and financing risks relate to the company’s ability to pay for goods and services required to trade on a day-to-day basis. The company has two main sources of financing facilities; borrowing facilities, and trade credit from suppliers. The primary risk element here is a reduction in trade credit facilities which could lead to a reduction in the trading ability of the company. This is mitigated by maintaining strong relationships with financial institutions, regularly reviewing and optimizing the company’s cash flow management practices and ensuring a robust credit control process to manage receivables effectively.

Since the year end, the trading company has opened a new depot as part of their future growth strategy.

Pegasus Couriers Scotland Limited adopt a number of KPIs used to measure its performance and progress against strategic objectives. Of these, the directors consider Turnover, Gross Profit (“GP”) and EBITDA (after non-recurring items) to be the most representative of the company’s financial performance.

             2023/2024 2023/2022

Turnover £11.2m £17.2m

Gross Profit £1.4m £4.5m

EBITDA (after non-recurring items) £30k £(94)k

The KPIs for the year are in line with directors’ expectations and strategic objectives.

This is expected to continue to grow with substantial further expansion planned for FY 24/25.

The director presents his annual report and financial statements for the year ended 30 September 2024.

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £808,288. The director does not recommend payment of a final dividend.

The director who held office during the year and up to the date of signature of the financial statements was as follows:

Thomson Cooper were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006.

The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these financial statements, the director is required to:

• select suitable accounting policies 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 company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

We have audited the financial statements of Pegasus Couriers Scotland Limited (the 'company') for the year ended 30 September 2024 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 30 September 2024 and of its 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 opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

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

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is 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.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

• the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the director's report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.

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, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of director's remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

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 auditor's 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 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.

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

We considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: posting of manual journals to manipulate financial performance, significant one-off or unusual transactions, and non-compliance with laws and regulations. We discussed these risks with management, gained an understanding of internal controls established to mitigate risks related to fraud, and performed journal entry testing to address the risk of fraud through management override of controls.

We reviewed areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience through discussion with the officers and other management (as required by the auditing standards).

We reviewed the laws and regulations in areas that directly affect the financial statements including applicable company law and considered the extent of compliance with those laws and regulations as part of our procedures on the related financial statement items.

With the exception of any known or possible non-compliance with relevant and significant laws and regulations, and as required by the auditing standards, our work in respect of these was limited to enquiry of the officers and management of the company.

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's 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.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

Pegasus Couriers Scotland Limited is a private company limited by shares incorporated in Scotland. The registered office is 5 South Gyle Crescent Lane, Edinburgh, EH12 9EG.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, and at least for the next 12 months. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Turnover from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, turnover is recognised only to the extent of the expenses recognised that are recoverable.

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

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. Where such indicators exist, the recoverable amount of the asset is estimated. An impairment loss is recognised when the carrying amount exceeds the recoverable amount, which is the higher of fair value less costs to sell and value in use. Impairment losses are charged to the profit and loss account unless they relate to a previously revalued asset, in which case they are treated as a revaluation decrease.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

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

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

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

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, 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 and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

Tangible fixed assets includes assets held under finance leases or hire purchase contracts, as follows:

Hire purchase and finance lease liabilities balance of £Nil (2023: £5,907) is secured against the assets concerned.

Net obligations under hire purchase contracts are secured over the assets to which they relate.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

There is an ongoing enquiry with HMRC regarding P11d non disclosure and submission. The financial effect of the contingent liability cannot be quantified at this point in time, and there are uncertainties over the amount and timing of potential outflows.

The company has taken advantage of the exemption available under FRS 102 paragraph 33.1A from disclosing transactions with group entities, as it is a wholly owned subsidiary of Pegasus Couriers Holdings Ltd which is a wholly owned subsidiary of Canireca Ltd, which prepares consolidated financial statements that are publicly available.

During the year, there were transactions with Q Couriers Ltd, a company wholly owned by former directors Martin and Sandra Smith. The company had £486,504 of recharged income from Q Couriers Ltd in the year to 30 September 2024.

The closing balance of £20,000 is included in other debtors (note 13).

Advances or credits have been granted by the company to its directors as follows:

The intermediate parent company of Pegasus Couriers Scotland Limited is Pegasus Couriers Holdings Ltd (company number: SC778575). The ultimate parent company is Canireca Ltd (company number: SC787913), a company wholly owned by director Phillip West. Both companies are registered in Scotland with their registered office at 69 Pumpherston Road, Uphall Station, Livingston, Scotland, EH54 5PH

Phillip West (Director) has ultimate control, controlling all group companies.

During the year ended 30 September 2024, the director identified a prior period error in the financial statements for the year ended 30 September 2023. Accrued income of £247,723 was incorrectly recognised within cost of sales rather than turnover. Additionally, the corresponding balance was presented as work in progress (stocks) on the balance sheet, rather than as accrued income.

This error has been corrected by restating the comparative figures. The impact of the correction is as follows:

- Turnover for the year ended 30 September 2023 has been decreased by £247,723

- Cost of sales has been decreased by £247,723

- Gross profit and net profit remain unchanged

On the balance sheet as at 30 September 2023:

- Work in progress (stocks) has been decreased by £414,577

- Accrued income has been increased by £414,577