Lunovi Limited - Limited company accounts 18.2

REGISTERED NUMBER: 09742722 (England and Wales)

GROUP STRATEGIC REPORT, REPORT OF THE DIRECTOR AND

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

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, 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 2017.

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

Following the group restructuring and internal reorganisation in the previous period the group is showing a

stronger financial position.

Increasing production benefited from efficiency gains which helped to improve margins, tight control of

overhead spending resulted in savings compared to the previous year.

The outlook for the coming financial year looks good. The group continues to pursue new opportunities and

develop new products as well as deepen existing customer relationships.

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

25 September 2018

The director presents his report with the financial statements of the company and the group for the year

ended 31 December 2017.

PRINCIPAL ACTIVITIES

The principal activities of the group in the year under review were those of the design, manufacture and

supply of training munitions and related products and precision tools and components.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2017.

DIRECTOR

P Mehta held office during the whole of the period from 1 January 2017 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, Statutory Auditor, will be proposed for re-appointment at the forthcoming

Annual General Meeting.

SIGNED BY ORDER OF THE DIRECTORS:

P Mehta - Director

25 September 2018

Opinion

We have audited the financial statements of Lunovi Limited (the 'parent company') and its subsidiaries (the

'group') for the year ended 31 December 2017 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 2017 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 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, 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.

Opinion 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, Statutory Auditor

Eagle House

28 Billing Road

Northampton

Northamptonshire

NN1 5AJ

26 September 2018

TURNOVER

3

11,928,130

7,524,730

Cost of sales

7,767,893

5,636,164

GROSS PROFIT

4,160,237

1,888,566

Administrative expenses

1,858,196

5,874,511

2,302,041

(3,985,945

)

Other operating income

26,284

56,176

OPERATING PROFIT/(LOSS)

6

2,328,325

(3,929,769

)

Loan waiver

7

-

9,193,421

Loan impairment

7

-

(9,841,687

)

Write off goodwill

7

(327

)

2,294,259

2,327,998

(2,283,776

)

Interest payable and similar expenses

8

414,132

336,714

Other finance costs

22

90,000

-

504,132

336,714

PROFIT/(LOSS) BEFORE TAXATION

1,823,866

(2,620,490

)

Tax on profit/(loss)

9

2,518

(71,157

)

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

1,821,348

(2,549,333

)

Profit/(loss) attributable to:

Owners of the parent

1,821,348

(2,549,333

)

PROFIT/(LOSS) FOR THE YEAR

1,821,348

(2,549,333

)

OTHER COMPREHENSIVE INCOME/(LOSS)

Actuarial gain/(loss) on pension scheme

323,000

(3,290,000

)

Limit on recognition of assets

-

181,000

Capital contribution

35,345

-

Income tax relating to components of other comprehensive income/(loss)

-

-

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

358,345

(3,109,000

)

TOTAL COMPREHENSIVE LOSS FOR THE YEAR

(5,658,333

)

Note

Prior year adjustment

11

951,936

TOTAL COMPREHENSIVE LOSS SINCE LAST ANNUAL REPORT

3,131,629

Total comprehensive income attributable to:

Owners of the parent

3,131,629

(5,658,333

)

FIXED ASSETS

Tangible assets

12

6,516,880

6,515,279

Investments

13

-

-

6,516,880

6,515,279

CURRENT ASSETS

Stocks

14

4,306,517

3,826,041

Debtors

15

2,033,302

1,275,731

Cash at bank and in hand

2,396,800

1,617,823

8,736,619

6,719,595

CREDITORS

Amounts falling due within one year

16

15,475,572

15,390,624

NET CURRENT LIABILITIES

(6,738,953

)

(8,671,029

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(222,073

)

(2,155,750

)

CREDITORS

Amounts falling due after more than one year

17

-

(13,016

)

PENSION LIABILITY

23

(2,876,000

)

(3,109,000

)

NET LIABILITIES

(3,098,073

)

(5,277,766

)

CAPITAL AND RESERVES

Called up share capital

21

1,000

1,000

Revaluation reserve

22

379,567

379,567

Capital contribution reserve

22

35,345

-

Retained earnings

22

(3,513,985

)

(5,658,333

)

SHAREHOLDERS' FUNDS

(3,098,073

)

(5,277,766

)

The financial statements were approved by the director on 25 September 2018 and were signed by:

P Mehta - Director

FIXED ASSETS

Tangible assets

12

-

-

Investments

13

1,327

1,000

1,327

1,000

CURRENT ASSETS

Cash at bank

2,697

-

NET CURRENT ASSETS

2,697

-

TOTAL ASSETS LESS CURRENT LIABILITIES

4,024

1,000

CAPITAL AND RESERVES

Called up share capital

21

1,000

1,000

Capital contribution reserve

22

35,345

-

Retained earnings

22

(32,321

)

-

SHAREHOLDERS' FUNDS

4,024

1,000

Company's loss for the financial year

(32,321

)

-

The financial statements were approved by the director on 25 September 2018 and were signed by:

P Mehta - Director

Called up

Capital

share

Retained

Revaluation

contribution

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 20 August 2015

-

-

379,567

-

379,567

Changes in equity

Issue of share capital

1,000

-

-

-

1,000

Total comprehensive loss

-

(6,610,269

)

-

-

(6,610,269

)

Balance at 31 December 2016

1,000

(6,610,269

)

379,567

-

(6,229,702

)

Prior year adjustment

-

951,936

-

-

951,936

As restated

1,000

(5,658,333

)

379,567

-

(5,277,766

)

Changes in equity

Total comprehensive income

-

2,144,348

-

35,345

2,179,693

Balance at 31 December 2017

1,000

(3,513,985

)

379,567

35,345

(3,098,073

)

Called up

Capital

share

Retained

contribution

Total

capital

earnings

reserve

equity

£

£

£

£

Changes in equity

Issue of share capital

1,000

-

-

1,000

Balance at 31 December 2016

1,000

-

-

1,000

Changes in equity

Total comprehensive income

-

(32,321

)

35,345

3,024

Balance at 31 December 2017

1,000

(32,321

)

35,345

4,024

Cash flows from operating activities

Cash generated from operations

1

1,955,512

(5,466,065

)

Interest paid

(405,776

)

(320,400

)

Interest element of hire purchase payments paid

(8,356

)

(16,314

)

Tax paid

-

11,019

Net cash from operating activities

1,541,380

(5,791,760

)

Cash flows from investing activities

Purchase of intangible fixed assets

-

2,294,259

Purchase of tangible fixed assets

(731,498

)

(7,140,535

)

Sale of tangible fixed assets

9,329

92,115

Net cash from investing activities

(722,169

)

(4,754,161

)

Cash flows from financing activities

New loans in year

-

9,531,681

Hire purchase repayments

(23,000

)

36,417

Share issue

-

1,000

Capital contribution from shareholders

35,345

-

Net cash from financing activities

12,345

9,569,098

Increase/(decrease) in cash and cash equivalents

831,556

(976,823

)

Cash and cash equivalents at beginning of year

2

(976,823

)

-

Cash and cash equivalents at end of year

2

(145,267

)

(976,823

)

1.	RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

Period

20/8/15

Year Ended

to

31/12/17

31/12/16

as

restated

£

£

Profit/(loss) before taxation

1,823,866

(2,620,490

)

Depreciation charges

726,908

621,615

Profit on disposal of fixed assets

(6,339

)

(88,475

)

Exchange rate gains on loans

(993,063

)

-

Finance costs

504,132

336,714

2,055,504

(1,750,636

)

Increase in stocks

(480,476

)

(3,826,041

)

Increase in trade and other debtors

(757,571

)

(1,275,731

)

Increase in trade and other creditors

1,138,055

1,386,343

Cash generated from operations

1,955,512

(5,466,065

)

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 2017

31/12/17

1/1/17

£

£

Cash and cash equivalents

2,396,800

1,617,823

Bank overdrafts

(2,542,067

)

(2,594,646

)

(145,267

)

(976,823

)

Period ended 31 December 2016

31/12/16

20/8/15

as restated

£

£

Cash and cash equivalents

1,617,823

-

Bank overdrafts

(2,594,646

)

-

(976,823

)

-

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.

Based on the availability of financial support from associated companies under the control of the

director, the director has a reasonable expectation that the group has adequate resources to continue

in operational existence for the foreseeable future. Thus the director has adopted the going concern

basis of accounting in preparing the annual financial statements.

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

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.