ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Registered number:
FOR THE YEAR ENDED 31 MARCH 2023
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LANTERN RECOVERY SPECIALISTS PLC
COMPANY INFORMATION
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LANTERN RECOVERY SPECIALISTS PLC
CONTENTS
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LANTERN RECOVERY SPECIALISTS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present the Strategic Report, of Lantern Recovery Specialists Plc ('the Company' or 'LRS') for the year ended 31 March 2023.
The results contained in these financial statements reflect the success of the strategy adopted by the management team, led by Ray Coleman, as managing director of Lantern Recovery Specialists Plc (“LRS”) and as Executive Chairman of Lantern Services (Holdings) Limited ('LSH'), the Group parent company. Following ongoing strategic reviews, which confirm the view that LRS is a solid business with a robust customer base, a unique state of the art transport fleet, strong operational capabilities and network, the management team identified its strategic priorities: Coordinating and streamlining operations Central costs are being reduced and management teams have taken responsibility and accountability for their operations on a fully costed basis. This will enable better visibility of the profitability of each division. Additionally, the development of the Company’s own bespoke software will greatly assist in enabling the coordinating and streamlining of operations. Increasing utilisation levels of vehicles and operational sites Any underutilisation is being addressed and operated more effectively, by the use of enhanced reporting of utilisation levels, which has allowed for better planning and is expected to drive profitability going forwards. Re-focusing the customer base Review of the existing customer sectors and focus on areas aligned to the Company’s core operational capabilities, is driving efficiencies and improving profitability. Throughout the year, the business has continued to invest for the future and continued its programme of capital expenditure, which for the year 2023 was £2,650,132. In particular, the renewal of its motor fleet vehicles, which will deliver future savings each year as LRS will not have the high maintenance and fuel costs that would otherwise be incurred. LRS's corporate discipline and keen reviews has enabled the business to respond flexibly and to continue to provide high levels of customer service. Despite the impact of continued uncertain times the Company has come out of this period of trading with demonstrable successes against its key strategic objectives and against a background of unprecedented economic pressures, by focusing on the core competences of the business. Following the year end, the Company has continued to trade successfully, in fact exceeding all expectations. The Company is focused on growing and improving the profitability and to that end continues to invest in increasing growth. The principal activities of the Company are expected to continue in line with the year ended 31 March 2023.
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LANTERN RECOVERY SPECIALISTS PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The main core business activity is the assistance and recovery of vehicles; however, the Company continues to gain substantial sales in the multi-car carrying and Prestige vehicle transportation sectors. Other activities include vehicle servicing, vehicle repairs, vehicle storage, as well as an engineering business in the United Kingdom and the selling of fleet vehicles according to the Company’s requirements in line with LRS’s motor fleet renewal programme of investment.
LRS is a leading supplier of vehicle recovery and vehicle transportation solutions to UK businesses encompassing servicing and storage services. The business operates a unique, technology enabled model, maintaining high levels of service while delivering cost effective solutions to our customers. Our strategy focuses on the efficient utilisation of our assets, both vehicle and depot based, to deliver long term value to our customers and shareholders. Growth is targeted in key market sectors that are complementary to the company's current network and core competencies. We have continued to deliver excellent service to our customers, at times of exceptional demands we have provided additional resource on very short notice to support our customers. This ability to demonstrate flexibility and provide support on short lead times has been a contributing factor to further customer gains in the year.
Our key performance indicators are, Turnover and Profit from operating activities before exceptional items.
Turnover increased by £5,818,605 in the year with revenues of £18,717,651 (2022: £12,898,956) up by 45.11% on the prior year. The increase is a result of positive actions taken to deliver the strategy to focus on core capabilities, including the withdrawal from uneconomic contracts. Profit from operating activities before exceptional items was £5,869,656 for the year, which is an increase of £2,692,923 compared to a profit of £3,176,733 in 2022. The increase in Profit is mainly as a result of action that was taken to re-balance and alleviate the impact by increasing efficiency of asset utilisation, exiting unprofitable contracts and the rigorous control of the cost base. Whilst we remain mindful of the current economic uncertainties, we are confident that our operating model provides us with the flexibility to respond rapidly to changing conditions. We continue to follow central Government guidance and advice. We continue to manage our operations in the safest way possible prioritising the health and safety of our people.
Our business performance will continue to be driven by our strategy to achieve improved performance from a more stable footing. This will be achieved through:
- Maintaining our market leading customer service position - Continuing to innovate and invest in asset renewal and technology led operations - Maintaining an experienced and high performing management team
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LANTERN RECOVERY SPECIALISTS PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
During the year, the Board was and is ultimately responsible for setting the Company's risk appetite and for overseeing the effective management of risk. The risk strategy for the company is based on the Company’s risk framework, management and internal controls. Day to day risk management is the responsibility of the senior management team of the Company and a risk management framework setting out the Company's risk management processes and procedures in place.
A summary of the more significant risks specific to our operations and industry are outlined below. Economic Environment Risk Changes in the economic environment, whether resulting from the changing government policy and legislation or other external factors, may adversely affect our business and our customers' businesses. For example, rules for restrictions on the movement of workers from Europe may affect the Company's operations and changes in the economic environment resulting from the pandemic. The Board monitors developments in the economic environment and other factors that may affect the Company. Advisers are retained to assist in minimising the impact of adverse changes in the economic environment. The Board also monitors economic developments that present opportunities which offset the downside risks. Operating Environment Risk Customer demand for outsourced vehicle recovery and transportation and storage services may change, reflecting the changing behaviours of consumers. There may be changes in the availability of depot and storage capacity and other property opportunities to support business growth. New technologies may emerge that change the nature of our industry. We continually review and monitor market developments including new technologies, property opportunities and emerging business models, and review our strategy accordingly. The Company stays in close contact with its customers to ensure we understand and can respond to their changing needs. We continue to invest in developing our own state of the art technology in order to stay at the forefront of technological expertise in our industry. People Risk Loss of one or more key members of the senior management team or failure to retain and attract experienced and skilled people at all levels across the business could also have an adverse impact. The executive management structure of LRS and management team of the Company bring with them market and sector experience into the business. The management team is appropriately rewarded for its efforts and succession plans are in place across key positions in each of the divisions. We take pride in creating a positive workplace environment, through training, engagement, rewards and values for all positions. Customer Risk Loss of one or more of our key customers could have a material impact on Company revenues. We believe that the best way to mitigate this risk is to continue to deliver excellent levels of service at competitive rates. We monitor our key customer dependency regularly and seek to balance our exposure to each market sector we operate in by targeting new customer opportunities. We typically have long-standing customer relationships and many of our key relationships have lasted for over 15 years. A healthy pipeline of new opportunities is being evaluated. This risk is also mitigated by our strategy of building a balanced portfolio across the sectors we operate in. Health and Safety Risk Our business involves operating vehicles and other assets, and working in environments that can be a risk to people and property. Our primary concern is to minimise, to the extent possible, the risk of harm to people who work in our business or are affected by it.
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LANTERN RECOVERY SPECIALISTS PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Induction sessions for new employees (including our drivers and depot operatives) involve health and safety training and we run an ongoing health and safety training program. We also have a comprehensive suite of health and safety procedures that all new joiners must confirm they will adhere to. Reputational Risk Our potential to win new business or develop existing relationships could be adversely affected by a material incident and negative press could affect public perception of our brand. Such incidents could include a significant failure to deliver a customer project, wrongdoing or fraud by an employee, breach of our IT security system, a natural disaster such as a fire or flood preventing us from operating from a site or a major health and safety incident. We have comprehensive processes and procedures in place to manage operational risk and adherence to those processes and procedures is regularly reviewed by our Health, Safety, Environment and Quality Management team. We also have business continuity plans in place and escalation processes to ensure significant incidents are dealt with promptly and effectively. Systems and Technical Risk A failure or unavailability of a key IT system, unauthorised access or a cyber security breach could have a significant impact on operational performance, company reputation and financial performance. All critical core IT infrastructure and data is replicated across dual data centres, to provide resilience and availability. A formal testing programme is in place to provide assurance of recovery in the event of a disaster. We continue to invest in cyber-security solutions, tools and infrastructure in line with industry best practice. Financial Risk Lack of available liquidity could result in the Company being unable to meet its financial obligations. Through its operations, the company is exposed to liquidity risk and Credit risk from trade debtors. Net debt and expected cash flow movements are monitored on a daily basis to ensure that adequate funds are in place. The Company has no significant concentration of credit risk, with exposure spread over a large number of customers. The revenue from one customer amounted to more than 10% of the Company's total revenue however this does not give rise to an increased credit risk. Legal and regulatory risk We are required to comply with extensive and complex legal and regulatory requirements. Non-compliance could result in significant fines, reputational damage and possibly criminal proceedings, withdrawal of operating licenses and closure of sites. Changes in laws and regulations could have an adverse impact on operations and financial performance. We have systems and procedures in place to ensure compliance with, and to manage the impact of, and changes in, government legislation and regulation such as, vehicle operating procedures and environmental requirements.
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LANTERN RECOVERY SPECIALISTS PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The directors have an excellent expectation that the Company has sufficient resources to continue in operation for the foreseeable future, a period of at least 24 months from the date of this report.
The Company's liquidity is managed centrally alongside other fellow subsidiaries within the LSH group of companies, the ultimate parent entity. In making their judgment around the going concern assumption, the Company's directors have considered the future trading forecasts of the Company and confirmed that: - The trading forecasts of the Company are included within the forecasts for the Group as a whole. - The trading forecasts for the Group show sufficient headroom with regards to liquidity and covenant compliance such that the use of the going concern assumption is appropriate. - The directors have considered sensitivities to their forecasts, which we believe adequately cover any sensitivities that may be relevant to the Company. - Sensitivities considered included material reductions in trading volumes allied to increased costs, the failure to achieve cost and efficiency savings and a deterioration in working capital system of measurement. - The directors of the Company continue to adopt the going concern basis of accounting in preparing the annual financial statements.
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LANTERN RECOVERY SPECIALISTS PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Board of directors of LRS considers that it has, both individually and collectively, acted in good faith in a way which would most likely promote the success of the Company for the benefit of the members as a whole, and in doing so have had a regard, amongst other matters, to factors in (a) to (f) as set out in s172(1) of the Companies Act 2006 for the decisions during the year ended 31 March 2023. In making this statement the directors have considered the following matters:
Likely consequences of any decision in the long-term: The Board reviewed the Company's strategy, as disclosed in the Strategic Report, during the year and concluded that it remains appropriate to support the long-term success of the Company. Shorter term expectations in supporting that strategy are approved by the Board as part of the annual budgeting process, against which the performance of the Company is then monitored. Decisions taken during the year are made in the context of the Company's strategy in order to ensure that they are consistent with that strategy. The interests of the Company's employees: Our people are critical to the success of our business and a core component of our business model. We endeavour to recruit the best people, train them well and look after them so that they provide the best possible service for our customers and remain with us for the long term. The Board has ultimate responsibility for ensuring the Company's decisions consider the interests of our employees. The need to foster the Company's business relationships with suppliers, customers and others: Managing the Company's relationships with suppliers and customers is critical in ensuring the Company delivers on its strategy. Management at all levels are dedicated to ensuring that we maintain an ongoing dialogue with customers and suppliers to enable us to respond at all levels of the organisation appropriately. The impact of the Company's operations on the community and the environment: The Company seeks to have a positive impact on the communities in which it operates and minimise the environmental impact on our operations. We recognise the impact of poor air quality on the communities in which we operate and continue to trial and deploy new technology to reduce our impact. During the year, we continued to invest in the renewal of our fleet and equipment, with an additional £2,650,132 invested in 2022-23. We continued to develop sustainability plans, designed to reduce our environmental impacts and ensure that we continue to move towards achieving our Environmental, social, and governance (ESG) targets. Our commitment to net-zero by 2040 is a definite target for carbon emissions reduction, irrespective of future growth, and we strive to dissociate emissions performance from business performance, demonstrating that we are a company 'managing carbon' and that we are implementing actions, policies and strategies to address climate risks. The desirability of the Company maintaining a reputation for high standards of business conduct: The Company regularly reviews and updates, where appropriate, its business conduct and ethics policies and ensures that these are communicated to employees, customers and suppliers and that appropriate training is undertaken by relevant employees on a regular basis to reinforce the Company's policies. The Company business ethics and conduct policy is approved by the Board and is communicated to relevant stakeholders. The need to act fairly as between members of the Company: The Company always seeks to ensure that its communications are transparent and its actions are in accordance with the Company's stated strategic aims to promote the long-term success of the Company.
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LANTERN RECOVERY SPECIALISTS PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
This report was approved by the board on 21 September 2023 and signed on its behalf.
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LANTERN RECOVERY SPECIALISTS PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
The directors are responsible for preparing the strategic report, the directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are 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 directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are 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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are 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.
The profit for the year, after taxation, amounted to £4,602,142 (2022 - £2,795,770).
During the year, the directors declared dividends of £125,700 (2022 - £261,700).
The directors do not recommend payment of a final dividend.
The directors who served during the year were:
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LANTERN RECOVERY SPECIALISTS PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Company has financial risk management objectives and policies in place as noted in the Strategic Report. The Company's activities expose it to a number of financial risks including price risk, credit risk, cash flow risk and liquidity risk.
Funding and Liquidity risk The Company manages its cash flows and ensures that is has sufficient available funds for operations and planned developments. Credit risk from trade debtors The Company's principal financial assets are cash at bank and trade debtors. The Company's credit risk is primarily attributable to its trade debtors which is managed very closely through the use of tight credit control procedures. however certain of the risk and rewards of trade debtors remain with the company. The amounts presented in the balance sheet are net of impairment and expected credit loss provision. The Company has no significant concentration of credit risk, with exposure spread over a large number of customers. The revenue from one customer amounted to more than 10% of the Company's total revenue however this does not lead to an increased credit risk.
We undertake research and development activities, predominantly in connection with our continued investment in IT systems and technologies that help us deliver logistics solutions to our customers.
Our policy during the 2023 financial year was to employ the best people irrespective of race, gender, nationality, disability or sexual orientation. Consultation with employees or their representatives occurred regularly, with the aim of ensuring employees' views were taken into account when decisions were made that were likely to affect their interests. Factors affecting the performance of the Company are shared with employees and updates about significant events are communicated on the internal newsletters as well as on noticeboards.
Our employees are the face of the company and we could not deliver our services without them. We know that the more engaged, skilled and motivated our people are, the better service they provide to our customers. Our policy throughout 2022 was to employ the best people irrespective of race, gender, nationality, disability or sexual orientation.
We have an engaged a workforce who take pride in their work and value opportunities to learn new skills, and we maintain an open and honest dialogue with all colleagues. Line managers play a vital role in supporting employees with regular one-to-one meetings and we continue to communicate business wide performance updates on the internal newsletter. In light of the COVID-19 pandemic, we have further enhanced our communications and engagement strategy to all colleagues, to ensure they are kept informed about the latest national guidelines and what we were doing to respond to the pandemic. We recognised that it has been a challenging time from a psychological perspective as well as a practical one. We have shown our support of the services we had in place to help colleagues with a wide range of issues, from stress and emotional counselling, through to health and wellbeing information.
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LANTERN RECOVERY SPECIALISTS PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Company will seek to minimise adverse impacts on the environment from its activities, whilst continuing to address health, safety and economic issues. The Company has complied with all applicable legislation and regulations.
Carbon and Energy Reporting A Carbon and Energy Report which includes the Company has been set out in the financial statements of the ultimate parent Lantern Services (Holdings) Limited, which are publicly available.
The strategic report sets our strategy for growth and 2023 priorities. The Group has the following key priorities:
• Continuing the re-organisation and streamlining operations • Maintaining vehicle utilisation levels • Servicing the customer base We plan to actively review our operating criteria and handling processes to seek to ensure profitability is maintained in difficult market conditions. This includes gaining a better understanding of our component costs, pricing and profit profile to develop a strategy to remain competitive in the market. Overall, in the coming year we aim to grow net profits at a rate consistent with the current year whilst continuing to maintain and develop our relationships with customers, generating new business where possible and increasing retention levels while navigating the pressure on pricing.
It is the Company's policy to:
a) settle the terms of payment when agreeing the terms of each transaction; b) ensure that the suppliers are made aware of the terms of payment; c) abide by the terms of payment. Based on the amounts outstanding at the year end, the average time taken to pay creditors during the year was 89 days (2022 - 110 days).
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LANTERN RECOVERY SPECIALISTS PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
For the year ended 31 March 2023, under The Companies (Miscellaneous Reporting) Regulations 2018, the Company has not applied any Corporate Governance Code. Although no specific Corporate Governance Code has been adopted by the Company, it is believed that the policies adopted by the Company ensure strong Corporate Governance. The titles from the Wates Principles have been used in the Corporate Governance Statement to ensure that the Company is following the same corporate governance themes of all companies that adopt the Wates Principles.
Purpose and Leadership The Board of Directors is responsible for the long-term success of the Company and for setting a clear purpose, vision and sustainable strategy which creates value for existing and future customers, stakeholders and shareholders. It provides the leadership necessary for the Company to meet its business objectives while ensuring a sound system of internal control and risk management is in place. The powers and the duties of the directors are determined by legislation and by the Company's Articles of Association. The directors scrutinise, measure and review the performance of management; constructively challenge and assist in the development of strategy; review the Company financial information; and ensure systems of internal control and risk management are appropriate and effective. During the year, the Company Board was directly assisted in the discharge of its duties by the Audit Committee of Lantern Services (Holdings) Limited, whose remit, authority and composition are monitored to ensure continued and appropriate Board support. Board composition The Board comprises four executive directors and Company Secretary and is the principal decision-making forum for the Company. The directors represent investors, operational and Group management. The directors are nominated by the Board of the Company's ultimate parent entity, Lantern Services (Holdings) Limited, including the Group Audit Committee. Raymond Coleman was appointed as Executive Chairman of Lantern Services (Holdings) Limited, the ultimate parent company of the Lantern Group of companies, on 8 February 2013 and fulfils the same role for Lantern Recovery Specialists Plc. Directors Responsibilities There are clear lines of accountability and responsibility when there is a decision made by the Company. All decisions are made in line with the Company's internal authorities. The directors also consider their directors' duties; details of the stakeholder engagement under section 172 of the Companies Act can be found on the Strategic Report. Regular Board meetings take place to ensure the directors' responsibilities are fulfilled. Opportunity and risk The Company has an embedded risk management approach with clear roles, responsibilities and authorities to ensure that all opportunities are robustly reviewed and to ensure there are no gaps. Through this approach the Company ensures that it is prepared for any risks that it might face in the short, medium and long term. This helps to ensure that there is good corporate governance within the Company. Remuneration The Company follows the remuneration policy approved by the Board of Lantern Services (Holdings) Limited. Director and employee remuneration is based on clear structures and policies.
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LANTERN RECOVERY SPECIALISTS PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Stakeholder Relationships and Engagement
With every decision that the Company makes, the directors acknowledge their duties under section 172 of the Companies Act, and give consideration to the stakeholders of the Company. These stakeholder engagements can be seen on the Strategic Report. The Board also ensures it spends time out of the Boardroom with stakeholders. During the year, members of the Board met with representatives of the workforce and other stakeholders.
The auditors, Barnes Roffe LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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LANTERN RECOVERY SPECIALISTS PLC
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LANTERN RECOVERY SPECIALISTS PLC
We have audited the financial statements of Lantern Recovery Specialists Plc (the 'Company') for the year ended 31 March 2023, which comprise the statement of income and retained earnings, the balance sheet and the related notes, including a summary of 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).
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the directors' 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 directors with respect to going concern are described in the relevant sections of this report.
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LANTERN RECOVERY SPECIALISTS PLC
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LANTERN RECOVERY SPECIALISTS PLC (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our auditors' report thereon. The directors are 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the strategic report and the directors' 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 directors' report.
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LANTERN RECOVERY SPECIALISTS PLC
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LANTERN RECOVERY SPECIALISTS PLC (CONTINUED)
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 auditors' 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:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the relevant sector, including Companies Act 2006;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
∙laws and regulations identified were communicated with the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙reviewed the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations; and
∙performed analytical procedures and tested journal entries to identify any unusual or unexpected relationships or transactions.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial statements, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.
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LANTERN RECOVERY SPECIALISTS PLC
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LANTERN RECOVERY SPECIALISTS PLC (CONTINUED)
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 auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditor
Statutory Auditor
Leytonstone House
3 Hanbury Drive
London
E11 1GA
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LANTERN RECOVERY SPECIALISTS PLC
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 MARCH 2023
Page 17
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LANTERN RECOVERY SPECIALISTS PLC
REGISTERED NUMBER: 02186762
BALANCE SHEET
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 19 to 34 form part of these financial statements.
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Lantern Recovery Specialists PLC ("the Company") is a company limited by shares, incorporated in
England and Wales. Its registered office is Lantern House, 39 - 41 High Street, Potters Bar, Hertfordshire, EN6 5AJ.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company is a wholly owned subsidiary company of Lantern Services (Holdings) Limited (incorporated in England and Wales). The Company is included in the consolidated financial statements of Lantern Services (Holdings) Limited which are publically available.
The directors have considered the ability of the Company to continue as a Going Concern. In making their assessment the directors have prepared and critically reviewed the Company's cash flow forecast for the next 12 months and ensured that this forecast is modelled on a suitably cautious basis.
Based on these assessments the directors have concluded that the Company has adequate resources to continue in existence for the forseeable future as a Going Concern and accordingly these financial statements have been prepared on that basis.
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Revenue is measured at the fair value of the consideration received or receivable and represents the amount receivable for goods supplied or services rendered, net of returns, discounts and rebates allowed by the Company and value added taxes.
The Company recognises revenue when: (a) the significant risks and rewards of ownership have been transferred to the buyer; (b) the Company retains no continuing involvement or control over the goods; (c) the amount of revenue can be measured reliably; (d) it is probable that future economic benefits will flow to the entity and (e) when the specific criteria relating to each of the Company’s sales channels have been met, as described below: (i) The Company provides a variety of services related to assistance, recovery and servicing of vehicles, and also call handling, transportation and Institute of Vehicle Recovery training programmes. Revenue is recognised in the accounting period in which the services are rendered. (ii) The Company also make sales in respect of its fleet vehicles. Revenue is recognised when the Company has delivered the vehicle to the customer and no other significant obligation remains unfulfilled that may affect the customer’s acceptance of the vehicle. The risk of obsolescence and loss of the vehicles are considered to have been transferred to the customer when the vehicles are delivered to the location specified by the customer and the customer has accepted the vehicle. (iii) Rental income from operating leases is recognised on a straight-line basis over the term of the lease. All sales, with the exception of investment income, are normally made with credit terms, unless settled immediately in cash. The element of financing is deemed immaterial and disregarded in the measurement of revenue.
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Lantern Services (Holdings) Limited as at 31 March 2023 and these financial statements may be obtained from Companies House.
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Grants of a revenue nature are recognised in the statement of income and retained earnings in the same period as the related expenditure.
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the balance sheet.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are show in equity as a deduction, net of tax, from the proceeds.
The Company disclosed transactions with related parties which are not wholly owned within the same Group. It does not disclose transactions with members of the same Group that are wholly owned.
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Critical judgments in applying the entity’s accounting policies No significant judgments have had to be made by management in preparing these financial statements. Critical accounting estimates and assumptions Useful economic lives of tangible assets The annual depreciation charge for tangible assets is sensitive to changes in estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on the technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 15 for the carrying amount of the property plant and equipment, and note 2.14 for useful economic lives for each class of assets. Impairment of debtors The Company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See note 17 for the net carrying amount of the debtors. Taxation The Company establishes provisions based on reasonable estimates. Management estimation is required to determine the amount of deferred tax assets/liabilities that can be recognised, based upon likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies. Further details are contained in note 2.13 and note 12.
The whole of the turnover is attributable to the principal activity of the Company and there are no other material sources of turnover. It is in the opinion of the directors disclosure by class of business would be seriously prejudicial to the interests of the Company.
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 26
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 27
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 28
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
12.Taxation (continued)
In the UK Budget on 3 March 2021, it was announced that legislation will be introduced in Finance Bill 2021 to increase the main rate of UK corporation tax from 19% to 25%, effective 1 April 2023. This was substantively enacted in May 2021 and its effects have beeen reflected in these financial statements and deferred tax has been measured at a rate of 25%.
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 30
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 31
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 32
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
22.Deferred taxation (continued)
Profit and loss account
other adjustments.
The entity operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the entity in an independently administered fund. The pension cost charge represents contributions payable by the entity to the fund and amounted to £54,086 (2022 - £53,012). There were no amounts outstanding at the year end (2022 - £Nil).
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LANTERN RECOVERY SPECIALISTS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The Company regards R M Coleman as its ultimate controlling party.
The Company regards Lantern Services (Holdings) Limited as its ultimate parent company.
Page 34
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