Coral Products PLC
Annual Report 2019

Plain-text annual report

CORAL PRODUCTS PLC ANNUAL REPORT AND ACCOUNTS 2OL9 Contents Business Overview Chairman's Statement Strateg¡c Report Directors and Advisers Directors' Report Directors' Remuneration Report Audit Committee Report lndependent Auditor's Report to the Members of Coral Products plc Group lncome Statement Group Statement of Comprehensive lncome Balance Sheets Statement of Changes in Shareholders' Equity Cash Flow Statements Notes to the Financial Statements Five Year Record (unaudited) Notice of the Annual General Meeting Financial Calendar and Shareholder lnformation t 3 6 CI 11 t7 20 2L 26 26 27 28 D 30 59 60 63 Financial Highlights Group revenue Gross margin Profit/(loss) before tax Operat¡ng profit/(loss) Underlying earnings before interest, tax, depreciat¡on and amortisation * Underlying operating profit * 20t9 C24.7m ?5.9% Ê0.04m f0.5m C2.5m C1.0m 2018 f23.4m 34.6% f(0.s)m f(0.2)m f2.1m €0.9m *Underlying profit measures are defined and explained in the accounting policies and in note 6 of the financial statements. Business Overview About Us Coral Products is a manufacturer and distr¡butor of plastic injection, extruded and blow moulded products into a diverse range of sectors including food packaging, personal care, household, healthcare, automotive, on-line totes, telecoms and rail. The Group has operat¡ons in the UK with manufacturing facilities in Haydock, Merseyside, and Wythenshawe, Greater Manchester and a distr¡bution facil¡ty in Hyde, Greater Manchester. By developing ¡nnovative plastic moulded products, providing excellent customer service and through its hard-working employees, Coral Products cont¡nues to refocus on new markets to be in a pos¡tion to create growth and value for its shareholders, Overview The Company was listed on the main market of the LSE from April 1995, moving to AIM in August 2011. lnitially the Company focused on serving the VHS, CD and DVD market. Due to the onset of internet-based media and the demise of the CD and DVD market the Company has reinvented itself by developing innovative products such as food containers, extrus¡on, tr¡gger sprays and nozzles and injection and blow moulding, serving a more diverse market and customer base. Strategy We aim to grow and develop our positions within our chosen product markets and geographical areas in the rigid plastic packaging and waste recycling ¡ndustry by ma¡ntaining strong long-term relationships w¡th our customers and developing high quality, innovative products that meet customer needs. With our trade moulding partners, we aim to develop the relationship and work together to produce a partnership resulting in long-term reliability of production, development and flexibility as the need arises in order to deliver long-term sustainable profit growth. There are five key drivers to our strategy which support a focused sales approach: Health and safety - This is the main priority in the business and we have str¡ved to ¡mplement an environment where safety is paramount. We continuously train and re-train our staff to ensure that we operate best health and safety practices throughout the organisation. Quality - We have an excellent reputat¡on for delivering quality products but we are not complacent. We invest cont¡nuously ¡n new machinery, robot¡cs and moulds in order to maintain a strong posit¡on and keep market share. Our quality control and assurance processes are regularly reviewed and developed to ensure that our customers receive quality products each t¡me. Cost control - We continually investigate prices to improve our financial efficiency and deliver the best returns for shareholders. This may lead to dual supply sources to ensure key costs are minimised. We recognise also the efficiencies and effectiveness that results from new machinery in reducing our carbon footpr¡nt as well as the pos¡tive effect on reducing the cost of power absorption. Culture - We continually look to promote a well-motivated workforce by attract¡ng and motivating talented people to drive our business forward and foster a culture of responsibility, accountability and openness. Acquisitions - We have adopted a strategy of seeking acquisitions where we feel we can add value from synergies or ¡nvestment to grow our markets and ultimately enhance shareholder value. Strategic Plan The S-year plan implemented in 2015 continues to be followed. The plan has been bolstered by the recent addit¡on of a bespoke recycling unit installed in the Coral Mouldings plant ¡n Haydock. lt is expected that recycling will become a big part of the future growth of the Group. Page l1 Business Overview continued Business Model To create and grow markets for rigid plastic containers, extrusion profiles and container triggers and spray nozzles, via innovation, development and acquis¡t¡ons. We recognise that for many products' plastic is a better container solution for handling goods and gives greater functionality, economy and a cleaner environment' Social, Community and Human Rights lssues The Group endeavours to impact positively on the communit¡es in which it operates. ln particular, raw materials are purchased from established companies which have high reputations within the plastics industry' The Group,s ethical and social accountab¡lity statement details the standards of behaviour which are regarded as acceptable' Provision of a safe, clean working environment, free from discrimination, is an essential right of all the employees' ln order to gain accreditation under the BRC packaging Materials Standard on product¡on of food containers, the premises, working practices and materials had to meet requ¡red standards of compliance. These are regularly audited to ensure the Group contlnues to adopt good manufacturing practices in order to develop and manufacture safe, legal packaging materials. The Group is also often audited by its customers to assess compllance wlth min¡mum acceptable standards. Page l2 Chairman's Statement Trading Whilst I am pleased to report an improved performance this year, it has proved to be a difficult period. After a strong first half when we reported revenues of Ê13.1m (2018: €11.9m) and underlying profit of f 1.0m (2018: €0.4m), the Group endured a poor start to its second half, with losses in the four months to 28 February 2019. This resulted in our announcing by an RNS dated 26 March 2019 that results for the year would be materially below management and market expectations. The losses were across the Group, with the exception of lnterpack. Decisive action, including the re-organisation of both Tatra-Rotalac and Mouldings to reduce costs, returned the Group to profitab¡l¡ty during March and April though at a lower level than during the first half. Further direct and ind¡rect cost reduction measures across the Group have continued into th¡s current financial period. The recycling unit introduced into production during May 2019 is already contribut¡ng to our cost reduction plan and will do increasingly throughout the current year as we ramp up production. Throughout this difficult period, we have cont¡nued to ¡nvest in the Group adding new and improved capac¡ty and a state-of-the-art recycling unit. This has created greater sales opportunit¡es in both existing and new markets. We therefore ant¡cipate significant sales growth over the current financial year. I was pleased w¡th the increase in revenue up 5.7% to f24.7m (2018: f23.4m) and underlying operat¡ng profit up 13.5%to f1.0m (2018: €0.9m). (Note that underlying profit is defined in note 2 and a reconcil¡ation provided in note 6). The Group has continued with its strateg¡c progress of increasing focus on value-added and innovative products. The focus is to build a significant plastic moulding business with a bias towards using recycled materials and with the new Recycling un¡t now installed and operational at Haydock, we remain confident in our ability to do so. The Group has reported a profit before taxation for the financial year of f0.04m (2018: €0.5m loss). Across the Group, finance costs have increased to €0.4m (2018: f0.3m) and depreciation to €1.5m (2018: €1.2m) in line with the increased spend on new, replacement and/or improvement of the assets of the Group, lnterpack's profit before tax ¡s €0.7m (201s: f0.6m) and Global One-Pak's f0.2m (2018: €0.5m). The focus on Coral products (Mouldings) has resulted in a substant¡al prof¡tability improvement from last year with a loss of f0.4m (2018: €1.1m loss). Tatra has been affected by adverse material prices and operational costs resulting in an increased loss to f0.2m (2018: f0.0m loss). A reorgan¡sat¡on and cost cutting exercise was completed in July 2019 to improve future profitab¡l¡ty. These results are before amortisation of intangibles arising on consolidation of €0.3m (2018: f0.3m) as set out in note 6. Our new 360-degree recycling plant using both internal and external acquired plastic waste is now ¡n operation and interest from both new and ex¡sting customers has been very encouraging. The interest I highlighted last year by local authorities and councils is now becoming more tangible with developments at an advanced stage w¡thin both areas. Further investment ¡n new tool¡ng for food packaging and robotics handling will stand the business in good stead going forward with actual demand from the new tool¡ng increasing month by month. The developments will enable the manufacturing businesses to cont¡nue to reduce operational costs, wh¡lst reinforcing the important recycling message the business promotes. Performance of the Group is monitored principally through adjusted profit measures which exclude f0.5m of adjusted items (2018: f 1.1m). Such items are set out in note 6 and include the amortisation of intangibles arising on the acquisitions of Global One-pak and Tatra-Rotalac, acquisition costs, share based payment charges, compensation for loss of office of senior management and reorgan¡sation costs. Page l3 Chairman's Statement Continued Dividends The Board remains committed to its long-term progressive dividend policy, which takes account of the underlying growth, whilst acknowledging the requirement for continuing investment and short-term fluctuations in profit. Due to the uncerta¡nty surrounding UK Brexit the Board believe it is prudent to pay a total dividend of 0.25 pence per ordinary share ¡n respect of the financial year ended 30 April 2019. Having paid an interim dividend at 0.25 pence per ordinary share on 28 March 2019, the Board will not be recommending the payment of a final dividend. Board Changes There were no board changes during the yea(. Chairman's Corporate Governance Statement As Non-executive Chairman of the board, my role is to set the strategy for the company, monitor the ongoing performance of the companies within the Group to ensure that they are meeting our requirements and also identify potential acquisition targets. ln addition, my role also encompasses overseeing the functioning of the board and its effectiveness and ensuring sound corporate governance practices are followed. All the Directors of Coral believe strongly in the importance of good corporate governance for the creation of shareholder value over the medium to long-term and to engender trust and support amongst the Group's wider stakeholders. I work with key executives throughout the organisation to instill good corporate governance practices in accordance with the Code. ln accordance with the changes to AIM Rule 26 the Company is now applying the revised QCA Corporate Governance Code published earlier in 2018. The board monitors our corporate governance pract¡ces and will always implement improvements which further enhance performance and/or benefit stakeholders. Strategy Our Board continuously reviews business performance alongside market conditions to make sure that we take the correct strategic decisions for each of our businesses. The Board recognises fully that it has been tasked with delivering enhanced shareholder value. The challenges facing the Board relate to managing the continued growth of the group through the uncerta¡nty and timelines surrounding UK Brexit. People We are reliant on the expertise, professionalism and commitment of our people and thank them for their continued contribution to the business during a challenging year. Page l4 Chaírman's Statement Continued Future Developments a a a The multi box recycling system (MBRS) was launched ln July 2019. The flrst dellver¡es to customers wlll bg made ln the latter part of the current financlal year. The (oollng for the new improved food packaglng is due in Haydock during August 2019 wlth production commengng soo¡ after. we expect the tollowlng products to be introduced durÍng the latter part ef the current flnanclal year: o ße-developed light-weight 23 ând 55 lltre caddies. o Conservatory and outbuildings rooftiles. o Plastic soundproofing system to'be lnstalled along road hlghways, Outlook whllst we have confìdence in our development strategy and the prospects of the 6roup, the very real uncertaínt¡es over Brexlt are a cause for concern. The decllne ln sterllng agalnst the dollar and euro, our maJor tradlng currencles, leads to increases in our costs ot materlals. We are taklng actlon to mlt¡gate these factors by contlnulng to develop exlsting products and bringlng to market new '{ innovat¡ve products. These are supplemented by new revenue streams such as,recycling. The Group contlnues wlth lts strateg¡e progress of increasing focus on value-added and lnnovative products, particularly in the food container, recycfing, teleconlmunications, rail industry home delívery totes and blow moulding areas. Our aim is to build a significant plastic moulding buslness w¡th a b¡as towards using recycled materlals pr.oduced by our new recycling unit instailed in Haydock. we remaln confldent ln our ablllty to do so via both improved internal performances of lndlvidual subsldlarles supported by strategic acqu¡s¡t¡ons ln the short to medium term. The current year will benefit from the Coral Mouldíngs and Tatra-Rotafac cöst reductlons, lnvestments ln plantand machinery and new business. rv outturn eiven the orevailing conditions. rta look Joe otavnQ 21 August 2019 Page i5 Strategic Report Review of the Business The Group is required to produce a Strategic Report complying with the requirements of The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013. An overview of the Group's strategy and business model is set out on pages 1 to 2, and together with the Chairman's Statement on pages 3 to 5 form part of this Group's Strategic Report. This incorporates a review of the Group's activ¡ties, its business performance and developments during the year as well as an indication of likely future developments. Our business model is designed to bridge the gap between reliable, qual¡ty assured products made with regulated materials and our customers' requirements. Key to the success of our business model is our experience and knowledge of the materials and processes we handle and our ability to service customer demands with product ¡nnovation. FINANCIAL REVIEW lncome Statement Group revenues for the year ended 30 April 2019 were f 1.3m higher at 824.7m (2018: f 23.4m). Of this, food container sales were E7.4m l2lt9r Ê6.8m), sales for extrusion were f6.6m (2018: €6.7m), sales for trigger sprays and nozzles were f3.1m (2018: €3.1m) and sales for ¡nject¡on and blow moulding increased to €7.6m (2018: f6.8m). The Group has continued to expand its processes in order to be able to attract more business growth from sales in areas of market growth. The 6roup has reported a profit before taxation for the financial year of Ê0.04m (2018: €0.5m loss). Across the Group, finance costs have increased to €0.4m (2018: f0,3m) and depreciation to €1.5m (2018: f 1.2m) in line with the increased spend on new, replacement and/or improvement of the assets of the Group. Gross margins increased to 35.9% (20L8:34.6%l due to a better mix of sales and resulted in a gross prof¡t of f8.9m (2018: €8.1m). Underlying operat¡ng profit increased by 13.5% to Ê1.0m (2018: €0.9m) and underlying earnings before interest, tax, depreciation and amortisation increased to f2.5m (2018: Ê2.lm). Separately recorded costs of f0.5m (2018: f1.1m) resulted from acquisition costs, intangibles amortisation and reorganisation costs, as well as share-based payment cha rges and compensation for loss of office of senior management, The total dividend for the year is 0.25p (2018: 0.25p) resulting in dividend cover on underlying operating profit of 4.92 times earnings for the year (2018: 4.25 times). Basic underlying earnings per share for the year decreased to 0.75 pence (2018:0.84 pence). Balance Sheet Total shareholders'equity decreased by Ê0.3m to f12.9m (2018: Ê13.2m), with net assets per share decreasing to 15.6 pence (2018: 15.9 pence). The term loan which is repayable in rnonthly ¡nstalnìents ltV 2027 has been split between a current liability and a non-current liab¡lity in line with the repayment profile. ln the yeâr encled 30 April 2018 this term loan was disclosed as a current liability given the technical breach of covenant which was waived subsequent to the year-end. Pa¡1r: l6 Strategic Report Continued Cash Flow Net cash generated from operations were f 1.5m (2018: €1.0m) with cash and cash equivalents being an overdraft of f27k(2018: f47Lk cash). As set out in note 23 the Group's net debt increased to f 8.2m (2018: f 7.3m) with the level of gearing rising from 555%to 63.6% which is in line with the increase in investment to meet the forecasted increase in demand. The Group has a mix of secured borrowing facilities totalling f5.1m in addition to a f1.6m 10-year mortgage. The borrowingfacilities and mortgage are both held with Barclays Bank plc and the Group continues to enjoy a positive relationship with its bank and has recently agreed a further renewal on the borrowing facilities to cover the period to June 2020. The land and buildings at Haydock were refinanced in May 2019 raising f500,000 in cash, this was used to clear a temporary overdraft balance in Coral Products (Mouldings) Ltd. Borrowing facilities are monitored against the Group's forecast requirements and the Group mitigates financial risk by staggering the maturity of borrowings and by maintaining undrawn committed facilities. Treasury Policies The Group operates a conservative set of treasury policies to ensure that no unnecessary risks are taken with the Group's assets. No investments other than cash are currently permitted. Where appropriate, there may be balances held in Euros and US Dollars, but only as part of the Group's overall hedging activity. The Group can be affected by movements in exchange rates due to raw material prices being established in foreign currencies and on its export sales. The Group is affected by movements between Sterling, Euro and US Dollars but has the ability to hedge any exposure on its sales by purchasing raw materials in Euros. Thus, it is able to mitigate partly its currency risks. Cash deposits and financial transactions give rise to credit risk in the event that counterparties fail to perform under the contract. The Group regularly monitors the credit ratings of its counterparties and controls the amount of credit risk by adhering to limits set by the board. The Group maintains debtor levels within the insured limits unless it has strong grounds for allowing increases. As a consequence of these controls, the probability of material loss is considered to be at an acceptable level. Key Performance lndicators (KPls) KPls have been set at Group level to allow the Board and shareholders to monitor the Group as a whole, as well as the operating businesses within the Group. The Group has financial KPls which it monitors on a regular basis at Board level and, where relevant, at operational executive management meetings as follows: Group revenue Gross margin Operati ng profit/( loss) Profit/( loss) before tax Underlying earnings before interest, tax, depreciation and amortisation Underlying operating profit Gearing 2fJL9 824.7m 35.9% 80.5m EO.O4m e2.5m 87.0m 53.6% 2018 823.4m 34.6% f(0.2)m f(0.5)m f2.1m fO.9m 55.5% ln addition, the Board monitors a number of non-financial indicators including customer satisfaction, product quality, employee attraction and retention, number of reportable accidents and energy footprint. Page l7 Strategic Report continued Risks and Uncertainties Loss of a key individual. TheGroup has identified various risks and uncertainties it faces, which include: . Movements in commodity prices often caused by supply constraints or demand management. . . Foreign exchange risk, particularly with regard to the Euro, as many of the Group's materials are purchased in Euros. . Credit risk in ensuring payments from customers are received in full and on a timely basis. . . Legislative and regulatory risk as new requirements are being imposed on plastics businesses and in industry. UK Brexit. The Group has taken appropriate steps to manage and control these risks, which include: . Ensuringthat current market prices are confirmed with industry price monitors and that purchases are based upon a well- researched understanding of the various grades and their capabilities for operational uses. . The Group's future performance depends heavily on its ability to retain and attract the services of suitable personnel. The Group holds service contracts for its directors and senior management and periodically reviews performance, expectations and employment conditions. The implementation of a foreign exchange risk policy. . . Agreement of appropriate payment terms with customers including, where necessary, payment in advance. o Taking a pro-active and leading role in ensuring that the Group's systems and procedures are adapted to ensure compliance with new or changing legislation or regulatory requirements. . Erexit planning across the Group. The Group regularly reviews its commercial insurance programme and maintains an appropriate and adequate portfolio of insurance policies in line with the nature, size and complexity of the business. The Group also continues to have in place a team of Board members whose on-going responsibility is to assess the issues which the Group would face should it experience a major and unforeseen disaster and to put in place clear actions to continue to operate successfully in such an event. Diversity Appointments within the Group are made on merit according to the balance of skills and experience offered by prospective candidates. Whilst acknowledging the benefits of diversity, individual appointments are made irrcspcctive of pcrsonol characteristics such as race, disability, gender, sexual orientation, religion or age. As a predominantly manufacturing Group, few women apply for positions within the production areas. However, women are well represented in other areas of the business and account for 20% of the Group workforce as at 30 April 2019. Position Group Directors Senior Managers Other Employees Total Employees Male Female Total 4 11 L22 r37 1 4 29 34 5 15 151 t7L Page l8 Strategic Report continued Social, Community and Human Rights The Group endeavours to impact positively on the cornmunities ¡n which it operates. ln particular the Group purchases raw materialsfrom trusted suppliers who it recognises asobtaining the products through trusted, fairand sustainable methods. Ethicalconcerns and human rights issues have always played an important role in the company philosophy and the Group,s ethical and social accountability statement details the standards of behaviour which are regarded as acceptable, provision of a safe, clean working environment, free from discrimination, coercion and harassment is a basic right of all employees, which Coral products expects as a minimum standard of its business partners. The Group is often audited by its customers to assess compliance with minimum acceptable standards, including ethical and human rights considerations. UK Referendum on EU Membership The referendum on the uK's membership of the EU on 23 June 2016 increases economic uncertainty, The Group actively monitors and considers the economic situation to ensure it is well preparêd for all eventualities once the full effect of the referendum result is known. The Group is currently reviewing steps to rnit¡gate the movement in exchange rates, as described on page 7. ln addition, the Group is locking mater¡al supply costs in some cases for up to 6 months in advance to maintain material prices. The Group is also actively sourcing alternative material from outside the EU and closely monitoring the EU exit negot¡ations and modifying, where necessary our procurement and operational decisions, Going concern As explained fully in note 2 to the financial statements, after making enquiries, the oirectors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to cont¡nue in operational existence for the foreseeable future. For this reason, the directors continue to adopt the going concern bases in preparing the financial statements, This strategic report was approved by the board on 21 August 2019. Sharon Gramauskas Finance Director Page l9 Directors and Advisers N on-executive Di rectors Joe Grlmmond, Non-Executive Choirmon loe was appointed in March 2011. He was previously Chief Executive of James Dickie plc and Chairman of Widney plc. Joe was appointed as non-executive Cha¡rman at the AGM in 2011 and in December 2019 became Execut¡ve Chairman, ln June 2016 he became non-execut¡ve Cha¡rman following the appo¡ntment of Roberto Zandona, He became Executive Chalrman again April 2017 to August 2017 following Roberto Zandona's retirement as d¡rector. Mr Grimmond is a Fellow of the Assoc¡at¡on of Accounting Technicians. David Low, Non-execut¡ve David was appointed on 4 September 2015. He has over 25 years of experience in investment management and management consultancy. He was a director of. Manroy plc until july 2015 when it was sold to FN Herstal SA for €16m. shareholder in several pr¡vate companies involved in sport and leisure, vending and l1e is a telemetry services, brewing and retail estate. Executive Directors Michael (M¡ck) Wood, chief Executive officer Mick was appointed Chief Executive Officer ¡n January 2018. Over a career spanning 39 years he has held senior management roles at a number of plastics businesses, the most recent be¡ng UK Operations Manager at Linpac Packag¡ng Ltd before joinlng Coral Products PLC as Chief Operating Officer in August 2017. Registered Office North Flor¡da Road Haydock lndustrial Estate Haydock Merseyside WAl1 gTP UK Registered Number: 02429784 Auditor BOO LLP 3 Hardman Street Sp¡nninBf¡elds Manchester M3 3ÂT Sollcitors Legal Clar¡ty Lawyers LLP 55 Newhall Street Birmingham 83 3RB Bankers Earclays Eank PLC 1st Floor 3 Hardman Street Spinningfields Manchester M3 3HF Sharon Gramauskat ACMA, F¡nonce Director and Cotnpony secretory Registrar Sharon was appointed in February 20U. She joined Coral Products Mould¡ngs Ltd Share Registrars Lirn¡ted as Group Financial Controller in December 2016. She has 19 years of experience. She previously acted as Financial Controller of James Dewhurst Ltd, prior to this she held accounting pos¡tions at Pets Cho¡ce Ltd, Thames Water, Scott Health and Safety Ltd and Uniqema Ltd. Sharon is an Associate of the Chartered lnstitute for Management Accountants. The Courtyard 17 West Street Farnham, Surrey GU9 7DR Broker & Nominated Advisor Cairn Financial Adv¡sors LLP Paul Freud, corporote Development Dircctor Paul was appointed in July 2015. He is respons¡ble for directing the business development activlt¡es and driving new sales growth by seeking market opportunit¡es or acqulsitions. Paul has over 20 years of management and leadership experience in the manufactur¡ng industry. He is also the Chairman of Tatra Rotãlac Limited, responsible for developing new and innovat¡ve product ranges for blue chip companies, including solutions for fibre optic broadbând ilr5tdld(rvù! dilu t dil IIt d)(t uLtut c. 61 Cheapside London EC2V 6AX PR Adviser Capital M Consultants 1 Royal Exchange Avenue London ç42\/ 2r I Page 110 Directors' Report The Directors present their annual report and the audited financial statements for the year ended 30 April 2019. Results and Dividends The results for the year are set out on page 26. This shows a Group profit after taxation of f0.1m (2018: loss €0.4m) A dividend of 0.25p per share in respect of the year ended 30 April 2018 was paid in December 2018. The amount of this dividend was f206,537. An interim dividend of 0.25p (2018: nil) amount¡ng to 8206,537 was paid in March 2019 There is no final dividend (2018: 0.25p) recommended in respect of the year ended 30 April 2019. A review of the Group's activities for the year and its future prospects is set out in the Chairman's Statement and Strategic Report. The financial risk management objectives and policies are detailed in note 4 to the financial statements. Principal Activity The principal activ¡ty of the Company and its subsidiaries is the manufacture and recycling of plastic injection, extrus¡on and blow moulded products and the reseller and distributor of a range of food packaging products. The Group also operates as a trade moulder for other UK Companies, lt has been in operation since 1990, became a fully listed plc in 1995 and moved to the AIM market in 2011. D¡rectors The current directors of the Company are given on page 10. During the year, no changes in d¡rectors took place. ln accordance with the Articles of Association, Joe Grimmond and David Low are the directors retiring by rotation and offering themselves for re-election at the AGM. Directors' lnterests in the Shares of the Company The beneficial interests of the Directors in the shares of the Company were as follows: Joe Grimmond Paul Freud David Low Mick Wood Sharon Gramauskas Ordinary shares of lp each 30 April2019 Ordinary shares of lp each 30 April2018 Number Number 5,323,337 1,948,333 930,000 186,564 t.62,78? 5,273,337 1,948,333 880,000 139,756 I53,774 8,551,017 8,395,200 Between the year-end date and the date of this report Joe Grimmond, David Low and Mick Wood have all purchased additional shares of 50,000, 50,000 and 37,037 respectively on 21 May 2019. Page 111 Directors' Report continued Substantial lnterests As at 26 July 2019, the Company had been made aware of the following interests of over 3% (other than the holdings of directors listed above) in the ordinary shares of the Company: Bank of New York (Nominees) Ltd Nortrust Nominees Ltd Vidacos Nominees Ltd Rathbone Nominees Ltd Rene Nominees (lOM) Ltd Hargreaves Lansdown (Nominees) Ltd lnteract¡ve lnvestor Services Nominees Ltd Barclays Direct lnvesting Nom¡nees Ltd Number of shares % of share capital L4,O92,222 6,980,000 5,519,587 5,193,135 4,7t6,720 4,056,888 3,594,801 3,366,088 77.06 8.45 6.68 6.29 5.7t 4.97 4.35 4.O7 Share Capital At the 2018 Annual General Meeting, the Company was granted authority to purchase up to a maximum of 15% of its own shares. The authority expires at the conclusion of the forthcoming Annual General Meeting at which a special resolution will be proposed to renew the authority for a further year. Any shares purchased in accordance with this authority will be subsequently cancelled. The Board of D¡rectors The Board's role is to provide entrepreneur¡al leadership of the Group within a framework of prudent and effective controls which enable risk to be assessed and managed. The Board reviews the Group's strategic objectives and looks to ensure that the necessary resources are in place to achieve these objectives. The Board also sets the Group's values and standards and manages the business in a manner to meet its obligations to shareholders. The Board meet regularly through the year, providing effective leadership and overall management of the Group's affairs through the schedule of matters reserved for its decision. This includes the approval of the Group's forecast and budget, major capital expenditure, risk management policies and approval of the financial statements. Formal agendas, papers and reports are sent to the Directors in a timely manner prior to the Board meet¡ng. The D¡rectors keep their skill set up to date through membership of their respective professional bodies and as a result of interaction with other bodies with whom they work. The Board delegates certain of its responsibilities to the Board Committees which have clearly defined terms of reference. Remuneration Committee The Remunerat¡on Committee comprises Joe Grimmond (chairman) and David Low. The Committee is responsible for determining the Group's policy for the remuneration of the executive directors. lt also considers the compensation commitments of ¡ts directors in the event of early termination of their service contracts. Audit Committee The Audit Committee is chaired by David Low. The executive directors may be requested to attend. ln add¡t¡on to an inter¡m meeting, the Audit Committee meets at the year-end with the external auditors who have d¡rect access to the non-executive directors for independent decisions. The Audit Comm¡ttee may examine any matters relating to the financial affairs and risk issues affecting the Group which includes reviewing the accounts, announcements, internal controls, accounting policies, and appointment of the external auditor. Page 112 Directors' Report cont¡nued Statement of Directors' Responsibilities The Directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations. statementsforeachfinancialyear. Underthatlawthedirectorshaveelected Companylawrequiresthedirectorstopreparefinancial to prepare the Group and Parent Company financial statements in accordance w¡th lnternational Financial Reporting Standards (lFRSs) as adopted by the European Union. 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 Group and the Company and of the profit or loss of the Group for that period. The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securit¡es on the Alternative lnvestment Market. ln preparing these financial statements, the directors are required to o a a select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will cont¡nue in business. The directors are responsible for keeping adequate account¡ng records that are sufficient to show and explain the Company's transact¡ons and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its 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 detect¡on of fraud and other irregularities. Website publication The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparat¡on and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein. Environment and Sustainability The key risk facing the Group in this area relates to reducing the environmental impact of the business with a focus on reducing waste and energy usage. A number of operational changes have been implemented to reduce our environmental impact. Product Safety The quality and safety of the products is of the highest importa nce and any failure in sta nda rds would significantly affect the confidence of our customers. There are str¡ngent controls in place to ensure product safety and ¡ntegr¡ty. Product performance is monitored regularly to ensure compliance with standards. lnsurance The Group has in place a D¡rectors and Officers liability insurance policy that provides appropriate cover in respect of legal action brought against its directors. Page 113 Directors' Report continued Creditor Payment Policy The policy of the Group is to agree the terms of payment with suppliers when agreeing the conditions of supply of goods and services. Suppliers are made aware of the terms of payment and payments are made in accordance with terms agreed between the two parties. The number of days purchases in trade creditors at the year-end amounted to 44 days (2018: 48 days). Shareholder Relat¡ons The importance of maintaining good relations with individual and institutional investors is recognised by the Board. This includes meetings on a regular basis between the execut¡ve directors and institut¡onal and private investors at relevant times. The Company encourages shareholder attendance at the Annual General Meeting, at which the Chairman and Board of Directors are available to answer any questions on the previous year's results and on current year trading. Health and Safety Coral Products PLC recognises and accepts its responsibilities to carry out its business in a safe manner. lt is comm¡tted to the safety of its employees and other people who may be affected by its activities. It is therefore the Group's policy to do all that is reasonably practicable to protect its employees and others from injury, prevent damage to the Group facilit¡es and other facilities in which it works. The Group will: o As a minimum comply with the requirements of all current relevant legislation, approved codes of pract¡ce and good working practices; ¡ Provide and maintain as far as is reasonably practicable, safe plant, equ¡pment and systems of work; . Maintain good general working conditions by the provision of adequate facilities such as heating, lighting and ventilation; ¡ Provide personal protective equipment where appropriate; ¡ Maintain a continuing interest in health, safety and welfare as they affect the Group's act¡vities, and in particular inform, consult and involve employees wherever possible; o Provide such information, instruction, tra¡n¡ng and supervision that ¡s necessary to ensure so far as is reasonably practicable, the health and safety of our employees and others who may be affected by the work we do; ¡ Take measures to protect all persons, whether employees or not, from risks to their health and safety. Notw¡thstanding the above, every employee must consider the prevention of accidents as a prime personal responsibility Corporate Social Responsibility and Governance The Group is committed to responsible business practices, good corporate governance and sound risk management. The Board promotes the Group's corporate culture and receives feedback from employees on regular visits to operating sites and interact¡on with local staff during this time. Our Corporate Social Responsibility Committee demonstrates our commitment to our local and wider commun¡ty. As well as working alongside local authorities to provide local jobs for local people, we strive to actively support those in our commun¡ty through sponsorship events and volunteering opportunities. Our Safety-F¡rst Core Value and Employee Assistance Programmes ensure the wellbeing of our employees and creates a safe and comfortable work place environment. We actively consider CSR when selecting suppliers by ensuring that all companies in our supply chain work towards the same ethical trading standards that we demonstrate. We are committed to Environment programs and energy reductions for a sustainable future, Page 114 Directors' Report cont¡nued Employment and Human Rights The Group is committed to providing and promoting equal opportunities for staff and job applicants. We are comm¡tted to creating a working environment which enables everyone to work to the best of their skills and abilities and without the threat of discrimination or harassment arising. As a Group we pride ourselves on treating all members of staff equally, ¡rrespective of thelr or their ',Associated Persons" gender, sex, pregnancy or maternity status, marital status, race, colour, religion or belief, disability, age, sexual orientation, gender reassignment ("Protected Characteristics"). An Associated Person may be a member of staff,s family, friends or other dependants. All employees are required to comply with their obligations to promote a working env¡ronment free from discrimination. Employees are expected to treat their colleagues, customers and members of the public as they would expect to be treated and respect the Protected Characteristics of others. Anti-Slavery and Human Trafficking Coral Products PLC has a zero-tolerance approach to modern slavery and are committed to act¡ng ethically and with integrity in all our business dealings and relationships and to implementing and enforcing effective systems and controls to ensúre modern slavery is not taking place anywhere in our own business or in any of our supply chains. The Group is also commltted to ensuring there is transparency in our own business and in our approach to tackling modern slavery throughout our supply chains, consistent with our disclosure obligations under the Modern Slavery Act 2015. We expect the same high standards from all of our contractors, suppliers and other business partners, and as part of our contracting processes, we include specific prohibitions against the use of forced, compulsory or trafficked labour, or anyone held in slavery or servitude, whether adults or chlldren, and we expect that our suppllers will hold their own suppliers to the same high standards. Auditor ln accordance wlth Section 489 of the Companies Act 2006 a resolution will be proposed at the Annual General Meet¡ng that BDo LLp be re-appointed as auditor. Disclosure of lnformation to Auditor Each of the persons who is a director at the date of approval of this report confirms that: ' ' so far as the director is aware, there is no relevant information of which the Group's auditor is unaware; the director has taken all steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Group's auditor is aware of that information. This confirmat¡on is g¡ven and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006. Post Balance Sheet Events The land and buildings at Haydock were refinanced in May 2019 raising f500,000, this was used to clear a ternporary overdraft balance in Coral Products (Mouldings) Ltd. Page 115 Directors' Report continued Corporate Governance Code Hlgh standards of corporate governance are a key priorlty for the Board and provide the framework on which it seeks to deliver long term improvement in shareholder value, The responsibility for corporate governance rests w¡th the Board as a whole and policies are regularly reviewed and adapted as necessary to changing circumstances and feedback from both internal and external sources. The Group has adopted the QCA Code in compliance w¡th AIM Rule 26 which requires AIM companies to report on corporate governance from 28 September 2018. The Group is small and has limited resources and therefore has formulated a corporate governance policy around the principles contained ¡n the QCA (Quoted Companies Alliance) corporate governance code which is appropriate for smaller companies, The QCA code was revised at the end of April 2018 and the Board has set out on the Group's website (www,coralproducts.com) and ln this report how it addresses the ten principles ofthe new code. Research and Development During the year, the Group has spent Ê729,000 (2018: f307,000) on research and development AnnualGeneral Meeting The AGM will be held on Wednesday 25 September 2AI9 in Leverhulme Room One at Haydock Race Track, Newton-le-Willows, Merseyside, WA12 OHQ. The Notice of Meeting is contained on pages 60 to 62 of this report. At the meeting, resolutions will be prepared to receive the audited accounts and approve the Remuneratlon Report, to elect directors and to re-appoint 8DO LLp as auditor. ln add¡tlon, shareholders wlll be asked to renew both the general authority of the directors to issue shares and to author¡se the directors to ¡ssue shares without applying the statutory pre-emption rights. The directors have no present intention of exercising the authority if granted, but consider it will be comrnercially useful to have the author¡ty should they need to allot shares for any he future By order of the Board S Gramauskas Company Secretary 21 August 2019 Page 116 Directors' Remuneration Report lntroduction Although not required to do so by the AIM rules, the directors have decided to provide certain directors' remuneration disclosures. A resolution to approve the report will be proposed at the Annual General Meeting. The auditor reports to the shareholders on the "auditable part" of the Directors' remuneration report and to state whether in their opin¡on that part of the report has been properly prepared in accordance with Section 420 of the Companies Act 2006. The report has therefore been divided into separate sections for aud¡ted and unaudited information. Unoudited inÍormotion Remuneration Committee The Group has established a Remuneration Comm¡ttee which is constituted in accordance with the recommendations of the Combined Code. The remunerat¡on comm¡ttee now comprises Joe Grimmond (Chairman) and David Low. The performance measurement of the executive directors and the determination of their annual remuneration package are undertaken by the Committee. The remunerat¡on of the non-executive directors is determined by the Board. No director plays a part in any discussions about his own remunerat¡on. Remuneration Policy Executive remuneration packages are designed to attract, motivate and retain directors of the h¡gh calibre needed to progress and develop the Company and to reward them for enhancing value to shareholders. There are three ma¡n elements of the remuneration package for executive directors: o Basic annual salary and benefits o Pensioncontributions . Share opt¡ons Basic Salary An executive director's basic salary is determined by the Remuneration Committee prior to the beginning of each year and when an individual changes pos¡t¡on or responsibility. ln deciding appropriate levels, the Committee considers the Group as a whole and by reference to other compan¡es ¡n the media and manufacturing sectors, The Group has a policy of allowing contracts of service to be no more than one year in duration. Execut¡ve directors' contracts of service which include details of remuneration will be available for inspection at the Annual General Meeting. ln addition to basic salary, the executive directors receive pension contributions and certain benef¡ts-¡n-kind, principally medical insurance. Pension Contributions The executive directors have individual pension arrangements in the form of personal pension plans. The Group makes a contribution at a rate oÍ L2% of basic salary towards funding each director/s pension plan. Performance Bonus There is a performance bonus in place. Additionally, the remunerat¡on committee is empowered to make awards for special circumstances if appropriate. Share Options No share options were exercised during the year (2018: Nil). Page 117 Directors' Remuneration Report continued Performance Graph The graph below shows the Group's share price movement over the last f¡ve years. 24.5 20.06 15.ô2 1f.18 4.74 2.3 Jul '15 Jul'16 Jul'17 Jul '18 Jul'10 Directors' Contracts The Company's policy is that executive directors should have contracts with an indefinite term providing for a maximum of six months' notice. The details of the executive directors' contracts are summarised as follows: Paul Freud MickWood Sharon Gramauskas Date of,contract Notlce perlod July 2015 January 2018 February 2017 3 months 6 months 6 months Non-Executive Directors The service contracts of non-executive directors were originally set for an initial period of three years. They are now required to submit themselves for re-election every year and the Board believes this to be appropriate in the circumstances. The non-execut¡ve directors have specific terms of engagement and their remuneration is determined by the Board based on a review of fees paid to non-executive directors of similar companies and reflects the time commitment and responsibilities of each role. The current basic annual fee payable to the senior non-executive director is f50,000. The Board met ll times during this financial period with 100% attendance from all Directors. Page 118 Directors' Remuneration Report contlnued Audlted lntormation Dlrectors' Remuneratlon The total amounts pald for Dlrectord remuneratlon was as follows: Emoluments Penslon contrlbutlons - deflned contrlbutlon scheme Share based payment Emoluments - Executive Dlrectors 2019 2019 Sasic salary Benef¡ts-ln-klnd f,000 Paul Freud Sharon Gramauskas Joe Grimmond* M¡ck Woodrt €'000 100 65 tt4 279 I Emoluments whllst acting as executive Çhalr.man, t* Dlrecto¡/s salary for 2018 is for 10 months only. Emoluments - Non-execut¡ve Directors Davld low Joe Grlmmond By Joe Chairman of the Remuneraflon Commlttee 21 August 2019 a019 Execüt¡ve t'(xlo 20t9 Non- executlve l'000 292 t7 61 370 78 78 2019 Pensíon f,,'o(þ 20r9 Share based payment ¿'000 I t2 13 6 !1 t7 12 49 6t Page 119 2019 'Total c'ooo 370 17 61 448 20t9 Totôf f'000 100 a+ 186 370 20t8 Total f'000 363 t2 4L 4t6 20t8 Total dfoot t02 7i 50 115 338 20r9 f'(Xl0 28 50 78 2018 f'(mo 28 50 78 Audit Committee Report ourlng the year the Audit commlttee met 2 tlmes and there were also meetlngs between the Audlt commlttee chalr, the Group Flnance Dlrector and the external audltor. The Audit committee discussed the scope and key audit matters before the commencement of the current audit. Flnancial Reporting The commlttee has revlewed with both management and the external audltor the more signlflcant areas of Judgement and the approprlateness and appllcatlon of the Group's accountlng pollcles. ln partlcular, emphasls was placed on the two new accoun¡ng standards of IFRS 15 (Revenue from contracts wlth customers) and IFRS 9 (Flnanclal lnstrumentsl adopted for the fìrst time durlng the year. The adoptlon of lFRs 15 has changed the revenue recogn¡tlon pollcles applied by the Group and the commlttee has revlewed the approprlateness ofthose updated pollcies wlth both management and the external audltor. As detailed ¡n note 2, the adoptlon of IFRS 15 has not had a material impact on the recognltlon of revenue. The adoptlon of IFRS t has resulted ln the Group applylng the slmplifled method of expected cred¡t loss model when calculating lmpalrment losses on lts flnanclal essets measured at amonlsed cost. As detalled ln note 2, the Gfoup has chosen not to restate compâraüves as there has been no materlal impact as the provlslon calculated under the expected loss model ls not signlflcantly dlfferent. The commlttee ls also reviewing progress to the adoptlon of lFRs 16 ¡n the next financlal year which wlll require all leases to be recognlsed on the Group's balance sheet. The commlttee reports to the Board on whether the accounts are a comprehensive review of the current year,s activlty. Rlsk management and ¡nternal control The Audlt commlttee has overall responslbillty for the monltorlng of lnternal controls, approvlng accountlng pollcles and agreelng the treatment of slgníflcant accountlng lssues. The consideration and documentatlon of risks and opportunltles ls undertâken on an annuar basls as part of the budgetlng process whlch the full Board take part in' These måtters are then rnonltored and adapted as requlred throughout the year by the means of regular management meetln8s and scheduled conference calls between the Executlve D¡rectors and the dlvlslonal management tearns. The annual insurançe renewâl provldes a further opportunlty to assess rlsks and provlde cover ln areas where rrsk mlilgatlon ls not possible, or levels of rlsk are slgnlflcant. The Board reviews monthly flnanclal perforrnance agalnst budgets and forecasts and monltors bank facilities and other treasury funct¡ons wlth any policy changes approved by the Board. The Audit commlttee recelves feedback from the external auditors on areas of risk and accounting proceriures which are used ln adaptlng internal control processes as requhed. The commlttee reviews any proposed due dlllgence of acquisltlon targets and the selection of the professlonal ftrm carrv¡ng out the work. Audlt lndependence The comm¡ttee ls responsible for maklng recommendatlons to the Board on the appointment of the externalaudltor and for non.audlt servlces such as taxation and acquisltion due dlllgence. The chair of the cotnm¡ttee met with the external audit partner to dlscuss lndependence before the commencement of the current yea/s audlt. The Audlt commlttee Report has been approved by the Board and signed on lts behalf by: David low Chalrman of the Audlt Cornm¡ttee 21 August 2019 ( Page 120 lndependent Auditor's Report to the Members of Coral Products plc Opinion We have aud¡ted the financial statements of Coral Products plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 April 2019 which comprise the group income statement, the group statement of comprehensive income, the group and parent company balance sheets, the group and parent company statements of changes in shareholders' equity, the group and parent company cash flow statements and notes to the financial statements, including a summary of significant accounting policies. The financial report¡ng framework that has been applied in the preparation of the financial statements is applicable law and lnternational Financial Report¡ng Standards (lFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. ln our opinion: the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 30 April 2019 and of the group's profit for the year then ended; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis for op¡n¡on We conducted our audit in accordance with lnternational Standards on Auditing (UK) (lSAs (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 group and the parent 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 as applied to listed entities, 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 relat¡ng to going concern We have nothing to report ¡n respect of the following matters in relation to which the lSAs (UK) require us to report to you where: the directors' use of the go¡ng concern basis of accounting in the preparat¡on of the f¡nancial statements ¡s not appropr¡ate; or the directors have not disclosed in the financial statements any identified material uncertalnties that may cast significant doubt about the group's or the parent company's ability to cont¡nue 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. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall aud¡t strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opin¡on on these matters. Page 121 lndependent Auditor's Report to the Members of Coral Products plc Continued lmpairment of Goodwill and lntangible Assets As described in Note 2 (Accounting policies), Note 14 (Goodwill) and Note 15 (Other intangible assets), the group has goodwill and intangible assets, which requires management to test these balances for impairment at least annually. There is a high degree of management judgement and assumpt¡ons required in assessing the value in use of the Cash Generating Units ("CGU") to which the Goodwill and lntangible assets are allocated and therefore determining any potential impairments. How we Addressed the Key Aud¡t Matter in the Audit We obtained the impairment analys¡s performed by management for each CGU. We tested management's impairment analysis for each CGU for logical and arithmetic accuracy and to check that it has been undertaken in accordance with the requirements of the accounting standards. We performed procedures to obtain an understanding of the underlying assumptions made by management. The key assumptions included: o future trading projections and cash flow forecasts; o the discount rate applied; and . the long-term growth rate. The reasonableness of these key assumptions was tested through reviewing the group's detailed calculations and challenging the methodology applied in preparing the trading and cash flow forecasts. This was done by engaging BDO specialists to ass¡st us in assessing the rcasonablcncss of the underlying assumptions and this enabled us to check that the directors had adopted reasonabie assumptions in each c¡rcumstance. We also reviewed the sensitivity analyses prepared by management to understand the relative impact of changes in the key assumptions within the impairment models, as wellas to check that management's disclosure of sensitivities (included in Note 14) in respect of the impairment review are complete and balanced. Based on the work performed we concur with management's view that there is no requirement for goodwill and intangible assets to be impaired. lnventory Valuation and Existence How We Addressed the Key Aud¡t Matter in the Audit As described in Note 2 (Accounting policies) and Note 17 (lnventories), the group carries inventory at the lower of cost and net realisable value. As at 30 April 2019, the group held inventories of f3.5m (2018: f2.9m). Judgement is required to assess the appropriate level of provisioning for ¡tems which may be sold at a value below cost as a result of a reduction in consumer demand, age of items held in stock, and/or new products being developed that render inventory items obsolete, Such judgements include management's expectations for future sales. A significant risk has been raised in relation to inventory valuation and existence for items held within the subsidiary undertaking Coral Products (Mouldings) Limited and Tatra Rotalac Lim¡tecj, given inventory count variances and significant inventory write-downs in previous years. We obta¡ned evidence over management's judgements applied in calculating the value of inventory provisions by: a a a considering the carrying amount of a sample of inventory to confirm it is held at the lower of cost and net real¡sable value. lnventory cost was tested by verifying relevant supplier invoices and ensuring overheads incurred in bringing ¡nventory to its present location and condit¡on have been appropriately recorded. lnventory cost (plus any costs to complete) was compared to net realisable value by examination of post year- end invoices a nd sales prices for the sample of inventory tested; assessing the group's ¡nventory provis¡oning policy by reviewing usage of raw materials and sales of finished goods, with specific consideration g¡ven to slow moving or obsolete stock lines; and we also reviewed the basis of stock provisioning applied by all group ent¡t¡es and considered whether these were being applied consistently and reflected the nature of the stock held in each location. We obtained evidence over existence of inventory through attendance at year end counts, sales and purchases cut off testing and verification of a sample of inventory items to relevant supplier invoice. Based on the work performed we did not identify any issues over the reasonableness of inventory valuation and existence. Page 122 lndependent Auditor's Report to the Members of Coral Products plc Continued Our application of materiality We consider materiality to be the magnitude by which misstatements, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. We use materiality both in planning the scope of our audit work and in evaluating the results of our work. Misstatements below these levels will not necessarily be evaluated as immaterial as we also take ¡nto account the nature of identified mlsstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined mater¡ality for the financial statements as a whole as follows: Basis for Rationale for the benchmark adopted O.SYo of revenue (2018l.0.60/o o1 revenue). Revenue is determined to be a stable basis of assessing business performance and is considered to be the most significant determinant of performance used by shareholders. ln considering individual account balances and classes of transactions we apply a lower level of mater¡ality (performance mater¡al¡ty) in order to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. Performance materiality was set at €86,000 (2018: É91,000), representing 70% of materiality. We agreed with the audit committee that we would report to the committee all individual audit differences identified during the course of our audit in excess of f6,150 (2018: f6,550). We also agreed to report differences below these thresholds that, in our view, warranted reporting on qualitative grounds. Our audit work on each component was executed at levels of materiality applicable to each individual entity which was lower than group materiality. Component material¡ty ranged from E27,0OOto €100,000 (2018: f25,000 to f 100,000). Parent company mater¡ality was €98,000 based on 80% of Group materiality (2018: f 100,000 based on 8Oo/o of Group materiality). An overview of the scope of our aud¡t Our group audit was scoped by obtaining an understanding of the group and its env¡ronment, including group-wide controls, and assessing the risks of material misstatement at the group level. The group has five components and manages its operations from three principal locations in the UK. Our group audit scope focused on the parent company and each of the group's subsidiaries, and each entity was subject to a full scope audit. All audit work was performed by the group audit team. As a consequence of the audit scope determined, we achieved coverage of 100% (2018: 100%) of revenue, 100% (2018: L}O%l of profit before tax and tOO% (20t8: tÙO%l of net assets. Page 123 lndependent Auditor's Report to the Members of Coral Products plc Continued Other information The directors are responsible for the other information. The other information comprises the information included in the annual report and accounts 2019, other than the fina ncia I statements a nd 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. ln connection with our audit of the financial statements, our responsibility ¡s 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 ¡n the audit or otherwise appears to be mater¡ally misstated. lf we identify such material incons¡stencies 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. lf, based on the work we have performed, we conclude that there is a mater¡al m¡sstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescr¡bed by the Companies Act 2006 ln ouropinion, based on the work undertaken in the coursc ofthe audit: the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors' report have been prepared in accordance with applicable legal requirements. Matters on wh¡ch we are requ¡red to report by exception ln the light ofthe knowledge and understanding ofthe group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements ¡n the strategic report or the directors' report. We have nothing to report in respect of the following matters ¡n relation to which the Companies Act 2006 requires us to report to you il 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 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 directors' report, the directors are responsible for the preparat¡on of the f¡nancial statements and for being satisfied that they g¡ve 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. ln preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to cont¡nue 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 group or the parent company or to cease operations, or have no realistic alternative but to do so. Page 124 lndependent Auditor's Report to the Members of Coral Products plc Continued Auditor's responsibilities for the audit of the financial statements Our objectives are to obta¡n reasonable assurance about whether the financial statements as a whole are free from material m¡sstatement, 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 lSAs (UK) will always detect a material m¡sstatement 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 responsibil¡ties for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.ore.uk/auditorsresponsibilities. This description forms part of our auditor's report. Use of our report This report is made solely to the parent company's members, as a body, in accordance w¡th Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed. ßoo L-L r Gary Harding (Sen¡or Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor Manchester United Kingdom 21 August 2019 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127) Page 125 Group lncome Statement for the year ended 30 April 2079 Revenue Cost of sales Gross profit Operat¡ng costs Distribution expenses Administrative expenses before impairment and separately disclosed items lmpairment losses (separately disclosed) Separately disclosed items Administrative expenses Operating profit/(lossl Finance costs Profit/(lossl for the financial year before taxat¡on Taxation Profít/(loss) for the financial year attributable to the equity holders of the parent Earnlngs per share attr¡butable to the equlty holders of the parent Basic and diluted earnings/(loss) per ordinary share Group Statement of Comprehensive lncome for the yeor ended 30 April 2019 Note 2019 f'000 2018 f'000 5 6 6 7 8 10 11 24,7t3 (15,861) 8,872 23,405 (15,302) 8,103 lt,246l (6,6081 (s3el l7,t47l 479 (4381 4t 43 84 lt,256l (5,968) (186) (87s) (7,033) (186) (311) (4e71 t27 (370) 0.10p (O.as)p Profit/(loss) for the financial year Total other comprehensive income Total comprehensive income/(loss) for the year attr¡butable to equity holders of the parent The accompanying accounting polícies and notes form an integral part ofthese financial statements. 2019 €'000 84 84 2018 Ê'000 (370) (370) Page 126 Balance Sheets os ot 30 Aprll 2079 Company reference: 02429784 ASSElS Non-current assets Goodwill Other lnteng¡ble assets Property, plant and equlpment lnvestments in subsldlaries l0tal non-current assets Current assets lnventories Trade and other receivables Cash and cash equivalents Total current assets tn8ttmEs Current llabilities Term loan -ther bonowlngs Trade and other payables Total current liabllltles Net current assets/(llabllltles) Non-currcnt llabllíties Term loan Other bonowlngs Deferred tax Total non.current liabllltles NET ASSETS SHAREHOTDERS'EqU¡TY Share capital Share premium Other reserves Retained earnlngs TQTAI SHAREHOIDERS' EQUITY Note 14 15 16 13 t7 18 20 20 19 20 20 10 22 Group As at 30 Aprll As at 30 Aprtl 2018 g,000 2019 f,000 Parent Company As at 30 Aprll As at 30 Aprll 2078 g'000 2019 G'(XIO 5,495 1,40r 9Att 5,495 1,690 9,299 t6,?o7 16,494 2,519 t0,9?7 13/456 2,509 10,866 13,374 3,505 5,521 9,026 150 4,800 3,834 8,7U 2,864 5,452 471 9,787 1,604 4335 3,909 9,848 242 (x,0611 1,303 1,965 368 3,636 t2,9t3 826 t288 t,567 5,232 12,9t3 1,843 409 2,252 13,171 826 5,288 7,567 s¡90 t3,L7L ¿t83 27 510 1s0 59 209 301 1,303 1,303 t2454 826 t288 L,567 4ins 12As4 1,031 1,031 ,l¡ 1,604 5 1,609 {s781 t2,796 826 5,288 L,567 5,115 12,796 An income statement ls not provided for the parent company as permitted by section 408 of the companies Act 2006. The loss deaft wlth ln the fìnancial statements of coral products plc was €nil (201g: f0.1.m). The financlal statements on pages 26 to 58 were approved by the Board of Dlrectors on 21 August 2019 and were slgned on lts behalf by: Joe Sharon Gramauskas Dlrectors The accompanying accounting policles and notes form an integral part of these financial statements. Pasë 127 Statement of Changes in Shareholders' Equity for the yeor ended 30 April 2019 Called Up Share Capital €'000 Share Premium Other Reserve Resefves €'000 €'000 Note Retained Earnlngs f,000 Total Equity €'000 Group At 1 May 2017 Loss for the year Other comprehensive income Total comprehensive income Contributions by and distributions to owners Credit to equity for equity settled share-based payments Dividend paid At l May 2018 Profit for the year Total comprehensive loss Contributlons by and dlstrlbutions to owners Credit to equity for equity settled share- based payments Divldend paid At 30 April2019 2T 72 21 t2 826 5,288 t,567 826 5,288 L,567 6,116 (370) 13,797 (370) (370) (370) 50 50 (306) 5,490 (306) 13,l7t 84 84 7l 84 84 7I 826 5,288 1,567 (413) 5,232 (413) !2,913 Called Up Share Capital €'000 Share Premlum Reserve Ê'000 Note Other Retalned Reserves Earnings f '000 €'000 826 5,288 t,567 5,486 (11s) {1ls) Total Equlty €'000 t3,167 (1ls) (1ls) 2L L2 2L T2 826 5,288 t,567 (306) 5,115 (306) L2,796 50 50 826 5,288 1,567 4,773 7L (413) 7t (413) 12,454 Parent Company At 1 May 2017 Loss for the year Other comprehensive income Total comprehensive income Contributions by and distrlbutlons to owners Cred¡t to equity for equity settled share-based payments Dividend paid At 1 May 2018 Loss for the year Total comprehensive loss Contributions by and dlstrlbutions to owners Credit to equity for equity settled share- based payments Dividend paid At 30 Aprll2019 The accompanying accountlng pollcles and notes form an integral part of these financial statements. l,age 128 Cash Flow Statements for the year ended 30 April 2019 Cash flows from operating activities Profit/(loss) for the year Adjustments for: Deprec¡ation of property, plant and equipment (Profit)/loss on disposal of tangible assets Amortisat¡on of intangible assets Share based payment charge lnterest payable Taxation credit Operating cash flows before movements in working capital (lncrease)/decrease in inventor¡es (lncreasel/decrease in trade and other receivables (Decrease)/increase in trade and other payables Cash generated by operations UK corporation tax paid Net cash generated from operat¡ng activities Cash flows from investing activities Proceed from disposal of property, plant and equipment Acquis¡tion of property, plant and equipment Net cash used in investing activities Cash flows from financing activities New bank loans raised Dividends paid New finance leases lnterest paid on borrowings Repayments of bank borrowings Repayments of obligations under finance lease Movements on invoice discounting facility Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 May Cash and cash equivalents at 30 April Group 2019 f'000 2018 €'000 Parent Company 2019 €'000 2018 f'000 84 (370) (114) Note L6 15 2t 8 10 rA6L (23) 289 7t 438 (43) 2,277 (641) (6e) (7s) L,492 2 t,494 r,2t2 L7 348 50 311 lL27l T,44L 18 77 {s4s) 987 46 1,033 33 (6eo) (6s71 (s) (eo7) (e12) 63 63 549 53 66s 66s (11) (11) (413) (631 (1s1) 57 (s7) 375 (e7l 22L 22r L,743 (306) (s7) (1,601) t,743 (306) 500 (311) (1,601) (8es) L2 20 (413) 3s0 (438) (rs1) (801) 118 (1,335) 551 (323) (627!' (2271 (4e8) (2021 47r l27l 673 47L 27 27 The accompanying accounting policies and notes form an integral part of these financial statements. Page 129 Notes to the Financial Statements for the yeor ended 30 April 2079 1. GENERAL INFORMATION Coral Products plc is a public limited Company ('Company') incorporated in the United Kingdom under the Companies Act 2006. The Company's ordinary shares are traded on the AIM (Alternative lnvestment Market) market. The consolidated financial statements of the Group as at and for the year ended 30 April 2019 compr¡se the Company and its subsidiaries (together referred to as the 'Group'). The address of the registered office is given on page 10. An overview of the business is g¡ven on pages 1 to 2. The nature of the Group's activ¡ties, together w¡th the factors likely to affect its future development, performance and position are set out in the Chairma n's Statement on pages 3 to 5, The financial position of the G roup, its cash f lows, liquidity position and borrowing facilities are described in the Strategic Report on pages 6 to 9. 2. SIGNIFICANTACCOUNTING POLICIES A summary of the Group's principal accounting policies is set out below. These policies have been applied consistently to all the years presented. Basis of Preparation These financial statements have been prepared in accordance with lnternational Financial Reporting Standards (IFRS) as adopted for use in the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the h¡storical cost convent¡on. The consolidated and parent Company financial statements are presented in GBP which is also the Group's functional currency Amounts are rounded to the nearest thousand, unless otherwise stated. New Standards, Amendments and lnterpretat¡ons The Group has adopted the following standards and interpretations which have been issued by the lnternational Accounting Standards Board in these financial statements for the year ended 30 April 2019: o IFRS 9 - Financial lnstruments (effective for accounting periods on or after l January 2018); and ¡ IFRS 15 - Revenue from Contracts with Customers (effective for periods on or after 1 January 2018). ,FRS 9 - Fínøncíol lnstruments IFRS 9 'Financial instruments' replaces IAS 39 'Financial ¡nstruments: Recognition and Measurement' w¡th the exception of macro hedge accounting. The standard is effective for accounting periods beginning on or after 1 January 2018. The standard covers three elements: c Classification and measurement: Changes to a more principle-based approach to classify financial assets as either held at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss, dependent on the business model and cash flow characterist¡cs of the financial asseu and r lmpairment: Moves to an impairment model based on expected credit losses based on a three-stage approach; and r Hedge account¡ng: The IFRS t hedge account¡ng requ¡rements are designed to allow hedge accounting to be more closely aligned with the group's underlying risk management. A new lnternational Accounting Standards Board (IASB) project ¡s in progress to develop an approach to better reflect dynamic risk management in entit¡es' financial statements. Page 130 Notes to the Financial Statements for the yeor ended 30 April 2079 New Standards, Amendments and lnterpretat¡ons (continued) The group have applied IFRS 9 for the first t¡me in the current year, in replacement of IAS 39. For trade receivables, the group applied the simplified method of the expected credit loss model when calculating impairment losses on its financial assets measured at amortised cost. This resulted in greater judgement due to the need to factor in forward-looking information when est¡mat¡ng the appropriate amount of provisions. ln applying IFRS 9 the group considered the probability of a default occurring over the contractual life of its trade receivables balances on initial recognition of those assets. Underthe previous incurred loss model, the historical loss rate has typically been between t% and 2% of lhe gross carrying amount of receivables over the last 2 years, and at 30 April 2018 this provision amounted to f186,000. The group has chosen not to restate comparatives on adoption of IFRS 9 as there has been no material impact and the provision calculated under the expected loss model is not significantly different. Due to this, there has been no adjustment recorded in respect of the IFRS 9 transition in opening equity at l May 2018. The key assumptions, inputs and est¡mation techniques for this calculation are set out on page 38. The classification of certain financial instruments was affected on initial application of IFRS 9, Financial assets previously categorised as Loans and receivables under IAS 39 are now classified as Amortised cost, however the measurement remains cons¡stent subject to the application of the expected credit loss model outlined above. Financial liabilit¡es continue to be recognised and measured under the Amortised cost category. IFRS 75 Revenue from controcts wíth customerc IFRS 15, 'Revenues from Contracts with Customers' is effective for periods beginning on or after 1 January 2018. IFRS 15 introduces a five-step approach to the timing of revenue recognition based on performance obligations in customer contracts. The group has adopted IFRS 15 - Revenue from Contracts with Customers for the financial year start¡ng 1 May 2018, applying the fully retrospective method of transition. With the except¡on of the additional disclosure requirements, the new standard has not had a material ¡mpact on the Group's Financial Statements. Further details on the revenue recognition account¡ng policy are given on page 34. Other new and amended standards and interpretations ¡ssued by the IASB that apply for the first time ¡n the annual financial statements have not impacted the Group as they are not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies, New Standards, Amendments and lnterpretat¡ons Not Yet Effective At the date of authorisation of these financial statements, the following Standards and lnterpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU): IFRS 9 (amendments) prepayment features with negat¡ve compensation (effective l January 2019); ¡ o Amendments to references to the Conceptual Framework in IFRS (effective l January 2020); o IFRS 3 (amendments) business combinations - definition of a business (effective l January 2020); ¡ IAS 1 and IAS 8 (amendments) - definition of material (effective l January 2020); ¡ Annual lmprovements to IFRSS 2OIS-2017 Cycle (effective from l January 2019); and o IFRIC 23 (amendments) Uncertainty over lncome Tax Treatment (effective from l January 2019). Page 131 Notes to the Financial Statements for the yeor ended 30 April 2019 New Standards, Amendments and lnterpretations Not Yet Effective (continued) IFRS 76 Leøses (effectÍve lrom 7 tonuøry 2079, EU-endorsed) Adoption of IFRS 16 will result in the group recognising right-of-use assets and lease liabilities for all contracts that are, or contain, a lease. For leases currently classified as operat¡ng leases, under current accounting requirements the group does not recognise related assets or liabilities, and instead spreads the lease payments on a straight-line basis over the lease term, disclosing in its annual financial statements the total comm¡tment. The Board has decided it will apply the modified retrospect¡ve adoption method in IFRS 16, and, therefore, will only recognise leases on balance sheet as at 30 April 2019. ln add¡tion, ¡t has decided to measure right-of-use assets by reference to the measurement of the lease liability on that date. This will ensure there is no immediate impact to net assets on that date. At 30 April 2019 operat¡ng lease commitments amounted to Ê1,180k (see note 26) which is not expected to be mater¡ally different to the anticipated position on 30 April 2O2O or the amount which is expected to be disclosed at 30 April 2020. Assuming the group's lease commitments remain at this level, the effect of discounting those commitments is anticipated to result in the right-of-use assets and lease l¡abilities of approximately f980k being recognised on 30 April 2019. However, further work stiil needs to be carried out to determine whether and when extension and termination options are likèly to be exercised, which may result in the actual liability recognised being different. lnstead of recognising an operating expense for its operating lease payments, the group will ¡nstead recognise interest on its lease liabilities and amortisat¡on on its right-of-use assets. This will increase reported EBITDA by the amount of its current operating lease cost, which for the year ended 30 April 2019 was approximately f 17lk. The first set of interim accounts that will be prepared in accordance with IFRS 16 is the 6-month ending 31 October 2019. Basis of Consolidation The Group's financial statements consolidate those of the Company and lts subsldlary undertaklngs drawn up to 30 April 2019. Subsidiaries are consolidated from the date of their acquis¡tion, being the date on which the Group obtains control. Control is achieved when the Company: o has the power over the investee; ¡ r has the ability to use its power to affect its returns. is exposed, or has rights, to variable return from ¡ts involvement with the investee; and The financial statements of subsidiaries used in the preparat¡on of the consolidated financial statements are prepared for the same report¡ng year as the parent Company and are based on cons¡stent accounting policies. All intra-Group balances and transactions, including unrealised profits arising from them, are eliminated in full. Business combinations are accounted for using the acquis¡tion method. This method involves recogn¡tion at fair value of all identifiable assets and liabilities at the acquis¡tion date. Goodwill represents the excess of acquisition costs over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. The costs of acquisition are expensed during the year. Going Concern ln adopting the going concern basis for preparing the financial statements, the Board has considered the business activities as set out ¡n the Chairman's Statement and the Strategic Report as well as the Group's principal risks and uncertaint¡es as set out in the Strategic Report. Based on the Group's cash flow forecasts and projections, the Board is satisfied that the Group will be able to operate within the level of its facilities for the foreseeable future. For this reason, the Group continues to adopt the going concern basis in preparing its financial statements. Page 132 Notes to the Financial Statements for the yeor ended 30 April 2079 Going Concern (continued) ln carrying out their dut¡es in respect of going concern, the directors have carried out a review of the Group's and the Company's financial pos¡t¡on and cash flow forecast for a period of twelve months from the date of signing these financial statements. The forecasts have been based on a comprehensive review of revenue, expenditure and cash flows, taking ¡nto account specific business risks and the uncertainties brought about by the current economic environment. To ensure the continuat¡on of the Group the directors regularly review the revenue generat¡ng act¡vit¡es, gross margin levels and cash flows of the Group, both in the short and medium term, and have a thorough approach to managing the working capital of the business by holding regular reviews with the managing directors of each division of the Group. The Group meets its day to day working capital requirements through invoice discounting facilities, an overdraft and short-term borrowing facilities which are due for renewal in June 2020. Forecasts are prepared and updated on a regular basis. The forecasts are compiled using key market data, extensive dialogue with customers and suppliers, in depth analysis of all the key input costs and a range of scenario and sensit¡vity planning. Uncertainties in preparing these forecasts are: ¡ Movements in commodity prices . Act¡vltles of competitors o Reliance on key suppliers, particularly w¡th regard to movements in the Euro as many of the Group's materials are purchased in Euro's The risk of the Government imposing budget cuts ¡ ¡ Credit risk in ensuring payments from customers are received in full and on a timely basis ¡ . Legislative and regulatory risk as new requirements are being imposed on plastic businesses Brex¡t Having taken all of the above factors into consideration, the directors have reached a conclusion that the Company and the Group are able to manage their business risks and operate within existing and future funding facilities for a period of at least twelve months from the date of approval of the financial statements. Accordingly, they cont¡nue to adopt the going concern basis in preparing the annual report and financial statements. Underlying Profit ln the opinion ofthe directors the disclosure ofthese transactions should be reported separatelyfor a better understanding of the underlying trading performance of the Group. These underlying figures are used by the Board to mon¡tor business performance, form the basis of bonus incentives and are used for the purposes of the bank covenants. lt is calculated as being operating profit or earnings before separately disclosed items. The term underlying earnings is not a defined term under IFRS and may not therefore be comparable with similar profit measurements reported by other companies. lt is not intended to be a substitute for, or superior to, IFRS measures of profit. A reconc¡liation to statutory profit measures is detailed in note 6. Separately Disclosed ltems Separately disclosed items are those significant items which in management's judgement should be highlighted by virtue of their size or incidence to enable a full understanding of the Group's performance. Segmental Reporting A business segment is a Group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from other segments. The directors have considered the different business activities undertaken by the Group. The Group is organised around one operating segment, that being its core market of moulded plastic products, therefore ¡ts operat¡ons have been reported as being one business segment. lnformation reported to the Group's Executive Chairman for the purpose of resource allocation and assessment of performance is focused on the Group's performance as a whole. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments. The Group considers it operates in one geographical segment. Page 133 Notes to the Financial Statements for the year ended 30 April 2019 Revenue Recognition IFRS 15 is effective from 1 January 2018, and replaces the previous revenue recogn¡tion standards and ¡nterpretations, including IAS 18 Revenue and IFRIC 13 Customer Loyalty Programmes. IFRS 15 establishes a single approach for the recognition and measurement of revenue, and requires an entity to recognise revenue as performance obligations are satisfied. lt applies to all contracts w¡th customers except for transactions specifically scoped out, which includes interest, dividends, leases, and insurance contracts. Revenue is derived from the transfer of goods at a point in time to customers when performance obligations to the customer have been satisfied. Revenue represents the amounts receivable in the normal course of business from the Group's trading businesses. Amounts received pr¡or to the year-end in respect of services to be rendered in the following year are deferred to the following year. Revenue is measured at the fair va lue of the consideration received or receivable and represents a mounts receivable for goods provided in the normal course of business, net of discounts, VAT and other sales related taxes. For the majority of the Group revenue is recognised on despatch which is when the Group satisfy its performance obligation. Revenue for Global One-Pak Ltd is recognised on delivery based on existing terms of sale prior to acquisit¡on. There have been no changes to the accounting for revenue during the year. Foreign Currencies Transact¡ons in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary assets and liab¡l¡ties that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined. Gains and losses arising on translation are included in the income statement for the period. Pension Contributions The Group contributes to defined contr¡bution pension schemes and the pension charge represents the amount payable for that period. The Group has no defined benefit arrangements in place. Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes ¡tems that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and l¡abil¡ties in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that ¡t ¡s probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects ne¡ther the tax prof¡t nor the accounting profit. Deferred tax l¡abilities are recognised on intangible assets and other temporary differences recognised in business combinations. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. The unrecognised Page 134 deferred tax asset relates to losses carried forward. Notes to the Financial Statements for the year ended 30 April 2019 Taxation (continued) Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with ¡n equity. Deferred tax assets and l¡ab¡l¡t¡es are offset when the Group has a legally enforceable r¡ght to offset current tax assets and liabilit¡es and the deferred tax assets and liabilities relate to taxes lev¡ed by the same tax author¡ty. Goodwill Goodwill arises on the acquisition of subsidiaries, Goodwill represent¡ng the excess of the fair value of the consideration transferred ("cost") over the fair value of the Group's share of the identifiable assets acquired is capitalised and reviewed annually for impa¡rment. Cost comprises the fair value of assets acquired, liabilities assumed and equity instruments issued, plus the amount of any non- controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree, Contingent consideration is included in cost at its acqu¡sition date fair value and, in the case of contingent consideration classified as a financial liability, remeasured subsequently through profit or loss. Direct costs of acquisition are recognised immediately as an expense. Goodwill is measured at cost less accumulated impairment losses lmpairment of Goodwill lmpa¡rment tests on goodwill are performed annually at the financialyear end. Determ¡ning whether goodwill is impaired requires an estimation of the value in use of cash generating un¡ts to which goodwill has been allocated. The calculation of value in use requires management to est¡mate the future cash flows expected to arise from cash generating units and a suitable discount rate in order to calculate present value. Any impairment of goodwill is charged to the Group income statement. Property, Plant and Equipment Property, plant and egu¡pment are stated at cost less accumulated depreciation and any recognised ¡mpairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Depreciation is charged so as to write off the cost less residual value of the assets over their estimated useful lives, using the straight-line method, on the following bases: Property Plant and equ¡pment Fixtures and f¡ttings Motor vehicles 2% LO-25% LO-33% 25% - - - - The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement. The Group ut¡lises a revaluation model of measurement for land and buildings with fair value being determined by reference to market-based evidence. Page 135 Notes to the Financial Statements for the year ended 30 April 2019 lntangible Assets lntangible assets other than goodwill that are acquired by the Group are stated at cost less accumulated amortisat¡on and are reviewed for impairment whenever there is an indication that the carrying value may be impaired. lntangible assets comprise customer lists acquired in business combinations, as well as license fees paid in advance for the use of trademarks and technology. Such assets are defined as having finite useful lives and the costs are amortised on a straight- line basis over their est¡mated useful lives as follows: Customer relationships - - Brands - Licences LO% I0% L2.5-33% lmpairment of Tangible and lntangible Assets Excluding Goodwill At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an ¡mpairment loss. lf any such indication exists, the recoverable amount of the asset is estimated in ordei to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individualcash-generating un¡ts, or otherwise they are allocated to the smallest Group of cash-generating units for ..,hi^L tvt[Ltt ¡a¡¡i¡}an} lvtrJrJlurrl o tEoJUttoutg ^.^^.^^^kl^ rll¡¡r+i¡n grrvlulrwrr l^à i¡ôñ}¡fiÁ¡ }l..i. vqJrJ çur¡ ^ãñ rn¡{ ottu lntangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. ln assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments ofthe tlme value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. lf the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss ls treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of ¡ts recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating un¡t) in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. lnventories lnventor¡es are stated at the lower of cost and net realisable value. The cost of finished goods manufactured includes appropriate materials, labour and production overhead expenditure. Net realisable value is the estimated selling price less the costs of disposal. Provision is made to write down obsolete or slow-moving inventory to their net realisable value. Page 136 Notes to the Financial Statements for the yeor ended 30 April 2079 Financial Assets and Liabilities IFRS 9'Financial lnstruments'outlines the principles an entity must apply to measure and recognise financial assets and liabilities. The following section sets out the accounting policies that were applied in the reporting period under IFRS 9. lnítíol recognítíon of línoncídl ossets ønd fínancíøl líobîlítíes The Group recognises financial assets and liabilities when it becomes a party to the terms of the contract, which is the settlement date. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are capitalised to the initial carrying amount of the f¡nancial asset/liability, as appropriate on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial l¡abilities at fair value through profit or loss are recognised immediately ¡n prof¡t or loss. On initial recognition, it is presumed that the transaction price is the fair value unless there is observable information available in an active market to the contrary. The best evidence of an instrument's fair value on initial recognition is typically the transaction price. However, if fair value can be evidenced by comparison with other observable current market transactions in the same instrument, or is based on a valuation technique whose inputs include only data from observable markets then the instrument should be recognised atthe fairvalue derived from such observable market data. For valuations that have made use of significant unobservable inputs, the difference between the model valuation and the initial transaction price is recognised in profit or loss either on a straight line basis over the term of the transact¡on, or over the report¡ng period until all model inputs will become observable where appropr¡ate, or released in full when previously unobservable inputs become observable. Financial llab¡lities are subsequently measured at amortised cost. Cløssilícatíon Non-der¡vative financial ¡nstruments comprise trade and other receivables, cash and cash equivalents, trade and other payables. Finoncíol ossets On initial recognition, the Group classifies its financial assets into the following measurement categories: . Amortised cost; o Fair value through other comprehensive income; or . Fair value through profit or loss. The classification and subsequent measurement of financial assets depends on: . The business model within which the financial assets are managed; and . The contractual cash flow characteristics of the asset (that is, whether the cash flows represent solely payments of principal and interest). Busíness model ossessment: The business model reflects how the Group manages the financial assets in order to generate cash flows and returns. The Group makes an assessment of the object¡ve of a business model in which a financial asset is held. The factors considered in determining the business model include how the financial asset's performance is evaluated and reported to management. Page 137 Notes to the Financial Statements for the yeor ended 30 April 2079 Financial Assets and liabiliti€s (continued) Assessment of whether contractual cosh flows øre solely poyments of princìpøl ønd ìnterest (SPPI): The Group has undergone a Solely Payments of Principal and lnterest (SPPI) test to classify financial assets, The SPPI test assesses whether the contractual cash flows of an asset gives rise to payments on specified dates that are solely payment of principal and profit on the principal amount outstanding. ln making the assessment of whether the contractual cash flows have SPPI character¡st¡cs, the Group considers whether the cash flows are cons¡stent with a basic lending arrangement. That is, the contractualcash flows recovered must represent solely the payment of principal and interest. Principal is the fair value of the financial asset on initial recognition. lnterest typically includes only consideration for the time value of money and credit risk but may also include consideration for other basic lending risks and costs, such as liquidity risk and administrat¡ve costs. Where the contractual terms include exposure to risk or volatility that is inconsistent with a basic lending arrangement, the cash flows would not be considered to be SPPI and the assets would be mandatorily measured at fair value through profit or loss. ¡b ln mrl¿ina +ha rccaccman+ ... l.lv¡\ll flows, prepayment and extens¡on terms, leverage features, terms that limit the Group's claim to cash flows from specified assets (e.g. non-recourse asset arrangements), and features that modify consideration of the time value of money (e.g. tenor +ha êrnrrn .^ñt¡ñdôñ} ¡nnci¡{arc rmnr¡n} ôrrôñÌc rrrnrrl¡{ nf ¡rch ¡hrnca fiminc in}ar f htl rnr{ }ha rli¡ mismatch). Contractual cash flows are assessed against the SPPI test in the currency in which the financial asset is denominated. Expected credit losses on finoncìol øssets lmpairment provisions for current and non-current trade recãivables are recognised based on the simplified approach within ll-RS 9 using a provision matrix in the determination of the lifetime expected credit losses. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and ageing. The expected loss rates are based on the Group's historical credit losses experienced over the three-year period prior to year-end. The historical loss rates are then adjusted for current and forward-looking informat¡on on macroeconomic factors affecting the Group's customers. The Group has identified the gross domestic product (GDP), unemployment rate and inflation rate as the key macroeconomic factors in the countries where the Group operates. Fortrade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administrative expenses ¡n the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is wr¡tten off against the associated provision. Amounts owed by subsidiory undertokíngs At initial recognit¡on, the parent company makes an assessment as to the init¡al credit risk of the amounts owed by subsidiary undertakings by taking into account available relevant ¡nformation about subsidiary undertakings current and expected operat¡ng performance and cashflow pos¡t¡on. This incorporates forward looking information such as the general economic environment, consumer confidence and inflation, changing consumer demands and the competit¡ve env¡ronment. The parent company has defined a default of amounts owed by subsidiary undertakings to be when there is evidence that the borrower is in significant financial difficulty such that it will have insufficient liquid assets to repay the loan when due. This is assessed based on a number of factors including key liquidity and solvency rat¡os. An assessment is made of significant increases in credit risk since init¡al recogn¡tion, using a qual¡tat¡ve assessment focusing on a comparison of forecasted KPls over the expected life of the amounts owed by subsidiary undertakings at initial recognition to forecasted KPls over the remaining expected life of the amounts owed by subsidiary undertakings at the report¡ng date (taking into account forward looking information such as the updated economic and business environment). The parent company has also considered credit impaired indicators and define this to be when amounts owed by subsidiary undertakings meets the definition of a default. Page 138 Notes to the Financial Statements for the yeor ended 30 April 2019 Fínqncial liobilities ønd equity Financial liabilities and equity are classified according to the substance of the financial instrument's contractual obl¡gations, rather than the financial instrument's legal form. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short-term depos¡ts with an original matur¡ty of three months or less. For the purpose of the cash flow statement, cash and cash equivalents compr¡se cash and bank balances together with bank overdrafts that are repayable on demand. Leased Assets Leases for which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Assets held under finance leases and hire purchase contracts are capitalised in the balance sheet and depreciated over their expected useful lives. The amount initially recognised as an asset is the lower of the fair value of the leased asset and the present value of the minimum lease payments payable overthe term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the income statement over the period of the lease. The capital element reduces the balance owed to the lessor. All other leases are regarded as operating leases and the payments made under them are charged to the income statement on a straight-line basis over the lease term. Research and Development Research and development tax credits are included and offset against the research and development line within admin¡stration expenseS. Share-based Payment Transactions The Group's equity-settled share-based payments comprise the grant of options under the Group's share option schemes ln accordance with lFR52 "Share-based payment", the Group recognises an expense to the income statement representing the fair value of outstanding equity-settled share-based payment awards to employees which have not vested as at 30 April 2019. Those fair values are charged to the income statement over the relevant vest¡ng period adjusted to reflect the actual and expected vest¡ng levels. The Group calculates the fair market value of the options as being based on the market value of a Company's share at the date of grant adjusted to reflect the fact that an employee is not entitled to rece¡ve dividends over the relevant holding period. The total amount to be expensed over the vesting period is determined w¡th reference to the fair value of options granted, excluding the impact of any non-market vesting conditions. Non-market vesting condit¡ons are included ¡n the assumptions aboutthenumberofoptionsexpectedtovest. AteachreportingdatetheGrouprevisesitsestimateofthenumberofoptions expected to vest. It recognises the impact of revisions to original estimates, if any, in the income statement, with a corresponding adjustment to equity. The proceeds received, net of any directly attributable transact¡on costs, are credited to share capital and share premium when the options are exercised. lnvestments in Subsidiaries lnvestments in subsidiaries are shown in the parent Company balance sheet at cost less any provision for impairment Page 139 Notes to the Financial Statements t^- +U^ .,^^- ^^)^/ JVt ^ ^-:t a^4 lttc ycu, ctrucu Jv APtI 4vtz t^ ^ Dividends Dividends receivable by the Company are recognised in the income statement if they are declared, appropriately authorised and no longer at the discretion of the entity paying the dividend, prior to the balance sheet date. Dividends payable by the Company are recognised when declared and therefore final dividends proposed afterthe balance sheet date are not recognised as a liability at the balance sheet date. Dividends paid to shareholders are shown as a movement in equ¡ty. 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of financial statements under IFRS requires the Group to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the c¡rcumstances. Actual results may differ from these est¡mates. The est¡mates and assumptions, which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities, are outlined below. lnventory Valuation lnventor¡es are valued at the lower of cost and net realisable value. Net realisable value includes, where necessary, provisions for siow moving and obsolete stocks. Calculation of these provisions requires estimates to be made, which include forecast consumer demand, the promotional, competit¡ve and economic environment, and inventory loss trends. Due to the nature of inventory provisions, ¡t ¡s ¡mpractical to disclose the assumptions that underlie est¡mates and quantify the impact of sensitivity on those provisions. lmpairment Reviews The Board reviews the useful ecorlomic lives and residual values attributed to assets orr arr orrgoirrg basis to errsure they are appropriate and performs an annual impairment review of goodwill and impairment reviews on tangible and other intangible assets (other than goodwill) when there are indicators of impairment. The recoverable amount is the greater of the net sell¡ng price and value in use, where value in use is determined by discounting the future cash flows generated from the continu¡ng useof theunit. Thevalueinusecalculationrequiresmanagementtoestimatethefuturecashflowsexpectedtoarisefromthe cash-generating unit and a suitable discount rate in order to calculate present value (see note 14). 4. FINANCIAL INSTRUMENTS - RISK MANAGEMENT The Group is exposed through its operations to one or more of the following financial risks: . Market price risk - Fair value or cash flow interest rate risk - Foreign currency risk Liquidity risk cred¡t risk . . Policies for managing these risks are set by the Board following recommendations from the Finance Director. The oolicy for each of theabove risks is described in more detail below. Further quant¡tative information in respectof these risks is presented throughout these fina ncia I statements. Page 140 Notes to the Financial Statements for the year ended 30 April 2019 Trade and other receivables (note 18)* Principal Financial lnstruments The principalfinancial instruments used by the Group, from which financial risk arises, are as follows: . . . . . . Other external loans (note 20)** Cash at bank* Trade and other payables (note 19)** Finance leases (note 19,20), operating leases and hire purchase agreements Bank loans, overdrafts and invoice discounting fac¡lities (note 19,20)** *Financial assets held at amortised cost **Financial liabilities held at amortised cost Market Risk Market risk arises from the Group's use of interest bearing, tradeable and foreign currency financial instruments. lt is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates (¡nterest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). The Group's main exposure to market risk arises from increases in ¡nput costs ¡n so far as it is unable to pass them on to customers through price increases. The Group does not undertake any hedging activity in this area and all materials and utilities are purchased in spot markets. The Group seeks to mit¡gate increases in ¡nput costs through a combination of continuous ¡mprovement activit¡es to minimise increases in ¡nput costs and passing cost increases on to customers, where this is commercially viable. The Group is also aware of market risk in relation to the dependence upon a relatively small number of keyvendors in its supply chain. This risk could manifest ¡n the event of a commercial or natural event leading to reduced or curtailed supply. The Group seeks to mitigate these risks by maintaining transparent and constructive relationships with key vendors, sharing long term plans and forecasts, and encouraging effective disaster recovery planning. Alternative sources of supply in different geographic regions have also been put into place. The Group is also exposed to the risk of a downturn in ¡ts customers'end markets leading to reduced levels of activ¡ty for the Group. The Directors seek to ensure that the Group's activities are not significantly concentrated in sales to either one individual customer or into a single market sector in order to mitigate the exposure to a downturn in activity levels. lnterest Rate Risk The Group is exposed to movements ¡n interest rates in currencies in which it has borrowings, namelySterlingand Euros, and this risk is controlled by managing the proportion of fixed to variable rates within l¡mits. lnterest rate swaps are used to achieve the desired mix if the Board consider the proportion to be outside the limits. The Group uses a mixture of fixed and variable rate loan and finance lease facilities in order to m¡tigate its interest rate exposure. During the current and prior financialyear, the Group has not utilised interest rate swaps. Foreign Currency Risk The Group conducts business in both Sterling and Euros. As a result, the Group is exposed to foreign exchange risks, which will affect transact¡on costs and the translat¡on of debtor and creditor balances. A significant amount of the Group's raw material purchases are in Euros and this helps to provide a natural match to the exposure from sales in that currency. Foreign currency is bought to match liabilities as they fall due where currency receipts are insufficient to match the liability. Page 141 Notes to the Financial Statements for the yeor ended 30 April 2019 Liquidity Risk Borrowing facilities are monitored against the Group's forecast requirements and the Group mitigates financial risk by staggering the matur¡ty of borrowings and by maintaining undrawn committed facilities. Short term flexibility is achieved by bank overdraft and invoice discounting facilities. cred¡t R¡sk Cash deposits and financial transactions give rise to cred¡t risk in the event that counterparties fail to perform under the contract. The Group regularly monitors the credit ratings of its cou nterparties and controls the amount of credit risk by adhering to limits set by the board. Where a customer is deemed to represent an unacceptable level of credit risk, terms of trade are modified to limit the Group's exposure. lnformation Technology (lT) Risk Group lT systems and the information they contain are subject to security risks including the unexpected loss of continuity from virus or other issues, and the deliberate breach of security controls for commercial gain or mischief. Any such occurrences could have a significant detr¡mental effect on the Group's business activ¡ties. These risks are m¡tigated by the utilisation of physical and embedded security systems, regular back-ups and comprehensive disaster recovery plans. Capital Disclosures Capital comprises share capital, share premium and retained earnings. The Group's objective when maintaining capital is to safeguard the Group's ability to cont¡nue as a going concern so that ¡t can provide returns to shareholders and benefits for other stakeholders. ln order to maintain the capital structure, the Group may adjust the dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. Sensitivity Analysis Whilst the Group takes steps to m¡nimise its exposure to cash flow interest rate risk and foreign exchange risk as described above, changes in ¡nterest and foreign exchange rates will have an impact on profit. The annualised effect of a 1% increase in the interest rate at the balance sheet date on the variable rate debt carried at that date would, all other variables being held constant, have resulted in a decrease of the Group's post-tax profit for the year of €35,000. A 1% decrease in the interest rate would, on the same basis, have increased post-tax profits by the same amount. The Group's foreign exchange risk is dependent on the movement in the Euro to Sterling exchange rate. The effect of a 5% strengthening in the Euro against Sterling at the balance sheet date on the Euro denominated debt at the date and on the annualised interest on that amount would, all other variables being held constant, have resulted in a decrease ¡n the post-tax profit for the year of f27,000. A 5% weakening in the exchange rate would, on the same basis, have increased post-tax profit by f30,000. The other numerical disclosures required by IFRST in relation to financial ¡nstruments are included in notes 18, 19 and 20. Page 142 Notes to the Financial Statements for the yeor ended 30 April 2079 5. REVENUE A breakdown of Group revenues by geographical region, based on the location of the customer is shown as follows: Continuing operat¡ons: UK Rest of Europe Rest of the World A breakdown of Group revenues by product group is shown as follows: Food containers Extrusion Trigger sprays and nozzles lnjection & Blow Moulding 2019 €'000 2?,269 7ts 749 24,7tt 2019 ['000 7,454 6,628 3,069 7,582 2018 f'000 2r,068 t,326 1,011 23,405 2018 f'000 6,767 6,745 3,109 6,784 24,733 23,405 All Group revenue is ¡n respect of the sale of goods and originated in the UK. No single customer contributed 10% or more to the Group's revenue for the year ended 30 April 2019 or the year ended 30 April 2018. There are no contract assets or liabilit¡es arising from contracts with customers. 6. UNDERLYING PROFIT AND SEPARATETY DISCTOSED ITEMS Underlying profit before tax, underlying earnings per share, underlying operating profit, underlying earnings before interest, tax and depreciation are defined as being before share based payment charges, amort¡sation of intangibles recognised on acquisition, acquisition costs, reorganisation costs, compensat¡on for loss of office and impairment loss on trade receivables. Collectively these are referred to as separately disclosed items. ln the opinion of the directors the disclosure of these transactions should be reported separately for a better understand¡ng of the underlying trading performance of the Group. Operating profit/(loss) Separately disclosed items w¡th¡n administrative expenses Share based payment charge (note 21) Amortisat¡on of intangible assets (customer relationships and brands) (note 15) lmpairment losses on trade receivables (note 18) Reorganisation costs Total separately disclosed items Underlying operating profit Deprec¡at¡on Underlying EBITDA Separately disclosed items (excluding amort¡sat¡on) EBITDA Page 143 20L9 f'000 479 7t 289 tt9 s39 1,018 L,461 2,479 (2sol 2,229 2018 f'000 (186) 50 348 186 481 1,065 879 L,212 2,09r (717!, 1,374 Notes to the Financial Statements for the year ended 30 April 2079 6. UNDERLYING PROFIT AND SEPARATELY DISCLOSED ITEMS (continued) Separately disclosed items in the current year are referenced where applicable to other notes. ln the year the ¡tems include reorganisation costs of €179,000 which included acquisition due diligence costs of C72,000, reorganisation costs of €38,000 and redundancy costs of Ê69,000, The share-based payment charge and amort¡sation charge have both been separately disclosed as are not controlled by management and do not represent the underlying trading performance of the Group. Separately disclosed items in the prior year include reorganisation costs of f481,000 which included set up costs of the new automotive plant of Ê200,000, the write off of slow moving and obsolete stock of Ê225,000 and redundancy costs of f56,000, in add¡t¡on to a provision of €186,000 for impa¡rment of trade receivables in respect of specific customers. 7. OPERATING PROFIT This is stated after charging/(ffediting) the following Staff costs (note 9) lmpairment loss recognised on trade receivables Cost of inventories recognised as expense Net foreign exchange gains Depreciation of property, plant and equipment: Owned assets Undeifinance leases Amortisation of intangible assets Rentals under operating leases: Hire of plant and machinery Land and buildings R&D Expenditure Auditors remuneration for statutory audit services to this Company Auditors remunerat¡on for statutory audit services to subsidiaries Non-audit fees of fnil (2018: f3,000) were payable to the auditor 8. FINANCE COSTS lnterest payable on bank borrowings lnterest payable on finance leases lnterest payable on term loans lnterest payable on other loans Page 144 2019 c'000 5,114 34 13,576 (86) 1,058 403 289 43 t28 739 20 48 2019 f'000 t26 227 85 438 2018 f'000 5,396 186 12,189 (6s) 826 386 348 39 r28 307 15 40 2018 Ê'000 79 L67 57 8 311 Notes to the Financial Statements for the yeor ended 30 April 2079 9. STAFFCOSTS Average number of employees (lncludlng executive directorsf comprised Production Selling and distributlon Admin¡strat¡on Their aggregate remuneratlon comprised Wages and salaries Social security costs Other pens¡on costs Ret¡rement costs to former directors Total remuneration before share option charge Share option charge/(credit) Total remuneratlon 20t9 No. 125 18 28 t7r 20t9 c'000 4477 458 108 5,043 7t 5,114 2078 No. 129 20 31 180 2018 f'000 4,844 430 72 5,346 50 5,396 Other than the D¡rectors, the parent company had 2 employees (2018: none). Details of Directors' emoluments are shown in the Directors' Remunerat¡on Report on pages 17 to 19. Key management personnel compensation Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activ¡ties of the Group, including the dlrectors of the Company and the site general managers. The¡r eggregate remuneratlon comprised Wages and salaries Social security costs Other pension costs Share option charge 2019 C,(xD 2018 f,000 s02 63 13 10 570 68 9 9 656 Page 145 Notes to the Financial Statements for the year ended 30 April 2079 10. TAXATION The (credit)/charge for taxation on the profit/(loss) for the financial year is as follows: Current tax Current tax on profit/(loss) for the year Deferred tax Reversal of temporary differences Total taxation credit for the financial year 2019 €'000 (43) (43) 2018 Ê'000 l74l (s3) (t27l' The tax assessed for the year is different from that calculated at the standard rate of corporation tax in the UK of 19% (2018: 19%). The differences are rcconciled as follows Reconciliation of taxation credit Profit/(loss) on ordinary activities before tax Tax on profit on ordinary activities at 19% standard rate of tax (20L8: t9o/ol Non-deductible expenses Deferred tax not recognised Other differences Total taxation credit Deferred tax liability - Group At 1 May 2018 Adjustment in respect of prior year Reversal of temporary differences cred¡ted to profit and loss At 30 April 2019 Comprising: Accelerated capital allowances Other temporary differences Liability arising on business combination 2019 c'000 4t 8 42 (7e) (14) (431 2019 c'000 409 2 (431 368 150 (66) 284 368 2018 f'000 (4s7l. (e4) l24l_ (e) lr27l 2018 f'000 462 (s3) 409 58 t4 337 409 The Group has not recognised a deferred tax asset of €1,860 (2018: f95,396) in relation to tax losses that can be carried forward indefinitely. Changes ¡n tax rates and factors affecting the future tax charge Reductions in the UK Corporation tax rate from20%to 77% (19% effective from 1 April 2017 and 17% effective from 1 April 2020) have been substantively enacted. This will impact the Group's future tax charge accordingly. The deferred tax liability at 30 April 2019 has been calculated based on the rates substantively enacted at the reporting date and that are expected to apply when the deferred tax liability settles. Page 146 Notes to the Financial Statements for the yeor ended 30 April 2079 TI. EARNINGS PER ORDINARY SHARE Number of Shares Weighted average number of shares for the purposes of basic earnings per share Effect of share opt¡ons Weighted average number of shares for the purposes of diluted earnings per share Earnings per share Diluted earnings per share Underlying earnings per share Basic and underlying earnings per share have been calculated as follows: 2019 2018 82,614,865 82,674,865 4,000,000 4,000,000 86,614,865 86,614,865 2019 2018 0.10p 0.10p 0.75p (0.as)p (0.4s)p 0.84p 2019 20L8 Weighted Earnings Weighted (Loss)/ average number of per (Loss)/ share earnings average number of earnings per share shares (pence) €'000 shares (pence) Earnings c'000 Profit for the year Separately disclosed items (note 6) Underlying profit for the period 84 82,614,865 0.10 539 623 82,614,865 0.75 (370) 82,6\4,865 1,065 695 82,614,865 (0.4s) 0.84 Underlying earnings per share Underlying earnings per share has been presented in addition to basic earn¡ngs per share since in the opinion of the directors this provides shareholders with a more meaningful representation of the earnings derived from the Group's operations. This measure is not intended to be a substitute for, or super¡or to, the IFRS measure. T2. DIVIDENDS PAID AND PROPOSED lnterim dividend 0.25p paid 28 March 2019 (2018: nil) Final dividend for 2018 0.25p paid 20 December 2OL8 (2017:0.37p paid 31 October 2017) 2019 f'000 207 207 4t4 2018 €'000 306 306 No final dividend (2018: 0.25p) is to be recommended at the forthcoming AGM. The final dividend is subject to approval by shareholders at the Annual General Meet¡ng on 25 September 2019 and has not been included as a liability in these financial statements. Page 147 Notes to the Financial Statements for the yeor ended 30 April 2079 13. INVESTMENTS: SHARES lN GROUP UNDERTAKINGS Parent Company Cost and net book value At 1 May 2018 Share options granted to employees in subsidiaries (note 21) At 30 April 2019 2019 c'000 10,866 7L 10,937 2018 f'000 10,816 50 10,866 lnvestments in subsidiary undertakings are recorded at cost, which is the fair value of the consideration paid. All subsidiaries of the company are wholly owned, incorporated in England and Wales and operate in the United Kingdom. Company Business activity Holding Registeredoffice lnterpack Limited lmporters and distributors of rco% plastic containers Coral Products Manufacture of plastic products toÙ% (Mouldings) Limited using plastic injection moulding Florida Road, Haydock lndustr¡al Estate, Haydock, Merseyside, WA11 gTP Florida Road, Haydock lndustrial Estate, Haydock, Merseyside, WA11 gTP machines Tatra Rotalac Limited Manufacture of plastic mouldings ß0% Florida Road, Haydock lndustr¡al Estate, Rotalac Plastics Limited and extrus¡ons Manufacture of plastic mouldings Haydock, Merseyside, WA11 9TP LOO% Florida Road, Haydock lndustr¡al Estate, Global One-Pak Limited Design, packaging and LOOo/o Hyde Park House, Cartwright Street, and extrusions Haydock, Merseyside, WA11 9TP d¡stribution of lotion pumps, Newton Hyde, Cheshire, trigger sprays and aerosol caps SK14 4EH L4. GOODWILL Group At 30 April 2019 and 2018 Í'000 5,49s Goodwill has been allocated to cash generating units (CGUs), which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. This allocation is shown in the table below: lnterpack Limited E Tatra Rotalac timited c Global One- Pak Limited E Goodwill At 30 April 2019 and 2018 3,457 t,3tt 634 Other C 93 Total C. 5,495 Page 148 Notes to the Financial Statements for the yeor ended 30 April 2019 t4. GOODWILL (continued) The Group tests goodwill and intangible assets annually for impairment. The recoverable amount of goodwill and intangibles arising on the acquisition of lnterpack, Tatra and GlobalOne-Pak in prev¡ous years is determined from value ¡n use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, revenue and overhead growth rates, and perpetuity growth rate. Management estimates discount rates us¡ng pre-tax rates that reflect market assessments of the time value of money and the risks specific to the acquired subsidiaries. ln assessing goodwill and intangibles for impairment, the d¡rectors consider each subsidiary to be the smallest Group of assets that generate cash flows and represent the lowest level within the Group at which goodwill is monitored for internal management purposes. As at the year-end of 30 April 2019, the impairment rev¡ew has concluded that the value in use of each exceeds the total goodwill and intangible carrying value. ln performing this impairment review, the Group has prepared cash flow forecasts derived from the most recent financial budgets approved by the Board, and then est¡mates revenue growth for the following four years at 25% per annum, with overheads also assumed to increase at2.5% per annum. Thereafter, a growth rate for pre-tax prof¡t of 2,5% per annum is assumed into perpetulty. The growth rate of 2.5% exceeds the long-term average growth rate, however, management have estlmated this based on a prudent view offuture growth in demand. A pre-tax rate of 11.5% has been used to discount the foiecast cash flow. The key assumptions are based on past experience for eipected changes in future conditions. The Group has conducted a sens¡t¡vity analysis on the impairment test of each CGU and the Group of units carrying value. A decrease in the growth rate of profit to 0% (i.e. the current level of prof¡t being generated remains constant) over the forthcoming five years would not cause the carrying value to be impaired for either lnterpack, Tatra-Rotalac or Global One- Pak, nor would a reduction of the growth rate for pre-tax profit into perpetuity to 0%. An increase in the discount rate to 15% (lnterpack), 15% (Tatra) and L5% (Global One-Pak) respectively would not create a potential impairment indicator, however such levels are not deemed to be reasonable by management. 15. OTHER INTANGIBLE ASSETS Group Cost At 1 May 2Ol7 , L May 2018 and 30 April 2019 Amortisation At 1 May 2017 Charge in the year At 1 May 2018 Charge in the year At 30 April 2019 Net book value At 30 April 2019 At 30 April 2018 Customer relationships €,000 Brands €'000 Licences €'000 Total f'000 2,653 899 316 L,2T5 257 \,472 1,181 1,438 322 38 32 70 32 LO2 220 252 573 573 573 573 3,548 1,510 348 1,858 289 2,t47 1,407 1,690 Page 149 Notes to the Financial Statements for the year ended j0 April 2079 15. OTHER INTANGIBIE ASSETS (continued) Parent Company Cost At 1 May 2Ot7,I May 2018 and 30 April 2019 Deprec¡at¡on At 1 May 20L7, t May 2018 and 30 April 2019 Net book value At 30 April 2019 At 30 April2018 [icences c'000 Total f'000 403 403 403 403 As set out in note 14, the Group tests goodwill and intangible assets annually for ¡mpairment. 16. PROPERTY, PIANT AND EqUIPMENT Group Cost or valuâtion At 1 May 2017 Additions Disposals At 1 May 2018 Addit¡ons Disposals At 30 April 2019 Depreciation At 1 May 2017 Charge in the year Disposals At 1 May 2018 Charge in the year Disposals At 30 April 2019 Net book value At 30 April 2019 At 30 April 2018 land and buildings f'000 Fixtures and fittings c'000 Plant and equipment f'000 Motor vehicles f'000 20 (20) 8 (8) 2,508 2,508 t2 2,52O 2,520 2,508 239 L76 (es) 320 L7 337 90 103 (es) 98 119 217 120 222 12,837 1,936 t4,773 1,554 (547l. 15,780 7,095 1,109 8,204 1,342 (s37) 9,009 6,77L 6,569 Total c'000 15,604 2,L12 (11s) L7,60T 1,583 (s47l, 18,6?7 7,193 1,2r2 (103) 8,302 I,467 (s37) 9,226 9,41L 9,299 The net book value of plant and equipment includes f3,415,000 (20L8: 83,L25,000) in respect of assets held under finance leases. Depreciation for the year in respect of these assets was f403,000 (2018: f386,000). Page 150 Notes to the Financial Statements for the yeor ended 30 April 2079 16. PROPERTY, PTANT AND EQUIPMENT (continued) Revaluation of land and bulldlngs The Group uses the revaluation model of measurement of land and buildings. The Group previously engaged Lambert Smith Hampton, an accredited independent valuer, to determine the fair value of its land and buildings. Fair value is determined by reference to market-based evidence. This is a level 2 hierarchy valuation, Valuations are based on active market prices, adjusted for any difference in the nature, location or condition of the specific property. The date of the most recent revaluation was 17 April 2018. The previous revaluation was on 16 December 2016. lf land and buildings were measured using the cost model, the carry¡ng amounts would be as follows: Cost Accumulated depreciation Net carrying amount Perent Company Cost or Valuation At 1 May 2017 and 1 May 2018 Additions Revaluation At 30 April 2019 Depreciation At 1 May 2017 and 1 May 2018 Revaluation At 30 April 2019 Net book value At 30 April 2019 At 30 April 2018 2019 c'000 2,to3 12271 r,876 2018 f'000 2,L03 (18s) 1,918 land and bulldlngs c,000 2,508 LI asú 2,519 2,508 Page 151 Notes to the Financial Statements for the yeor ended 30 April 2019 17. INVENTORIES Raw mater¡als Work in progress Finished goods and goods for resale Parent Company 2019 €'000 20L8 Ê'000 Group 2019 €'000 1,57L 252 L,682 3,505 2018 f'000 1,256 t79 L,429 2,864 Write-downs of inventories to net realisable value amounted to €n¡l (2018 - €50,000). These were recognised as an expense during the year ended 30 April 2019 and included in 'cost of sales' in profit or loss. 18. TRADE AND OTHER RECEIVABLES Current Trade receivables Less: provision for impairment of trade receivables Amounts owed by subsidiary undertakings Corporation tax recovera ble Prepayments and accrued income Group 2019 G'000 4,æ5 (a4l 4,611 288 622 5,521 2018 f'000 5,050 (186) 4,864 33 s55 5,452 Parent Company 2019 c'000 2018 f'000 4s5 28 483 r,0L7 T4 1,031 The fair value of trade and other receivables approximates to book value at 30 April 2019 and 2018. The Group is exposed to credit risk with respect to trade receivables due from its customers. The Group currently has around 930 customers predominantly in the manufacturing and retail sectors. Amounts owed by subsidiary undertakings are interest free and due on demand. The credit risk for amounts owed by subsidiary undertakings has not increased materially since the initial recognition. There is no impairment allowance for amounts owed by subsidiary undertakings for either the year ended 30 April 2019, or the year ended 30 April 2018. The carrying amount of the Group's trade and other receivables are denominated in the following currencies: Sterling Euros Parent Company 2019 c'000 2018 Ê'000 Group 2019 c'000 4,577 34 4,6LL 2018 Ê'000 4,725 139 4,864 Page 152 Notes to the Financial Statements lor the yeor ended 30th Aprìl 2079 18. TRADE AND OTHER RECEIVABLES (continued) As 30 April 2019 the llfetime expected loss provision for trade receivables is as follows: Group Current Overdue less Overdue 1 -2 Overdue Total than 1 month 9000 months more than 2 f'000 months Ê,000 €'(xlo f'000 Expected loss ratio o.L% t".vÁ 2.O/o 3.O% Gross carrylng amount Loss provision 2,300 (2) 1,613 (16) 518 (10) 214 (6) 4,645 (341 Movement in the loss provision for trade receivables has been included in administrative expenses in the financial statements and recelvables are shown net of allowance. ln the previous period, ¡mpairment was assessed under IAS 39 and the charge was included in separately disclosed items (see note 6). No adjustment has been made under IFRS 9 based upon the loss experience over the past three yeers as the impact ¡s ¡mmaterial. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit rlsk and ageing. The expected loss rates are based on the Group's historical credit losses experienced over the three-year period prior to year- end. The historical loss rates are then adjusted for current and forwardJooking information on macroeconom¡c factors affect¡ng the Grouy's customers. The Group has ldentified the gross domestic product (GDP), unemployment rate and inflation rate as the key macroeconomic factors in the countries where the Group operates. The movement in the loss provision has been as follows: At 30 Aprll 2018 under IAS 39 Restated on adoption of IFRS 9 Opening provision for impa¡rment Utllised in the period/unused provision released Provided in the period Closing Provislon Parent Company 2019 c'000 2018 f,000 Group 2019 c'000 186 186 11861 u u 2018 f000 186 186 The maximum exposure to credit risk at the report¡ng date is the fair value of each class of receivable set out above. The Group did not hold any significant ¡nterest swaps or forurard foreign exchange contracts at the year-end. Page 153 Notes to the Financial Statements for the year ended 30 April 2019 19. TRADEANDOTHERPAYABLES Trade payables Other taxes and social security Corporation tax payable Accruals and deferred income Other payables Group 20t9 f'000 2,938 408 464 24 3,834 2018 Ê'000 3,079 s30 272 28 3,909 Parent Company 2019 f'000 2018 Ê'000 t2 47 59 5 5 Trade payables principally comprise amounts outstand¡ng for trade purchases and ongolng costs. The average credit period taken for trade purchases is 46 days (2018: 48 days). The directors consider that the carrying amount of trade payables approximates to their fair value. 20. FINANCIAL LIABILITIES The maturity profile of the non-current financial l¡abilities as at 30 April 2019 is set out below: Group 20t9 c'000 2018 f'000 Parent Company 2019 c'000 2018 €'000 Borrowings Current Term loan Bank overdraft I nvoice discounting facility Finance lease liabilities Non-current Finance lease liabilities Term loan 150 27 3,513 1,260 4,950 1,965 1,303 3,268 The effective ¡nterest rates at the balance sheet date are as follows: lnvoice discounting facility Finance leases Term loan 2019 23% 5,5o/o 3.0% 1,604 150 L,604 3,395 940 s,939 1,843 1,843 2018 150 1,604 1,303 1,303 23% over base 5.5% 3.0% over base The bank loans and overdraft are secured by a fixed and floating charge over the Group's assets. F¡nance lease liab¡lities are secured on the assets to which the contracts relate. The invoice discounting facility is secured over trade receivables. The directors est¡mate that the fair value of the Group's borrowings is the same as the above book values as at 30 April 2019 and as at 30 April 2018. Page 154 Notes to the Financial Statements for the yeor ended 30 April 2019 20. FINANCIAL LIABILIT¡ES (continued) The maturity profile of the non-current financial liab¡lit¡es as at 30 April 2019 ¡s set out below: ln more than one year but not more than two years Finance lease liabilities Term loan ln more than two years but not more than five years Finance lease liabil¡ties Term loan ln more than five years Term loan Group 2019 f'000 1,053 150 9L2 451 702 3,268 2018 f'000 939 904 1,843 Parent Company 2019 €'000 20L8 €'000 150 451 702 1,303 U ndrawn borrowing facilitíes The Group has a maximum lnvoice Discounting Facility of f5.1m, subject to debtor levels and restrictions, together w¡th a f50,000 bank overdraft facility. At the year-end there was a temporary overdraft facility in place of f500,000 wh¡lst an application for a new mortgage was in progress with the bank. The mortgage was completed during May 2019 and the temporary overdraft repaid in full. Finance leases Future min¡mum lease payments under finance leases including future finance charges are as follows: Not later than one year After one year but not more than five years Future finance charge on finance lease Present value of finance lease liabilities Group 2019 c'000 7,526 2,674 4,200 (e7s) 3,225 The present value of minimum lease payments under finance leases are as follows Not later than one year After one year but not more than five years 6roup 20L9 f'000 1,260 1,965 3,225 Parent Company 2019 c'000 2018 f'000 Parent Company 20t9 €'000 2018 f'000 2018 f'000 998 2,L97 3,189 (406) 2,783 2018 €'000 940 L,843 2,783 There is no material difference between the maturity analysis presented above and the undiscounted cash flow analysis Page 155 Notes to the Financial Statements for the yeor ended 30 April 2019 21.. SHARE OPTIONS On 8 December 2014 share options were granted to 9 employees including 1 director under an EMI Scheme, the "Coral Products plc EMI Share Option Plan". Options were granted over 1,650,000 lp ordinary shares of the Company with an exercise price of 16p per share. The share price at the date of grant was 14.5p per share. 2 employees, including 1 director, with options totalling 600,000 lp ordinary shares have left the Company during the two-year vesting period. On 30 May 2017 share options were granted to 4 employees under an EMI Scheme, the "Coral Products plc EMI Share Option Plan". Options were granted over 550,000 lp ordinary shares of the company with an exercise price of 21p per share. The share price at the grant date was 15p per share. 1 employee with options totalling 100,000 1p ordinary shares has left the Company during the two-year vest¡ng period. On 22 August 2017 share opt¡ons were granted to 2 employees, both of which are directors of the company, under the EMI scheme. Options were granted over 2,500,000 1p ordinary shares of the company with an exercise price of 15p. The share price at the grant date was 14.5p. The options can be exercised two years after the grant date and there are no exercise conditions other than that for the options to vest, the individual must remain an employee of the Group over the two-year vesting period. The weighted average fair value of the options as at 30 April 20i.9 was f 155,327 based on a fair value oÍ 4.4p per share and 4,000,000 opt¡ons. The assumptions used in the calculation are as follows: Option pricing model used Black-Scholes Black-Scholes Black-Scholes 8 December 2014 30 May 2017 22 August 2017 Expected volatility Option life Risk-free interest rate Expected dividend yield 30% 1.0 years Ls% 3.45% 46% 10 years 1.09% 4.7% 45% 10 years r.09% 4.8% A deb¡t of €71,000 (2018: f50,000) has been recognised in the income statement ¡n the current year in relation to these share opt¡ons. No options have been exercised in the year (2018: none). The maximum term on the options is 10 years from the issue date, which remains the weighted average remaining life. 22. SHARE CAPITAT Group 2019 c'000 2018 €'000 Parent Company 2019 €'000 2018 f'000 Allotted, called up and fully paid 82,614,865 ordinary shares of 1p each 826 826 826 826 Page 156 Notes to the Financial Statements for the yeor ended 30 April 2019 23. RECONCILIATION OF NET CASH FTOW TO MOVEMENT IN NET DEBT Net (decrease)/increase in cash and cash equivalents Decrease on invoice discounting facility Decrease/(increase) in bank loans and other loans lncrease in finance lease liability Movement in net debt for the period Net debt at beginning of period Net debt at end of period Group 2019 €'000 (4e8) (118) 151 (441) (eo6) (7,3rtl la,2L7l 2018 €'000 (2021 (ss1) (t421 (806) (1,701) (5,610) (7,3711 Parent Company 2019 f'000 2018 €'000 27 151 t78 (1,604) lL,426l {.142l. lr42l lL,462l (1,604) Other than the movement in finance leases, the Group had no non-cash changes arising from financing activ¡t¡es. F¡nance lease liability 2,783 (4s1) 893 3,22s 2018 f'000 Cashflow Non-cashchanges New leases 20L9 f'000 €'000 f'000 24. RELATED PARTY TRANSACTIONS Group The Group has a related party relationship with its subsidiaries and with its key management personnel, who are considered to be its directors. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidationfortheGroupandarenotdisclosed¡nth¡snote. All relatedpartytransact¡onsareconductedonanarms'length basis. Key management personnel Details of the compensat¡on of the key management personnel have been disclosed in note 9, no other transact¡ons were entered ¡nto w¡th key management personnel in the year other than as detailed below: Parent Company The amounts due to the Company in respect of its subsidiaries are set out in note 18. The transact¡ons entered ¡nto between the Company and its subsidiaries were as follows: Rentals received from Group undertakings Recharge of overheads to Group undertakings 2019 €'000 300 ?24 2018 €'000 300 204 Page 157 Notes to the Financial Statements for the yeor ended 30 Aprll 2079 25. POST BAI.ANCE SHEET EVENTS The land and buildings at Haydock were refinanced in May 2019 raising f50Q000 in cash, thls was used to clear a temporary overdraft balance in Coral Products (Mouldings) Ltd. 26. COMMITMENTS Operatlng lease errangements At the balance sheet date, the Group had total future minimum lease payments under non-cancellable operatlng leases for each of the following periods: _ GrouP 2019_ __2018-_ Ê,000 f,000 Parent Company c'000 f'000 Within o,ne year Between two and five years More than five years 23t 727 222 1,180 238 615 229 t,o82 The Group leases certain plant and equipment under non-cancellable operat¡ng lease agreements. ln the opinion of the directors there is no u¡t¡mate controlling party. Page 158 Five Year Record (unaudited) Turnover Proflt Underlying operating profit Net interest payable Underlying profit before taxation Separately disclosed items Taxat¡on Profit/(loss) after taxation lnterest cover (times) Underlying earnings per share (pence) Dividend per share (pence) Assets employed Non-current assets Other net (liabilities)/assets Net assets Flnanced by Share capital Reserves Shareholder's funds Gearing (Zo) Net assets per share (pence) mtg c'000 24;rtt 1,018 (4381 580 ls3el 43 u 2,3 0.75 0.25 16,3O7 (3,rea¡ t2;9tg 826 t2,o87 12,9L3 æ 15 2018 Ê'000 2017 €'000 2016 c'000 2015 c'000 23,4O5 2L,432 18,7L4 L7,425 879 (311) 568 (1,065) L27 (370) 2.7 0.84 0.4 t6,484 (3,313) L3,t7L 826 L2,345 L3,771 56 16 1,093 12281 86s (4oo) (71 458 4.8 1.04 1.0 15,944 (2,L471 L3,797 826 12,971 !3,797 4L L7 L,649 (180) L,469 (7L71 (1s) 743 9.2 2.20 0.8 !4,4O2 17t4l 13,688 826 t2,862 13,688 24 t7 L,349 (184) 1,165 ls74l 191 7.3 2.L2 0.7 10,570 lr,449l 9,72L 579 8,542 9,L21 44 16 Page 159 Notice of the Annual General Meeting Notice is hereby given that the Annual General Meeting of Coral Products plc (the Company) will be held in Leverhulme Room One at Haydock Race Track, Newton-le-Willows, Merseyside, WA12 0HQ on Wednesday 25 September 2019, at 12.00 noon for the purpose of considering and, if thought fit, passing of the following resolutions, of which Resolutions 1 to 7 will be proposed as Ordinary Resolutions, to be passed with more than half of the votes in favour of the resolution and Resolutions 8 and 9 will be proposed as Special Resolut¡ons, to be passed with at least three-quarters of the votes in favour of the Resolution. Ordinory business Ordinary resolutions 1. To receive and adopt the audited accounts for the year ended 30 April 2019, together with the Reports of the D¡rectors and 2. 3. 4. 5. 6. 7. Auditors. To re-elect Joe Grimmond, who retires by rotation as a D¡rector of the Company. To re-elect David Low, who retires by rotation as a Director of the Company. To re-appoint BDO LLP as auditors of the Company to hold office until the conclusion of the next Annual General Meeting of the Company and that the Directors be authorised to tix their remuneration. To declare a final dividend of 0.00p per ordinary share in respect of the year ended 30 April 2019. To approve the Board Report on Directors' Remuneration for the year ended 30 April 2019. That the Directors be generally and uncond¡t¡onally authorised pursuant to and in accordancc with section 551 of the Companies Act 2006 (the "2006 Act") to exercise all the powers of the Company to allot shares in the Company or grant r¡ghts to subscribc for or to convert any sccurity into shares in thc Company ("Rights") up to an aggregate nominal amount of e550,765, provided that this authority shall, unless renewed, varied or revoked by the Company, expire at the end of the Company's annual general meet¡ng in 2019, save that the Company may, before such expiry, make an offer or agreement which would or m¡ght require shares to be allotted or R¡ghts to be granted and the directors may allot shares or grant Rights in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. This authority is (i) subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange and (ii) in substitution for all previous authorities conferred on the directors in accordance with section 551 of the 2006 Act but without prejudice to any allotment of shares or grant of Rights already made or offered or agreed to be made pursuant to such authoritles. Special resolutions 8. That, subject to and conditional upon the passing of resolution 7 set out in this notice, the directors be generally empowered to allot equ¡ty securities (as defined in section 560 of 2006 Act) pursuant to the authority conferred by resolution 8 as if section 561(1) of the 2006 Act did not apply to any such allotment, provided that this power shall: 8.1 be l¡mited to: 8.1.1 the allotment of equity securities in connect¡on with an offer of equ¡ty securit¡es: (a) to the holders of ordinary shares in proport¡on (as nearly as may be practicable) to their respective holdings; and (b) to holders of other equity secur¡ties as required by the rights of those securities or as the directors otherwise consider necessary; 8.7.2 the allotment of equity securities (otherwise than pursuant to paragraph 8.1.1 above) up to an aggregate nominal amount of €550,765; 8.2 be subject to such exclusions or other arrangements as the directors may deem necessary or expedient ¡n relation to fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; anci 8.3 expire at the end of the Company's annual general meeting in 2020 (unless renewed, varied or revoked by the Company pr¡or to or on that date), save that the Company may, before such expiry make an offer or agreement which would or might require equ¡ty secur¡t¡es to be allotted after such expiry and the directors may allot equity secur¡t¡es in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired. Page 160 Notice of the Annual General Meeting continued Speciol buslness Special resolutlon 9. That the Company be generally and unconditionally authorised for the purposes of Sect¡on 701 of the 2006 Act to make market purchases (with¡n the meaning of Section 693(4) of the 2006 Act) of ordinary shares of 1 pence each in the Company in such manner and upon such terms as the Directors may from t¡me to time determine, provided that: (a) the maximum number of ordinary shares which may be purchased is L2,392,23O; (b) the minimum price which may be paid for an ordinary share ¡s 1 pence (being the nominal value of the ordinary share) exclusive of expenses; (c) the maximum price which may be paid for an ordinary share exclusive of expenses is equal to the higher of (i) 105 per cent of the average of the middle market quotations for an ordinary share derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the purchase is made and (ii) the higher of (a) the price of the lest independent trade and (b) the highest current independent bid (in each case, in relation to (a) and (b), for any number of the Company's ordinary shares on the trading venue where the purchase is carried out); and (d) the author¡ty to purchase hereby conferred shall expire at the end of the next annual general meet¡ng in 2O2Q, save that the Company may make a contract to purchase ordinary shares under th¡s author¡ty before the expiry of the author¡ty which will or may be completed wholly or partly thereafter and a purchase of shares may be made in pursuance of any such contract. By order of the Eoard Sharon Gramauskas Company Secretary 21 August 2019 Registered Office North Florida Road Haydock lndustr¡al Estate Haydock Merseyside WA11 gTP Page 161 Notice of the Annual General Meeting continued Notes 1. A member ent¡tled to attend and vote at the Annual General Meet¡ng may appoint another person(s) (who need not be a member of the Company) to exerc¡se all or any of his rights to attend, speak and vote at the Annual General Meeting. A member can appoint more than one proxy in relation to the Annual General Meeting, provided that each proxy is appo¡nted to exercise the rights attaching to different shares held by him. 2. 3. 4. 5. 6. 7 L 9. 10. 11 L2. A proxy does not need to be a member of the Company but must attend the Annual General Meeting to represent you. Your proxy could be the Chairman, another director of the Company or another person who has agreed to attend to represent you. Your proxy will vote as you ¡nstruct and must attend the Annual General Meeting for your vote to be counted. Appo¡nting a proxy does not preclude you from attending the Annual General Meeting and vot¡ng in person. A Proxy Form which may be used to make this appo¡ntment and give proxy instruct¡ons accompanies th¡s Notice of Annual General Meeting. Details of how to appoint a proxy are set out in the notes to the Proxy Form. lf you do not have a Proxy Form and believe that you should have one, or if you requ¡re addit¡onal forms, please contact the Company. ln order to be valid an appo¡ntment of proxy must be returned (together with any authority under which ¡t ¡s executed or a copy of the author¡ty cert¡f¡ed) in hard copy form by post, by courier or by hand to the office of the Company at North Florida Road, Haydock lndustr¡al Estate, Haydock, Merseyside WA1l 9TP, and must be received by the Company at least 48 hours prior to the meeting. To change your proxy instructions, you may return a new proxy appointment using the methods set out above. Where you have appointed a proxy using the hard copy Proxy Form and would like to change the instructions using another hard copy Proxy Form, please contact the Company. The deadline for receipt of proxy appointments (see above) also applies in relation to amended instructions. To terminate your proxy instruction, please send a written not¡ce to the Company stat¡ng your intent¡on to revoke the proxy ¡nstruct¡on, to be received by the Company no later than 48 hours prior to the meeting. Any attempt to term¡nate or amend a proxy appo¡ntment rece¡ved after the relevant deadline will be disregarded. Where two or more valid separate appointments of proxy are received in respect of the same share in respect of the same macting, thc onc which is last scnt shall bc trcatcd as rcplacing and rcvoking thc othcrs. A copy of th¡s Notice of Annual General Meet¡ng may have been sent for information only to persons who have been nominated by a member to enjoy information r¡ghts under sect¡on 146 of the Companies Act 2006 (a "Nominated Person"). The rights to appoint a proxy cannot be exercised by a Nominated Person: they can only be exercised by the member. However, a Nominated Person may have a right under an agreement between him and the member by whom he was nominated to be appo¡nted as a proxy for the Annual General Meeting or to have someone else so appointed. lf a Nom¡nated Person does not have such a right or does not wish to exerc¡se it, he may have a right under such an agreement to g¡ve ¡nstructions to the member as to the exercise of voting rights. To be entitled to attend and vote at the General Meeting, members must be registered in the reg¡ster of members of the Company 48 hours prior to the meeting (or, if the meeting is acljournecl, 48 hours pr¡or to the clate of the adjournecl meeting) Changes to entr¡es on the register after this time shall be disregarded in determining the rights of persons to attend or vote (and the number of votes they may cast) at the meeting or adjourned meet¡ng. ^nnual Vot¡ng on all Resolutions will be conducted by way of a poll rather than a show of hands. This is a more transparent method of voting as member votes are to be counted according to the number of shares held. As soon as pract¡cable following the Annual General Meet¡ng, the results of the voting at the Annual General Meeting and the numbers of proxy votes cast for and against and the number of votes actively withheld in respect of each of the Resolutions will be announced via a regulatory information service. A member of the Company which is a corporation may authorise a person or persons to act as its representat¡ve(s) at the Annual General Meet¡ng. ln accordance with the provisions of the Companies Act 2006, each such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise if ¡t were an individual member of the Company, provided that they do not do so in relation to the same shares. lt is no longer necessary to nominate a designated corporate representat¡ve. The Company must cause to be answered at the Annual General Meeting any quest¡on relat¡ng to the business being dealt with at the Annual General Meeting which is put by a member attending the Annual General Meet¡ng, except ¡n certain c¡rcumstances, including if it is undesirable ¡n the interests of the Company or the good order of the meetlng that the quest¡on be answered or if to do so would ¡nvolve the disclosure of confidential information. As at 20 August 2019 (being the last Business Day prior to the publ¡cat¡on ofthis Notice ofAnnual General Meeting), the Company's issued share capital cons¡sts of 82,614,865 ordinary shares of 1p each with voting r¡ghts. Therefore, the number of total voting rights in the Company is 82,614,865. The contents of this Notice of Annual General Meeting and deta¡ls of the total number of shares in respect of which members are ent¡tled to exercise vot¡ng rights at the Annuai Generai Meet¡ng and, ìf applicabie, any members' statements, members' resoiutions or members' matters of business received by the Company after the date of this Notice of Annual General Meet¡ng will be available on the Company's corporate website: www.coralprod ucts.com. 13. You may not use any electronic address provided in this Not¡ce of Annual General Meeting to communicate w¡th the Company for any purposes other than those expressly stated. Page 162 Financial Calendar AnnualGeneral Meeting Payment of Final Dividend Provisional - lnterim results 25 September 2019 N/A January 2020 Shareholder I nformation Coral Products shareholders register ¡s maintained by Share Reg¡strars Limited who are responsible for updating the register, including details of shareholders' addresses. lf you have a query about your shareholding in Coral Products, you should contact Share Registrars bytelephone on0L25282L390, by emailto enouiries@shareresistrars.uk.com or ¡n wr¡ting to Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR. The Coral Products website et www.coralproducts.com provides news and details of the Group's activ¡t¡es plus information for Shareholders. The investor sect¡on of the website conta¡ns real time and historical share price data as well as the results and announcements Page 163 

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