The directors present the strategic report for the year ended 31 December 2018.
The principal activity of the company is detailed within the directors' report.
Pursuant to a securities exchange agreement ("the 'Securities Exchange Agreement") entered in to on 14 December 2016 and latterly amended on 22 November 2017, between the company, CUP Capital Corporation ("CUP"), GBT German Battery Trading GmbH and SWT Beteiligungs AG, CUP acquired the entire issued and outstanding share capital of the company by way of a share for share exchange in common shares of CUP. The terms of the Securities Exchange Agreement valued each ordinary share of the company at CAD$0.64, giving a total acquisition price of CAD$66,082,894, wholly satisfied through issuing share capital in CUP.
The Securities Exchange Agreement completed in March 2018 and the shares of CUP commenced trading on the TSX Venture Exchange on 27 March 2018, under the symbol GBLT. CUP subsequently changed its name to GBLT Corp, which is now the immediate parent company.
In the context of providing users of these financial statements with relevant information, the following narrative concerns both the company and its subsidiary. During the current and prior financial periods the company's subsidiary, GBT German Battery Trading GmbH ("GBT"), was the official licensee for POLAROID light products, POLAROID medical products and AGFAPHOTO mobile energy products.
GBT was incorporated in the year 2003 in Germany with an emphasis on photographic technologies. GBT is a leading manufacturer and distributor of high-quality mobile energy and light including LED products under the brands “AGFAPHOTO” and “POLAROID”, both brands offering excellent brand recognition amongst retail and commercial customers. Its products can be found in supermarkets, department stores, drugstores, convenience stores, petrol stations etc. Governments, public services or big industrial customers are supplied by GBT as well.
GBT is also the manufacturer for a range of “private label (so called OEM)” products that can be found on the shelves of leading supermarkets and do-it-yourself chains or e-commerce etc. under the customers own branding with competitive pricing. The Company uses state-of-the-art production facilities in Asia that are equally used by its competitors Philips, Osram, Panasonic and Varta, offering the same product quality as these brands.
The Company holds the exclusive branding and licensing rights for all its lighting products under the “POLAROID” brand. POLAROID is one of the rare worldwide brands with a brand recognition of 100%. Especially in Europe, but also in the growing markets in Africa and Middle East, GBT uses this recognition by means of secure long-term contracts to establish a global brand, both in the retail and in the B2B sector. GBT reputation in the marketplace led Polaroid to grant GBT the licenses to its major product line in a long-term partnership.
Additionally, under the brand name AGFAPHOTO, GBT manufactures and distributes a wide range of mobile energy products worldwide, such as batteries, rechargeable batteries and chargers, at the same time increasing brand awareness throughout the world.
The brand names are also used by GBT to offer the above mentioned products as private labels to the retail trade. Whether hypermarkets, do-it-yourself markets, discounters or ecommerce chains – GBT is the fastest growing provider in the light sector.
Both in the light and in the battery sector, private label products of GBT are not only manufactured to be offered in retail, but also for groups or companies who use these products themselves.
The group remains open to strategic alliances to help support the future development of the GBT, while considering all appropriate financing options.
The financial performance of the company for the year ended 31 December 2018 was considered acceptable and broadly in line with plans. The company received the benefit of investment funds in the form of share capital finance to further fuel group operations.
Whilst the statement of comprehensive income shows a loss of € 22,561,097 (201 7 : € 3,140,444 ), this has come about as a consequence of an impairment charge on the carrying valuation of the investment in the company's subsidiary of € 20,460,159 ( 2017: € Nil ) , waiving elements of a group debtor balance €1,832,945 (2017: €Nil) an d through recogni sing the fair value costs associated with granting options to purchase share capital in the company to three key employees of € Nil ( 2017: € 2 , 417 , 042 ) . The remaining costs are predominantly professional fees incurred in order to ensure the company meets its statutory and legal obligations in all relevant territories.
In the context of principal risks and uncertainties, the directors believe commentary from the perspective of the company and its subsidiary provide the relevant information for users of the financial statements. The group derives its turnover globally and believes ample opportunities exist to expand and capitalise on the demand for its products. Accordingly it seeks appropriate sources of finance to fund such growth as circumstances demand, leading to the various private placements for share capital finance in the financial period and that before it.
The group will require additional funds to continue operations and naturally there is no assurance that additional funding will be available to the group to carry out the completion of all proposed activities. Although the group has been successful in the past in obtaining financing through the issue of share capital investment , there can be no assurance that it will be able to obtain adequate financing in the future or that the terms of such financing will be favorable. Failure to obtain such additional financing could result in the curtailment of operations, liquidation of assets, seeking additional capital on less favorable terms and/or other remedial measures. At the time of signing there are no indications or concerns that this is currently the case.
The group's operations expose it to various financial risks which ordinarily arise in global operations, these include but are not limited to that of price, currency, interest rate, credit and liquidity. The board of directors monitor such risks ensuring that they are balanced against the profitable running of the group and in furtherance of its aims to expand in a sustainable manner.
The group mitigates the risk that it will be subject to foreign currency fluctuations in satisfying obligations related to its foreign activities by holding a portion of its currency holdings in US dollars and by entering into forward exchange contracts to purchase US dollars with Euros in regular intervals.
The group does not believe it was exposed to material interest rate risk throughout the reporting period or at the balance sheet date.
The group defines credit risk as being the potential for a customer or any other debtor to fail to settle any amounts receivable in good time. The c ompany’s primary exposure to credit risk is in its cash accounts and loans receivable. In order to reduce its credit risk, the group employs policies which include the analysis of the financial position of its customers and the regular review of their credit limits. Where appropriate, the group also requires bank letters of credit from new customers or subscribes to credit insurance.
Finally, liquidity risk is the potential for the group to be unable to meet its financial obligations as they fall due for payment. The group has a forecasting and budgeting process in place by which it anticipates and determines the funds required to support its normal operating requirements.
The board of directors are satisfied with the company 's position at the balance sheet date and believe that it is well placed to thrive in the future.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2018.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) 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 Auditor's 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.
Emphasis of matter
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 included in the annual report, other than the financial statements and our auditor’s report 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 our audit :
the information given in the strategic report and the directors' r eport 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.
As explained more fully in the directors' r esponsibilities s tatement, 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 is 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.
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 auditor’s 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
GBLT German Battery & Lighting Technologies PLC is a public company limited by shares incorporated in England and Wales. The registered office is International House, 142 Cromwell Road, London, SW7 4EF. The company's principal place of business is c/o GBT German Battery Trading GmbH, An Gut Nazareth 18 A, 52353 Duren, Germany.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling , which is the functional currency of the company. Monetary a mounts in these financial statements are rounded to the nearest €.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group .
At the balance sheet date, GBLT German Battery & Lighting Technologies PLC was a wholly owned subsidiary of GBLT Corp, a company incorporated in Canada. The results of GBLT German Battery & Lighting Technologies PLC are included in the consolidated financial statements of the parent company, which are prepared under IFRS and audited in Canada. A copy of these can be obtained from the company's trading address.
The company reported a loss during the financial year under review, although a significant element of this related to a charge in relation fixed asset impairment. The company is no longer actively trading, although it will incur minor amounts of expense linked to its continuing governance. The company's subsidiary will provide all reasonable funds as required in order to discharge these liabilities as they fall due for payment and so remain a going concern.
The wider group's ability to remain a going concern is dependent upon raising additional funds as required. Whilst the group has been successful in raising sufficient funds in the past, there is no guarantee it will continue to do so in the future. such uncertainty gives rise to significant doubt as to the company's ability to continue as a going concern.
A t the time of approving the financial statements , t he directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus t he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company . Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities .
Where a reasonable and consistent basis of allocation can be identified, assets are allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
All of the company's financial assets are basic financial instruments.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future paymen ts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. A m ounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
All of the company's financial liabilities are basic financial instruments.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
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 are 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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
In November 2016 the directors commissioned independent external professional consultants to undertake a formal valuation of the company's subsidiary. After reviewing the conclusions of this report, the directors considered them in light of the carrying value of the company's fixed asset investment at the balance sheet date, for the purposes of an impairment review in compiling the statutory financial statements. The directors also gave due consideration to the Securities Exchange Agreement completed in March 2018, whereby the parent company's shares were each valued at CAD$0.64.
However the directors then gave further consideration to the active share price of the company's parent at the balance sheet date, CAD$0.145, and its total market capitalisation at the same date. As this is principally informed by the performance of the company's trading subsidiary, the directors have taken a prudent view in carrying out their impairment review at the balance sheet date and consequently the impairment charge which has been recognised within the financial statements.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The directors commissioned external independent accountants to advise upon the fair value of the share options and, subsequently, the cost upon which to be recognised within these financial statements.
On 19 December 2018 the company waived €1,832,945.29 of the debtor balance owed by its subsidiary company.
Subject to the subsidiary achieving certain financial milestones, there exists a provision for an element of this waiver to be reversed. At the balance sheet date it did not appear that circumstances would give rise to this and so the full balance waived has been recognised in the financial statements.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The above impairment loss is stated in the Statement of Comprehensive Income within Amounts written off investments.
The company has taxable losses to carry forward of €31,369 (2017: €23,665) which can be set off against future taxable profits.
The Chancellor stated his intention to reduce the main rate of corporation tax from 19% to 17% from 1 April 2020. This change was substantively enacted on 6 September 2016.
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2018 are as follows:
At the balance sheet date, it was not possible to obtain the relevant financial information in respect of GBLT Africa (Pty) Ltd or SSD Stahlservice Deutschland UG to disclose in the note above.
In October 2016 the company granted options wholly relating to the purchase ordinary shares in the company, to three key employees. The total number of Ordinary shares under option is 3,500,000, which were all outstanding and exercisable at 31 December 2016.
In April 2017 400,000 options were exercised at a price of €0.05 for a total subscription price of €20,000, leaving 3,100,000 options outstanding and exercisable at 31 December 2017.
The options outstanding at 31 December 2018 had an exercise price of $0.05 per share, payable in Euros and all expire in October 2018.
The share options were valued using the Black-Scholes valuation model, with the relevant assumptions being a share price of €1.70, exercise price of US$0.05, expected volatility of 25%, expected dividend yield of 0%, risk free return of 0.61% and an expected remaining life of two years.
During the year, the company recognised total share-based payment expenses of €- (2017 - €2,417,042) which related to equity settled share based payment transactions.
In January 2018, the company issued a total of 174,000 Ordinary €0.85 shares for a total consideration of €147,900 and 15,000 Ordinary €0.70 shares for a total consideration of €10,500.
In February 2018, the company issued a total of 354,250 Ordinary €0.85 shares for a total consideration of €301,113.
There are no such reportable items.
Dividends totalling €0 (2017 - €0) were paid in the year in respect of shares held by the company's directors.
The directors, who are also the key management personnel of the company, did not receive any compensation during the year.
Following the completion of the Securities Exchange Agreement in March 2018, the immediate parent company was GBLT Corp, a company incorporated in Canada.
The directors consider Dr J T Senst to be the ultimate controlling party.