Luminescence International Ltd - Limited company accounts 20.1

REGISTERED NUMBER: 03735854 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements

For The Year Ended 31 December 2019

for

Luminescence International Ltd

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Income Statement

8

Other Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

DIRECTORS:

Mr P J Cooper

Mr M J C M Schoonenberg

Mr G W Hayes

Mr G Silver

REGISTERED OFFICE:

The Fairway

Bush Fair

Harlow

Essex

CM18 6NG

REGISTERED NUMBER:

03735854 (England and Wales)

AUDITORS:

Giess Wallis Crisp LLP

Registered Auditor

10-12 Mulberry Green

Old Harlow

Essex

CM17 0ET

The directors present their strategic report for the year ended 31 December 2019.

REVIEW OF BUSINESS

The company is engaged in the supply of technology and inks for bank notes, security documents and stitching threads

for passports.

In 2019 the business has delivered continued growth with sales growing year on year by 101% (2019 - £44.6m; 2018

£22.2m). This growth includes international sales and management carefully monitor and manage exchange exposures.

In 2020 the business has continued to enjoy success and with a dedicated work force and careful planning and

operating procedure changes the impact of COVID 19 has been minimised to the extent practically possible.

The strategy remains to grow through focused attention in the marketplace and with the support of Group companies.

The business has continued to invest, increasing capacity, adding new team members and developing new products

and technologies. The growth in 2019 has strengthened the business position in the marketplace and provides an

excellent platform for sustained performance in 2020.

PRINCIPAL RISKS AND UNCERTAINTIES

State of economy

The company operates in a growing global market for security inks. We continue to invest in all parts of our business to

facilitate our growth in this market.

Credit risk

The company's credit risk is primarily attributable to its trade debtors. The amounts presented in the balance sheet are

net of allowances for doubtful debtors. An allowance for impairment is made when there is a triggering event which,

based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The company has no

significant concentration of credit risk or liquidity risk with exposure spread over a large number of counterparties and

customers or with other group companies who are able to repay these balances.

Foreign exchange risk

With suppliers and customers worldwide, Luminescence is subject to currency exposure, especially within Euro and

USD Dollar. These exposures are recognised and under regular review. Access to its Parent Company's treasury and

market expertise gives the option to pursue forward contracts where high risk is considered including any future

uncertainties of Brexit.

Commercial risk

The directors consider that the primary commercial risk relevant to the company is price volatility of raw materials. The

company expects to cover this risk by entering into trading negotiations with its suppliers as part of its normal trading

activities.

Brexit

The directors are aware of uncertainties surrounding the impact Brexit on all aspects of the business and continue to

monitor the situation to scenario plan and ensure the company remains well placed including drawing on the global

expertise of our fellow group companies to minimise risks.

FUTURE DEVELOPMENTS

We remain confident that the banknote and passport market will remain stable for the next ten to fifteen years with

increased security required. Banknotes will become longer lasting (with reduced ink, thread and fibre consumables

required) with the increased use of polymers, hybrids and other durable substrates. We continue to focus on these new

substrates and also on new technologies to help us remain relevant and profitable in the future.

KEY PERFORMANCE INDICATORS

Gross Profit Margin: 47.52% (2018: 63.29%)

Margins are consistent over the years.

Debtor days: 18 days (2018: 30 days)

Tight control is kept on debtors and all are vigorously chased.

Creditor days: 95 days (2018: 58 days)

Creditors are generally paid when they become due.

EMPLOYMENT

Luminescence International Limited is an equal opportunities employer.

ON BEHALF OF THE BOARD:

Mr P J Cooper - Director

16 October 2020

The directors present their report with the financial statements of the company for the year ended 31 December 2019.

DIVIDENDS

The total distribution of dividends for the year ended 31 December 2019 will be £ 10,000,000 .

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 to the date of this report.

Mr P J Cooper

Mr M J C M Schoonenberg

Mr G W Hayes

Mr G Silver

COVID-19 AND BREXIT

The directors have assessed the risk of COVID-19 and BREXIT on the business and are satisfied that . the actions

taken have mitigated the risk to acceptable levels. With changes to the operating procedures, training for staff and the

deployment of improved sanitisation and social distancing measures the business has continued to trade through the

period of lock down due to COVID-19 with results remaining at materially similar levels. The directors continue to

monitor the situation and are currently satisfied that the business will continue to trade at acceptable levels for the next

12 months.

DISCLOSURE IN THE STRATEGIC REPORT

Information regarding the likely future developments of the company have been included in the strategic report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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 United Kingdom Generally Accepted Accounting

Practice (United Kingdom Accounting Standards and applicable law), 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 and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	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

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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have

taken as a director in order to make himself aware of any relevant audit information and to establish that the company's

auditors are aware of that information.

AUDITORS

The auditors, Giess Wallis Crisp LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mr P J Cooper - Director

16 October 2020

Opinion

We have audited the financial statements of Luminescence International Ltd (the 'company') for the year ended

31 December 2019 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of

Changes in Equity and Notes to the Financial Statements, 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its profit 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 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 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic

Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors

thereon.

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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or

apparent material misstatements, we are required to determine whether there is a material misstatement in the financial

statements or a material misstatement of the other information. 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 the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

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 Report of the Directors.

We have nothing to report in respect of the following matters where 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 directors' remuneration specified by law are not made; or

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, the directors are 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 directors determine 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 directors are 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 directors either intend to liquidate the company or to cease operations, or have no realistic

alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

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 a Report of the Auditors 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.

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 Report of the Auditors.

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 a Report of the Auditors 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.

Michael Wallis FCA (Senior Statutory Auditor)

for and on behalf of Giess Wallis Crisp LLP

Registered Auditor

10-12 Mulberry Green

Old Harlow

Essex

CM17 0ET

16 October 2020

TURNOVER

44,603,163

22,211,501

Cost of sales

23,409,883

8,153,182

GROSS PROFIT

21,193,280

14,058,319

Administrative expenses

5,673,979

(1,964,864

)

OPERATING PROFIT

5

15,519,301

16,023,183

Interest receivable and similar income

55,742

49,525

15,575,043

16,072,708

Interest payable and similar expenses

6

500

34

PROFIT BEFORE TAXATION

15,574,543

16,072,674

Tax on profit

7

5,746,726

276,141

PROFIT FOR THE FINANCIAL YEAR

9,827,817

15,796,533

PROFIT FOR THE YEAR

9,827,817

15,796,533

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

9,827,817

15,796,533

FIXED ASSETS

Intangible assets

9

-

-

Tangible assets

10

873,152

780,690

873,152

780,690

CURRENT ASSETS

Stocks

11

3,918,406

3,366,828

Debtors

12

12,998,449

19,977,466

Cash at bank and in hand

2,819,925

3,997,740

19,736,780

27,342,034

CREDITORS

Amounts falling due within one year

13

9,217,044

16,591,635

NET CURRENT ASSETS

10,519,736

10,750,399

TOTAL ASSETS LESS CURRENT LIABILITIES

11,392,888

11,531,089

PROVISIONS FOR LIABILITIES

15

107,943

73,961

NET ASSETS

11,284,945

11,457,128

CAPITAL AND RESERVES

Called up share capital

16

180

180

Capital redemption reserve

17

10

10

Retained earnings

17

11,284,755

11,456,938

SHAREHOLDERS' FUNDS

11,284,945

11,457,128

The financial statements were approved by the Board of Directors and authorised for issue on 16 October 2020 and were signed on its behalf by:

Mr P J Cooper - Director

Mr G Silver - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 February 2018

180

10,682,805

10

10,682,995

Changes in equity

Dividends

-

(15,022,400

)

-

(15,022,400

)

Total comprehensive income

-

15,796,533

-

15,796,533

Balance at 31 December 2018

180

11,456,938

10

11,457,128

Changes in equity

Dividends

-

(10,000,000

)

-

(10,000,000

)

Total comprehensive income

-

9,827,817

-

9,827,817

Balance at 31 December 2019

180

11,284,755

10

11,284,945

1.	STATUTORY INFORMATION

Luminescence International Ltd is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial

statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of

Ireland":

•

the requirements of Section 4 Statement of Financial Position paragraph 4.12(a)(iv);

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of Section 3 Financial Statement Presentation paragraph 3.17(d);

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party

transactions with wholly owned subsidiaries within the group.

Significant judgements and estimates

In the application of the company's accounting policies, the directors are 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 based on historical experience and other factors that

are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimate is revised where the revision affects only that

period, or in the period of the revision and future periods where the revision affects both current and future

periods.

There are no estimates and assumptions which have had a significant risk of causing a material adjustment to

the carrying amount of assets and liabilities

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates,

value added tax and other sales taxes.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2008, is being amortised evenly over its estimated useful life of ten years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost

less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Improvements to property

-

Straight line over 10 years

Short Leasehold

-

Over the life of the lease

Plant and machinery

-

Straight line over 8 to 11 years

Motor vehicles

-

Straight line over 4 years

Computer equipment

-

Straight line over 3 to 8 years

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and

slow moving items.

Financial instruments

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

The company only enters into basic financial instruments that result in the recognition of financial assets and

liabilities such as trade debtors and creditors.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when

there is an 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.

Debtors

Short terms debtors are measured at transaction price, less any impairment.

Cash and cash equivalents

Cash is represented by current accounts, cash in hand and deposits with financial institutions repayable without

penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no

more than three months from the date of acquisition and that are readily convertible to known amounts of cash

with insignificant risk of change in value.

Creditors

Short term creditors are measured at the transaction price.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to

the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the

balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws

that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal

of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling

at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension

scheme are charged to profit or loss in the period to which they relate.

4.	EMPLOYEES AND DIRECTORS

Period

1/2/18

Year Ended

to

31/12/19

31/12/18

£

£

Wages and salaries

3,433,873

2,876,489

Social security costs

334,502

297,565

Other pension costs

63,518

57,356

3,831,893

3,231,410

The average number of employees during the year was as follows:

Period

1/2/18

Year Ended

to

31/12/19

31/12/18

Manufacturing

53

53

Research and Development

8

8

Technical

4

4

Sales

3

2

Admin

16

10

84

77

Period

1/2/18

Year Ended

to

31/12/19

31/12/18

£

£

Directors' remuneration

220,175

85,000

Directors' pension contributions to money purchase schemes

1,289

599

Information regarding the highest paid director for the year ended 31 December 2019 is as follows:

Year Ended

31/12/19

£

Emoluments etc

220,175

Pension contributions to money purchase schemes

1,289

5.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

Period

1/2/18

Year Ended

to

31/12/19

31/12/18

£

£

Depreciation - owned assets

133,054

106,939

Profit on disposal of fixed assets

-

(5,999,757

)

Goodwill amortisation

-

86,666

Auditors' remuneration

11,500

11,000

Auditors' remuneration for non audit work

12,250

9,000

Foreign exchange (gains)/ losses

162,893

(225,095

)

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

1/2/18

Year Ended

to

31/12/19

31/12/18

£

£

Interest on late tax

500

34

7.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

Period

1/2/18

Year Ended

to

31/12/19

31/12/18

£

£

Current tax:

UK corporation tax

5,712,744

253,294

Deferred tax

33,982

22,847

Tax on profit

5,746,726

276,141

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is

explained below:

Period

1/2/18

Year Ended

to

31/12/19

31/12/18

£

£

Profit before tax

15,574,543

16,072,674

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

2,959,163

3,053,808

Effects of:

Expenses not deductible for tax purposes

562

519

Capital allowances in excess of depreciation

(24,180

)

(14,797

)

Group Relief

-

(2,786,236

)

Movement on Deferred Tax

33,982

22,847

Group Loss Relief charge 2018

2,777,199

-

Total tax charge

5,746,726

276,141

8.

DIVIDENDS

Period

1/2/18

Year Ended

to

31/12/19

31/12/18

£

£

Interim

10,000,000

15,022,400

9.	INTANGIBLE FIXED ASSETS

Goodwill

£

COST

At 1 January 2019

and 31 December 2019

2,600,000

AMORTISATION

At 1 January 2019

and 31 December 2019

2,600,000

NET BOOK VALUE

At 31 December 2019

-

At 31 December 2018

-