The director presents the strategic report for the period ended 30 September 2024.
Indirectly, Canireca Ltd now operate a well established courier service, operating multiple contracts including the world's largest online retailer. The trading company, Pegasus Couriers Scotland Limited 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.
As a whole, the group pride ourselves on being leaders in the logistics industry. To achieve this we aim to provide:
Exceptional customer service;
Efficient and reliable delivery solutions;
Advanced technology integration;
Sustainable and cost-effective operations
The group 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 period ended 30 September 2024. This was approved by HMRC and saw the two main customers of the indirect subsidiary, Pegasus Couriers Scotland Limited 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 £10.2m in the period from incorporation on 2 November 2023, to 30th September 2024.
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 were in a deficit position of £125,020.
The director considers the trading company to be performing well financially now and project a return on profitability for the year to September 2025.
The director of the group confirms they have carried out a robust assessment of the principal risks facing the companies, 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 trading 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 newly acquired trading subsidiary is encountering growing competition from both longstanding competitors and new entrants within the courier and delivery sector. To sustain its competitive edge, the trading 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 trading 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 trading company’s ability to pay for goods and services required to trade on a day-to-day basis. The trading 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 trading subsidiary. 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.
The Group adopt a number of KPIs used to measure its performance and progress against strategic objectives. Of these, the director considers Turnover, Gross Profit (“GP”) and EBITDA (after non-recurring items) to be the most representative of the company’s financial performance.
2023/2024
Turnover £10.2m
Gross Profit £1.27m
EBITDA (after non-recurring items) £28k
The KPIs for the year are in line with directors’ expectations and strategic objectives.
This is expected to continue to grow with further expansion planned for FY 24/25.
On behalf of the board
The director presents his report and financial statements for the period from incorporation on 2 November 2023, to 30 September 2024.
The results for the period are set out on page 9.
Ordinary dividends were paid amounting to £25,385. The director does not recommend payment of a further dividend.
The director who held office during the period and up to the date of signature of the financial statements was as follows:
Thomson Cooper were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
We have audited the financial statements of Canireca Ltd (the 'parent company') and its subsidiaries (the 'group') for the period ended 30 September 2024 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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).
Basis for 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 group's and 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 director with respect to going concern are described in the relevant sections of this report.
Other information
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 period 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.
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 group.
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.
Use of our 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £798,308.
Canireca Ltd (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 69 Pumpherston Road, Uphall Station, Livingston, EH54 5PH.
The group consists of Canireca Ltd and all of its subsidiaries.
These financial statements cover the period from incorporation on 2 November 2023 to 30 September 2024.
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.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Canireca Ltd together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 30 September 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the group balance sheet showed negative reserves. Individually, Canireca, and its subsidiaries have healthy reserves, and the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future, and at least for the next 12 months. Thus the director has adopted 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 it is probable will be recovered.
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 recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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 group 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 group 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 group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
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 group’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 if, and only if, there is 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.
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 leased asset are consumed.
In the application of the group’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
In preparing these financial statements, the Directors have made the following judgement and estimates:
Valuation of goodwill
Judgement and estimation is involved in determining the useful life of goodwill. As described in Note 1.7 the useful life of goodwill is estimated to be 10 years and is based on its expected use. It is also our judgement that goodwill is not impaired for the current year and that there were no indicators of impairment present at the year end.
For the purposes of impairment, goodwill is allocated to the cash-generating units expected to benefit from acquisition. Management has evaluated the ongoing cash generating units in particular the integration of the prior period acquisition into the business, and consider there to be a single cash generating unit for the UK trade of the business.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The actual (credit)/charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 30 September 2024 are as follows:
Other creditors includes a balance of £156,000 due to former shareholders of Pegasus Couriers Scotland Limited, subsidiary. This balance is secured by a bond and floating charge, which covers all the property and undertaking of the company.
Other creditors includes a balance of £661,096 due to former shareholders of Pegasus Couriers Scotland Limited, subsidiary. This balance is secured by a bond and floating charge, which covers all the property and undertaking of the company.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above is expected to reverse within 12 months, and relates to accelerated capital allowances that are expected to mature within the same period.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The company has taken advantage of the exemption available under FRS 102, section 33.1A, which permits non-disclosure of transactions with wholly owned subsidiaries within the group. Accordingly, transactions and balances with wholly owned group undertakings have not been disclosed in these financial statements.