Lunovi Limited - Limited company accounts 20.1

REGISTERED NUMBER: 09742722 (England and Wales)

GROUP STRATEGIC REPORT, REPORT OF THE DIRECTOR AND

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019

FOR

LUNOVI LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Director

3

Report of the Independent Auditors

4

Consolidated Income Statement

6

Consolidated Other Comprehensive Income

7

Consolidated Statement of Financial Position

8

Company Statement of Financial Position

9

Consolidated Statement of Changes in Equity

10

Company Statement of Changes in Equity

11

Consolidated Statement of Cash Flows

12

Notes to the Consolidated Statement of Cash Flows

13

Notes to the Consolidated Financial Statements

14

DIRECTOR:

P Mehta

REGISTERED OFFICE:

C/o JEB Technologies Limited

Hampstead Avenue

Mildenhall

Suffolk

IP28 7AS

REGISTERED NUMBER:

09742722 (England and Wales)

AUDITORS:

DNG Dove Naish LLP, Statutory Auditor

Eagle House

28 Billing Road

Northampton

Northamptonshire

NN1 5AJ

The director presents his strategic report of the company and the group for the year ended 31 December 2019.

The trading results for the period and the group's financial position at the end of the period are shown in the attached financial statements.

REVIEW OF BUSINESS

Total turnover on continuing operations reduced during the year by £9.5m due to timing of contracts. Net profit before tax reduced to £3.03m as a result but remained strong as a percentage on sales.

The group acquired a commercial property during the year for investment purposes.

PRINCIPAL RISKS AND UNCERTAINTIES

The group's activities expose it to a number of financial risks including credit risk, liquidity risk and currency risk. The group does not use derivative financial instruments for speculative purposes.

Credit risk

The group's principal financial assets are bank balances and trade debtors.

The group's credit risk is primarily attributable to its trade debtors. The amounts presented in the balance sheet are net of allowances for doubtful debts. The credit risk on bank balances is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

The group has some concentration of credit risk to a small number of major customers. However, a number of these are national defence agencies and other government departments and so this risk is considered to be limited. The group's exposure to commercial customers is managed on an account by account basis to ensure these don't exceed agreed credit limits.

Liquidity risk

In order to maintain liquidity to ensure that sufficient funds are available for on-going operations and future developments, the group uses a mixture of long-term and short-term debt finance and equity funding and inter-company treasury management.

Currency risk

The group undertakes trading transactions in currencies other than sterling and has funding instruments denominated in foreign currency. The foreign exchange risk is managed by holding cash resources in foreign currency.

KEY PERFORMANCE INDICATORS

The group uses order intake, production levels, turnover and profit as key performance indicators to monitor performance.

SIGNED BY ORDER OF THE DIRECTORS:

P Mehta - Director

5 December 2020

The director presents his report with the financial statements of the company and the group for the year ended 31 December 2019.

PRINCIPAL ACTIVITIES

The principal activities of the group in the year under review were those of the design, manufacture and supply of training munitions, diverse Industrial products and Medical devices.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2019.

DIRECTOR

P Mehta held office during the whole of the period from 1 January 2019 to the date of this report.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Group Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

-	select suitable accounting policies and then apply them consistently;

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

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and the group 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 director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and he 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 group's auditors are aware of that information.

AUDITORS

The auditors, DNG Dove Naish LLP, Statutory Auditor, will be proposed for re-appointment at the forthcoming Annual General Meeting.

SIGNED BY ORDER OF THE DIRECTORS:

P Mehta - Director

5 December 2020

Opinion

We have audited the financial statements of Lunovi Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2019 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, 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 group's and of the parent company affairs as at 31 December 2019 and of the group's 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 group 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 director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group'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 director is responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Director, 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 Group Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Director 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Director.

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

-	the parent company financial statements are not in agreement with the accounting records and returns; or

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

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

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page three, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the director is responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the group or the parent company or to cease operations, or has 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.

Andrew Clifford (Senior Statutory Auditor)

for and on behalf of DNG Dove Naish LLP, Statutory Auditor

Eagle House

28 Billing Road

Northampton

Northamptonshire

NN1 5AJ

9 December 2020

TURNOVER

3

14,402,753

23,941,579

Cost of sales

8,585,699

13,502,483

GROSS PROFIT

5,817,054

10,439,096

Administrative expenses

3,221,278

3,937,243

2,595,776

6,501,853

Other operating income

231,119

26,193

OPERATING PROFIT

6

2,826,895

6,528,046

Interest receivable and similar income

42,343

-

2,869,238

6,528,046

Interest payable and similar expenses

7

(239,253

)

427,757

Other finance costs

18

79,000

75,000

(160,253

)

502,757

PROFIT BEFORE TAXATION

3,029,491

6,025,289

Tax on profit

8

-

165,464

PROFIT FOR THE FINANCIAL YEAR

3,029,491

5,859,825

Profit attributable to:

Owners of the parent

3,029,491

5,859,825

PROFIT FOR THE YEAR

3,029,491

5,859,825

OTHER COMPREHENSIVE (LOSS)/INCOME

Actuarial gain/(loss) on pension scheme

(1,071,000

)

331,000

Income tax relating to other comprehensive (loss)/income

-

-

OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR, NET OF INCOME TAX

(1,071,000

)

331,000

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,958,491

6,190,825

Total comprehensive income attributable to:

Owners of the parent

1,958,491

6,190,825

FIXED ASSETS

Tangible assets

10

5,239,470

5,765,772

Investments

11

-

-

Investment property

12

1,891,699

-

7,131,169

5,765,772

CURRENT ASSETS

Stocks

13

8,061,527

3,508,910

Debtors

14

2,777,415

3,504,297

Cash at bank and in hand

6,378,360

6,870,310

17,217,302

13,883,517

CREDITORS

Amounts falling due within one year

15

15,527,228

13,936,537

NET CURRENT ASSETS/(LIABILITIES)

1,690,074

(53,020

)

TOTAL ASSETS LESS CURRENT LIABILITIES

8,821,243

5,712,752

PENSION LIABILITY

19

(3,770,000

)

(2,620,000

)

NET ASSETS

5,051,243

3,092,752

CAPITAL AND RESERVES

Called up share capital

17

1,000

1,000

Revaluation reserve

18

379,567

379,567

Capital contribution reserve

18

35,345

35,345

Retained earnings

18

4,635,331

2,676,840

SHAREHOLDERS' FUNDS

5,051,243

3,092,752

The financial statements were approved by the director and authorised for issue on 5 December 2020 and were signed by:

P Mehta - Director

FIXED ASSETS

Tangible assets

10

-

-

Investments

11

2,327

1,327

Investment property

12

-

-

2,327

1,327

CURRENT ASSETS

Debtors

14

1,741,921

-

Cash at bank

2,742

2,852

1,744,663

2,852

CREDITORS

Amounts falling due within one year

15

1,742,921

-

NET CURRENT ASSETS

1,742

2,852

TOTAL ASSETS LESS CURRENT LIABILITIES

4,069

4,179

CAPITAL AND RESERVES

Called up share capital

17

1,000

1,000

Capital contribution reserve

18

35,345

35,345

Retained earnings

18

(32,276

)

(32,166

)

SHAREHOLDERS' FUNDS

4,069

4,179

Company's (loss)/profit for the financial year

(110

)

155

The financial statements were approved by the director and authorised for issue on 5 December 2020 and were signed by:

P Mehta - Director

Called up

Capital

share

Retained

Revaluation

contribution

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 January 2018

1,000

(3,513,985

)

379,567

35,345

(3,098,073

)

Changes in equity

Total comprehensive income

-

6,190,825

-

-

6,190,825

Balance at 31 December 2018

1,000

2,676,840

379,567

35,345

3,092,752

Changes in equity

Total comprehensive income

-

1,958,491

-

-

1,958,491

Balance at 31 December 2019

1,000

4,635,331

379,567

35,345

5,051,243

Called up

Capital

share

Retained

contribution

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2018

1,000

(32,321

)

35,345

4,024

Changes in equity

Total comprehensive income

-

155

-

155

Balance at 31 December 2018

1,000

(32,166

)

35,345

4,179

Changes in equity

Total comprehensive loss

-

(110

)

-

(110

)

Balance at 31 December 2019

1,000

(32,276

)

35,345

4,069

Cash flows from operating activities

Cash generated from operations

1

1,388,039

7,647,027

Interest paid

239,253

(422,883

)

Interest element of hire purchase or finance lease rental payments paid

-

(4,874

)

Tax paid

(175,842

)

(73,441

)

Net cash from operating activities

1,451,450

7,145,829

Cash flows from investing activities

Purchase of tangible fixed assets

(125,394

)

(117,135

)

Purchase of investment property

(1,891,699

)

-

Sale of tangible fixed assets

31,350

300

Interest received

42,343

-

Net cash from investing activities

(1,943,400

)

(116,835

)

Cash flows from financing activities

Hire purchase repayments

-

(13,417

)

Net cash from financing activities

-

(13,417

)

(Decrease)/increase in cash and cash equivalents

(491,950

)

7,015,577

Cash and cash equivalents at beginning of year

2

6,870,310

(145,267

)

Cash and cash equivalents at end of year

2

6,378,360

6,870,310

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

£

£

Profit before taxation

3,029,491

6,025,289

Depreciation charges

620,345

868,243

Profit on disposal of fixed assets

-

(300

)

Finance costs

(160,253

)

502,757

Finance income

(42,343

)

-

3,447,240

7,395,989

(Increase)/decrease in stocks

(4,552,617

)

797,607

Decrease/(increase) in trade and other debtors

737,260

(1,402,613

)

Increase in trade and other creditors

1,756,156

856,044

Cash generated from operations

1,388,039

7,647,027

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 December 2019

31/12/19

1/1/19

£

£

Cash and cash equivalents

6,378,360

6,870,310

Year ended 31 December 2018

31/12/18

1/1/18

£

£

Cash and cash equivalents

6,870,310

2,396,800

Bank overdrafts

-

(2,542,067

)

6,870,310

(145,267

)

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1/1/19

Cash flow

At 31/12/19

£

£

£

Net cash

Cash at bank and in hand

6,870,310

(491,950

)

6,378,360

6,870,310

(491,950

)

6,378,360

Debt

Debts falling due within 1 year

(10,986,754

)

423,077

(10,563,677

)

(10,986,754

)

423,077

(10,563,677

)

Total

(4,116,444

)

(68,873

)

(4,185,317

)

1.	STATUTORY INFORMATION

Lunovi Limited 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 General Information page.

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries an joint ventures) made up to 31 December each period. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Subsidiaries

Subsidiaries are fully consolidated from the date on which control is transferred to the group and de-consolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

The consolidated financial statements incorporate the assets, liabilities and results of the following entities in accordance with the accounting policy described above:

Name of entity

Registered office

Country of incorporation

Class ofshares held

Equity holding %

JEB Technologies Limited

As parent

UK

Ordinary

100

UTM Limited

As parent

UK

Ordinary

100

Lunpro Limited

As parent

UK

Ordinary

100

Significant judgements and estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed within the individual accounting policies below.

Turnover

Turnover represents the value, excluding Value Added Tax, of goods and services supplied to customers during the year. Income is recognised when significant risks and rewards of ownership of the goods have been transferred to the buyer, which depending on the specific contract terms is either on dispatch or delivery of goods. Turnover on customer development and construction projects is recognised in accordance with agreed milestones being met.

Tangible fixed assets

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

Plant and machinery

-

25% on cost, 20% on cost, 20% on reducing balance and 10% on cost

Fixtures and fittings

-

25% on reducing balance and 25% on cost

Motor vehicles

-

25% on reducing balance

No depreciation is provided on a long term leasehold property where the lease is for a 999 year period, as in the opinion of the directors, the residual value is such that any depreciation charge would be immaterial.

Freehold buildings are improved such that residual values of these properties, based on prices prevailing at the time of acquisition, are at least equal to their book values. It is the opinion of the Directors that depreciation on any such properties as required by the Companies Act and accounting standards would not be material.

Other leasehold property is depreciated over the life of the lease.

Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Depreciation methods, useful lives and residual values are reviewed at each balance sheet date. The selection of these residual values and estimated lives requires the exercise of judgement. The directors are required to assess whether there is an indication of impairment to the carrying value of assets. In making that assessment, judgements are made in estimating value in use. The director considers that the individual carrying values of assets are supportable by their value in use.

Investment property

Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from changes in fair value is recognised in profit or loss.

Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated 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 statement of financial position date.

Deferred tax

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

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

Pension costs and other post-retirement benefits

The company operates a defined benefit pension scheme in the United Kingdom. The scheme was closed to new members and accruals from 31 October 2003. The assets of the scheme are held separately from those of the company, being invested with insurance companies.

The pension scheme surplus or deficit is recognised in full on the group balance sheet. The deferred tax relating to a defined benefit asset or liability is offset against the defined benefit asset or liability and not included with other deferred tax assets or liabilities.