Coral Products PLC
Annual Report 2020

Plain-text annual report

CORAL PRODUCTS PLC ANNUAL REPORT AND ACCOUNTS 2020 Contents Business Overview Chairman’s Statement Strategic Report Directors and Advisers Directors’ Report Directors’ Remuneration Report Audit Committee Report Independent Auditor’s Report to the Members of Coral Products plc Group Income Statement Group Statement of Comprehensive Income 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 Information 1 3 6 13 14 20 23 24 31 31 32 34 35 36 67 68 71 Financial Highlights Group revenue Gross margin (Loss)/profit before tax Operating (loss)/profit Underlying earnings before interest, tax, depreciation and amortisation * Underlying operating profit * 2020 £22.3m 35.8% £(0.8)m £(0.4)m £2.1m £0.4m 2019 £24.7m 35.9% £0.04m £0.5m £2.5m £1.0m *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 distributor 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 operations in the UK with manufacturing facilities in Haydock, Merseyside, and Wythenshawe, Greater Manchester and a distribution facility in Hyde, Greater Manchester. By developing innovative plastic moulded products, providing excellent customer service and through its hard-working employees, Coral Products continues to refocus on new markets to be in a position 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. The Company develops innovative products such as food containers, extrusion profiles, trigger sprays and nozzles and injection and blow moulding, serving a more diverse market and customer base. The Company manufactures and distributes a range of own and customer plastic products servicing a plethora of different uses including NHS, Network Rail, Telecoms, food, extrusion profiles and cosmetics. 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 industry by maintaining strong long-term relationships with 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 a main priority in the business and we have strived to implement 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 reputation for delivering quality products but we are not complacent. We invest continuously in new machinery, robotics and moulds in order to maintain a strong position and keep market share. Our quality control and assurance processes are regularly reviewed and developed to ensure that our customers receive quality products each time. We are currently certified to BRC, ISO 9001, ISO 14001 standards and we are environmentally accredited as a reprocessor for our recycling process. Cost control – We continually monitor 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 and automation in reducing our carbon footprint as well as the positive effect on reducing the cost of power usage in our manufacturing facilities. Culture – We continually look to promote a well-motivated workforce by attracting 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 investment to grow our markets and ultimately enhance shareholder value. Strategic Plan The 5-year plan implemented in 2015 continues to be followed. The plan has been bolstered by a recycling plant in Haydock, it is expected that recycling will play a major role in the future growth of the Group. In light of the likely long-term effect of economic activity from the covid 19 pandemic we are revisiting and reviewing our strategy for the next 5 years. P a g e | 1 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 acquisitions. We recognise that for many products’ plastic is a better container solution for handling goods and gives greater functionality, economy and supports a cleaner environment than other packaging mechanisms. Social, Community and Human Rights Issues The Group endeavours to impact positively on the communities in which it operates. In particular, raw materials are purchased from established companies which have high reputations within the plastics industry. 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, is an essential right of all the employees. In order to gain accreditation under the BRC Packaging Materials Standard on production of food containers, the premises, working practices and materials had to meet required standards of compliance. These are regularly audited to ensure the Group continues 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 compliance with minimum acceptable standards. P a g e | 2 Chairman’s Statement Coronavirus – Summary of Impact Assessment As might be expected I will begin with a summary of the risks that the coronavirus pandemic poses to the business and the actions we have taken to mitigate the effects. We cannot predict how widespread the virus will become, how long the pandemic will last and what the medium to long term effect of this pandemic will be. Our priority is to do all we can to keep our workplaces as safe as possible for staff, ensuring that we follow all government guidelines. We have planned our business to be flexible, in all areas, to meet fluctuating levels of demand. We have robust financial controls that will ensure we maintain our working capital requirements whilst meeting all our agreed parameters with our financial partners. We have taken measures to control costs and conserve cash within the business which include the delay of capital expenditure, the potential sale and leaseback of the land and building at the Haydock site and the suspension of dividend payments. We reacted quickly to the crisis and as early as mid-March 2020 negotiated capital repayment holidays and a CBIL loan of £1 million, this was received on 13 May 2020, with a six-month capital payment holiday and 12 months interest free from the Group’s existing bank Barclays. We had invested heavily in new capacity in the last 3 years and this investment will enable us to greatly reduce capital expenditure over the next 2 financial periods. Our manufacturing sites at Haydock and Wythenshawe were deemed as key suppliers during the first wave of the pandemic allowing both sites to continue manufacturing throughout. There will be many challenges to our working practices as the pandemic develops and we are putting plans in place to protect our most vulnerable employees, comply with differing levels of Government restrictions and cope with illness throughout the business. In particular, we have adapted our technology for greater home working and seeking to segregate critical operational teams so as to keep all our vital operations and projects on track. The actions taken by your board give us confidence that we will come through this current crisis and will be in a position to take advantage of any economic upturn. Trading This current trading period has been one of the most difficult I’ve ever experienced, with Brexit, the United States - China trading wars, the general election and the covid-19 pandemic. The net effect of all these culminated in a steep reduction in sales in the second half from our budgeted expectations. This fall in sales has resulted in a loss in contribution for the period. Revenue was £22.3m (2019: £24.7m) and underlying operating profit £0.4m (2019: £1.0m), the gross margin of 35.8% (2019: 35.9%) was maintained which was as a result of the direct and indirect cost reduction measures taken across the Group. (Note that underlying profit is defined in note 2 and a reconciliation provided in note 6). The second half of the year was forecasted to have much higher sales than the first half. This was expected from the long-awaited multi-box recycling system (MBRS) project and the general uptake in sales that occurs in the final quarter onwards. The tooling for the MBRS was severely delayed and with the lockdown the usual uptake did not occur and we had invested quite heavily in improved tooling last year to meet demand which the lockdown disrupted. Global One-Pak was hit particularly hard due to the pandemic as supplies almost dried up. The Group has continued with its strategic 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 unit now installed and operational at Haydock, we remain confident in our ability to do so. P a g e | 3 Chairman’s Statement Continued The Group has reported a loss before taxation for the financial year of £0.8m (2019: £0.04m profit), this is after non cash amortisation of £0.3m (2019: £0.3) and goodwill impairment of £0.4m (2019: £nil). Across the Group, finance costs have remained static at £0.4m (2019: £0.4m) and depreciation at £1.7m (2019: £1.5m). Interpack’s profit before tax is £0.4m (2019: £0.7m), Global One-Pak’s £0.1m (2019: £0.2m) and Tatra-Rotalac’s £0.1m (2019: £0.2m loss). The delay in the launch of the MBRS and drop in sales following the pandemic at Coral Products (Mouldings) has resulted in a loss of £0.8m (2019: £0.4m loss). These results are before amortisation of intangibles arising on consolidation of £0.3m (2019: £0.3m) and the goodwill impairment of Tatra Rotalac of £0.4m (2019: £nil) as set out in note 6. Performance of the Group is monitored principally through adjusted profit measures which exclude £0.8m of adjusted items (2019: £0.5m). 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, due-diligence costs, share based payment charges, compensation for loss of office of senior management, reorganisation costs and goodwill impairment. 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 uncertainty surrounding UK Brexit and the Coronavirus pandemic the Board believe it is prudent to suspend dividend payments in the short term. Therefore, the Board will not be recommending the payment of a dividend for this financial period. Board Changes There were no board changes during the year. 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. In 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. In 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 practices and will always implement improvements which further enhance performance and/or benefit stakeholders. P a g e | 4 Chairman’s Statement Continued 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 uncertainty and timelines surrounding UK Brexit and the coronavirus pandemic. 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. Future Developments The following projects were delayed due to the coronavirus pandemic. We expect these to now be introduced during the latter part of the current financial year: • • The multi box recycling system (MBRS). Conservatory and outbuildings rooftiles. Outlook Whilst we have confidence in our development strategy and the prospects of the Group, the very real uncertainties over Brexit and the coronavirus pandemic are a cause for concern. The Group continues with its strategic progress of increasing focus on value-added and innovative products, particularly in the food container, recycling, telecommunications, rail industry, home delivery totes and blow moulding areas. Our aim is to build a significant plastic moulding business with a bias towards using recycled materials produced by our recycling unit installed in Haydock. The current year will benefit from the Coral Mouldings and Tatra-Rotalac cost reductions and new business. Our Group is facing a crisis that is unprecedented, but we believe that our balance sheet and margins mean that we can mitigate the effects. The crisis will pass at some point. At that time, it will be the work we do to move the business forward that will determine our future success. So, our priorities being clear: (1) to do all we can to keep our workplaces as safe as possible for staff, (2) secure the cash resources of the business and (3) continue to develop our product ranges throughout the next financial period. We have enjoyed a strong start to our current financial period and we look forward to a satisfactory outturn for the year given the prevailing conditions. Joe Grimmond Chairman 8 December 2020 P a g e | 5 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 activities, 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, quality 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 innovation. FINANCIAL REVIEW Income Statement Group revenues for the year ended 30 April 2020 were £22.3m (2019: £24.7m). Of this, food container sales were £6.6m (2019: £7.4m), sales for extrusion were £6.0m (2019: £6.6m), sales for trigger sprays and nozzles were £2.7m (2019: £3.1m) and sales for injection and blow moulding were £7.1m (2019: £7.6m). The Group has reported a loss before taxation for the financial year of £0.8m (2019: £0.04m). Across the Group, finance costs have remained static at £0.4m (2019: £0.4m) and depreciation at £1.7m (2019: £1.5m) in line with the current hold of spend on new, replacement and/or improvement of the assets of the Group. Gross margins remained static at 35.8% (2019: 35.9%) due to the continued benefits now being seen from the recycling line, this resulted in a gross profit of £8.0m (2019: £8.9m). Underlying operating profit decreased to £0.4m (2019: £1.0m) and underlying earnings before interest, tax, depreciation and amortisation decreased to £2.1m (2019: £2.5m). Separately recorded costs of £0.8m (2019: £0.5m) resulted from due diligence costs, intangibles amortisation and reorganisation costs, as well as share-based payment charges and compensation for loss of office of senior management and the goodwill impairment of Tatra Rotalac. Balance Sheet Total shareholders’ equity decreased to £12.1m (2019: £12.9m), with net assets per share decreasing to 14.7 pence (2019: 15.6 pence). The term loan which is repayable in monthly instalments by 2027 has been shown as a current liability to match against the current asset of the land and buildings assets held for sale. The land and buildings at Haydock were put up for sale to raise some working capital for the future growth of the company. The adoption of IFRS 16 has resulted in the Group recognising right-of-use assets and lease liabilities for all contracts that are, or contain, a lease. See note 2 for the impact on the accounts. P a g e | 6 Strategic Report Continued Balance Sheet (continued) An impairment of £0.4m on the goodwill of Tatra-Rotalac was deemed necessary during the year. See note 14 for more details. Based on the results of the Group for the year ended 30 April 2020, the directors have assessed compliance with covenants on the invoice discounting facility and mortgage. Although these financial covenants have been passed in respect of the invoice discounting facility, calculations show that they have been breached on the mortgage with an outstanding balance of £1,765,000. The bank has reviewed the accounts and provided a waiver to these breaches after year end, however given these covenants were not waived at the year-end date have been treated as current in the company’s balance sheet. Cash Flow Net cash generated from operations were £2.6m (2019: £1.5m) with cash and cash equivalents being £453k (2019: £27k overdrawn). As set out in note 26 the Group’s net debt decreased to £8.0m (2019: £8.2m) with the level of gearing increasing from 63.6% to 66.0% which, when excluding the impact of IFRS 16, is in line with the decrease in investment to meet the revised, due to the pandemic, forecasted decrease in demand. The Group has a mix of secured borrowing facilities totalling £5.6m in addition to a £1.8m 10-year mortgage. The borrowing facilities 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 2021. 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. P a g e | 7 Strategic Report Continued Key Performance Indicators (KPIs) KPIs 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 KPIs which it monitors on a regular basis at Board level and, where relevant, at operational executive management meetings as follows: Group revenue Gross margin Operating (loss)/profit (Loss)/profit before tax Underlying earnings before interest, tax, depreciation and amortisation Underlying operating profit Gearing 2020 £22.3m 35.8% £(0.4)m £(0.8)m £2.1m £0.4m 66.0% 2019 £24.7m 35.9% £0.5m £0.04m £2.5m £1.0m 63.6% In 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. Section 172 Statement The following disclosure describes how the directors have had regard to the matters set out in section 172(1)(a)-(f) and forms the directors statement required under section 414CZA of the Companies Act 2006. Directors’ duties No new directors were appointed to the Board during the year. As part of their induction, all Directors have been briefed on their duties with access available to professional advice from the Company’s external legal advisors. The Directors fulfil their duties in part through a governance framework that includes delegation of certain day-to-day decision making to senior employees, principally the Managing Directors of each of the 4 subsidiaries of the Group. Risk Management As the Group grows, its business and risk environment become increasingly complex. It is therefore vital to the Company’s long-term success that it effectively identifies, evaluates, manages and mitigates the risks that it faces and that we continue to evolve its approach to risk management. Monthly Board meetings are conducted at which challenges and risks to the business are discussed and addressed in a timely manner. Focus for the 2019-20 financial year began with a growth strategy including potential acquisitions however it was modified to a “maintain Strategy” as the Covid Pandemic impacted our business at the beginning of 2020 and throughout the rest of the financial period. Concentration on cost reduction across the business to match the disrupted sales growth was paramount. Incorporating the Interpack subsidiary into Coral Mouldings including the refreshing of both the sales teams was completed along with major operational changes at Tatra to reduce the cost base. Additionally, the sourcing of products from alternative suppliers in China coupled with transport mechanism changes enabled Global One-Pak to get back to budget. Support from the Board of Directors enabled the MBRS (Multi-box-recycling-system) and additional improved ice-cream tub tooling to be developed and financed, both developments are now completed and are expected to positively impact the business profitability in the last quarter of the current financial period and beyond. In February 2020 the Board of directors discussed and agreed that it was in the best financial interest of the Group to attempt to sell and leaseback the property at Haydock, the company LSH was tasked with the marketing. A number of potential buyers showed interest, these were discussed by the board and one was selected, the sale is currently progressing. Engaging with our shareholders A small number of the Company’s shareholders (which include members of the Company’s Board) continue to be actively engaged within the business. The Board meet monthly throughout the year, and ad hoc, as necessary. The Board recognises the importance of continuing an effective and transparent dialogue with shareholders and ensuring that non-management shareholders understand and support the Group’s strategy and objectives. At least annually the Group’s strategy and plan for the forthcoming year is explained and discussed with shareholders with half-yearly reporting and updates for material issues as and when required. P a g e | 8 Strategic Report Continued Section 172 Statement (continued) Culture and environment The Board recognises that integrating environmental, social and governance (ESG) considerations into the Group’s investments is of paramount importance to the Group’s long-term success and value is placed on managing the Company in a sustainable way. Working within the plastics industry can, and does, bring criticism as demonstrated by the many documentaries and news reports about plastic pollution on TV on a daily basis. The decision to develop and invest in a bespoke recycling plant during 2019 and the subsequent gain of the Environmental Agency reprocessor accreditation has made us the go-to business for councils, authorities and some blue-chip companies to send their plastic waste to. The plant recycles the waste into a feedstock which is then used in the manufacture of new recycling products ensuring the 360-degree recycling initiative is achieved. The business also holds BRC Accreditation for food packaging manufacture underpinned by the ISO9000 Quality Management System. The Groups investment strategies align with being a responsible manufacturer i.e. new machinery criteria includes the requirement for less energy and resources. Covid-19 Pandemic At the beginning of the Covid-19 pandemic this year we followed the government guidelines. All members of the teams were updated via briefs on regular occasions to ensure communications and adherence was achieved. Installation of barriers in offices, one-way systems for entering and leaving the buildings, extra wash and cleaning stations. Sanitizing depots and PPE to both keep our employees and visitors safe at our Manufacturing sites and distribution centres. As key suppliers to the food, medical, telecommunications and transport we made the decision to keep our business operational whilst ensuring that as the Government Covid-19 guidelines subsequently changed we stuck to them rigidly. Business relationships The Company is committed to acting ethically and with integrity in all business dealings and relationships. Fostering business relationships with key stakeholders, customers, limited partners and suppliers is important to the Company’s success. Many customers and suppliers have been aligned with the business for many years with, in the case of suppliers, access to at least two suppliers for our major materials. The Board looks to implement and enforce effective systems and controls to ensure its supply chains are maintaining the highest standard of business conduct in line with best practice including in relation to anti-bribery and modern slavery. During the last 2 years the employee handbook has been updated with all up-to-date relevant information and Personnel have been advised, and in some instances, trained accordingly as and when new legislation or Governmental advice is issued. Being a relatively small company of just over 120 employees largely operating in two locations in the North West of the England, there is a high level of visibility regarding employee engagement and satisfaction. The UK based directors are able to monitor this engagement as they sit with and amongst the employees. During the year the Board re-tendered the employee benefits provider and engaged a new provider who offered certain additional services and benefits for the Group’s employees, including services regarding the mental health and wellbeing of employees and access to a discount company shop. Risks and Uncertainties The Group has identified various risks and uncertainties it faces, which include: • Movements in commodity prices often caused by supply constraints or demand management. • • Loss of a key individual. 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 risk of delays in supply of raw materials from Europe. • Coronavirus pandemic risk of loss in sales. P a g e | 9 Strategic Report Continued Risks and Uncertainties (continued) The Group has taken appropriate steps to manage and control these risks, which include: • Ensuring that 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. • 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. Brexit planning across the Group, mitigating lead times, increasing stock levels short term. Coronavirus planning across the Group, mitigating costs, furloughing staff as required to keep in line with production/sales needs. • • 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 irrespective of personal 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 16% of the Group workforce as at 30 April 2020. Position Group Directors Senior Managers Other Employees Total Employees Male Female Total 4 14 124 142 1 3 23 27 5 17 147 169 Social, Community and Human Rights The Group endeavours to impact positively on the communities in which it operates. In particular the Group purchases raw materials from trusted suppliers who it recognises as obtaining the products through trusted, fair and sustainable methods. Ethical concerns 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. P a g e | 10 Strategic Report Continued Brexit With the imminent departure of the United Kingdom from the European Union, as a business, we continue to focus on operational cost control to enable an improved gross margin. We know that the impact at the docks of the UK towards the end of 2020 early 2021 will be challenging, delays are expected. A constant monitoring of supplies to the plants is on-going with extra working capital used to buy some raw materials in advance. Our focus remains that of cost control across the 2 manufacturing subsidiaries. These will be supplemented increasingly by the recycling business which we believe will leave the Group on a good sound footing both during and after the completion of the UK’s departure from the European Union. Coronavirus (Covid-19) Uncertainty around the scale, timing and impact of the coronavirus pandemic means it is impossible to give meaningful guidance for profits in the year ahead. Instead, we have given a range of outcomes for the current year for different sales scenarios. The resulting stress test is very useful; it gives a clear picture of the possible effects on our balance sheet and finances and points to the practical steps we can take to ensure that the Group is best placed to cope with all imaginable outcomes. The method we have used to stress test the business is as follows: 1. Start with our Base Case sales, actual profits and cash flow as per the end of October 2020 management accounts from the beginning of the lockdown period 2. Model varying levels of sales and production decline and potential shut down 3. Assess the expected impact on cash flow for each scenario 4. Outline the measures we can take to increase cash retained within the business In the period to the end of July 2020 the Group shows an unaudited underlying operating profit of £0.2m on sales of £5.4m, as per the trading statement on 21 August 2020. Our stress test suggests that the Group could sustain a 19% reduction of sales from the 1st quarter without exceeding our current bank facilities. The Group would look to mitigate any cash loss by requesting further payment holidays from current financing, resizing the facilities by furloughing staff and the temporary reduction of staff pay. Base Case The forecast done in October 2020 was based on what we knew about the coronavirus pandemic at the time. The model has actual sales and profits up to September 2020 with the assumption made that the business would continue to recover over the next 12 months with an expected seasonable dip in November and December 2020. Reverse stress test scenario 1 For this scenario it was assumed that average sales and associated variable costs would drop by 19% over the remaining months in the forecast period, this showed that the Groups cashflow reserves would be reduced to a breakeven point in April 2021 which would be followed by an improvement in the cash balance throughout the following financial year. The directors feel that this is an unreasonable scenario as the business has continued to exceed its forecasts in October and November providing further cash headroom on this position and also proving that a consistent drop of this magnitude would be a significant reduction of the businesses sales achieved to date. . P a g e | 11 Strategic Report Continued Coronavirus (Covid-19) (continued) Reverse stress test scenario 2 The business has also run a reverse test model on the Groups covenant compliance due at 30 April 2021. This model shows that top line trade and associated variable costs would need to drop 19% across the remaining part of that period for the updated covenant tests to be breached. The updated covenant tests come as a result of a negotiation with Barclays bank to reduce its thresholds for the period ended April 2021 by 20%. Going concern As explained fully in note 2 to the financial statements, after making enquiries, the Directors 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 continue in operational existence for at least 12 months following the approval of the financial statements. For this reason, the directors continue to adopt the going concern bases in preparing the financial statements. In March 2020 an outbreak of covid 19 hit the UK and impacted business confidence in our sector. This resulted in a few months of significantly decreased trade as the country was forced into a lockdown. After the initial drop the business has responded and in recent months has been back to trading at near pre covid levels. After the impact of coronavirus, the business reforecast and performed reverse stress sensitivities as highlighted above. The forecast shows that the Group will be able to continue in operational existence for the foreseeable future within current and expected to be available facilities. The downside sensitivities are not considered a reasonable position based on post year end trading data and the businesses response to covid 19 but has helped identify further mitigating actions that could be taken to improve cash flows if required. As presented in the balance sheet the Group put its property up for sale, the proceeds of which will be used for future growth and increase working capital. Based on the results of the Group for the year ended 30 April 2020, the directors have assessed compliance with covenants on the invoice discounting facility and mortgage. Although these financial covenants have been passed in respect of the invoice discounting facility, calculations show that they have been breached on the mortgage with an outstanding balance of £1,765,000. The bank has reviewed the accounts and have provided a waiver to these breaches after the year end. It is noted that the invoice discounting facility was renewed in June 2020 as part of the annual renewal and the directors have discussed with the bank who have advised that they see no reason that the facility will not be continued at the next annual renewal in June 2021. For the year ended April 2021 the bank has agreed to temporarily reduce the covenants attached to the Groups term loan by 20% to provide additional headroom in the compliance tests for the year due to the short-term impact in trade surrounding the coronavirus pandemic at the start of the year. We not are not forecasting a breach for the year ended April 2021, but a 19% drop in forecasted sales could possibly mean a breach. Our Group is facing a crisis that is unprecedented, but we believe that our balance sheet and margins mean that we can mitigate the effects. The crisis will pass at some point. At that time, it will be the work we do to move the business forward that will determine our future success. So, our priorities being clear: (1) to do all we can to keep our workplaces as safe as possible for staff, (2) secure the cash resources of the business and (3) continue to develop our product ranges throughout the next financial period. This strategic report was approved by the board on 8 December 2020. Sharon Tinsley Finance Director P a g e | 12 Directors and Advisers Non-executive Directors Joe Grimmond, Non-Executive Chairman Joe 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 Chairman at the AGM in 2011 and in December 2015, became Executive Chairman. In June 2016 he became non-executive Chairman following the appointment of Roberto Zandona. He became Executive Chairman again April 2017 to August 2017 following Roberto Zandona’s retirement as director. Mr Grimmond is a Fellow of the Association of Accounting Technicians. David Low, Non-executive 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. He is a shareholder in several private companies involved in sport and leisure, vending and telemetry services, brewing and retail estate. Executive Directors Michael (Mick) Wood, Chief Executive Officer Mick was appointed Chief Executive Officer in January 2018. During a career spanning over 40 years he has held senior management roles at a number of plastics businesses, the most recent being UK Operations Manager at Linpac Packaging Ltd before joining Coral Products PLC as Chief Operating Officer in August 2017. Sharon Tinsley, ACMA, Finance Director and Company Secretary Sharon was appointed in February 2017. She joined Coral Products as Group Financial Controller in December 2016. She has over 20 years of experience. She previously acted as Financial Controller of James Dewhurst Ltd, prior to this she held accounting positions at Pets Choice Ltd, Thames Water, Scott Health and Safety Ltd and Uniqema Ltd. Sharon is an Associate of the Chartered Institute for Management Accountants. Paul Freud, Corporate Development Director Paul was appointed in July 2015. He is responsible for directing the business development activities and driving new sales growth by seeking market opportunities or acquisitions. Paul has over 20 years of management and leadership experience in the manufacturing industry. He is also the Chairman of Tatra Rotalac Limited, responsible for developing new and innovative product ranges for blue chip companies, including solutions for fibre optic broadband installations and rail infrastructure. P a g e | 13 Registered Office North Florida Road Haydock Industrial Estate Haydock Merseyside WA11 9TP UK Registered Number: 02429784 Auditor BDO LLP 3 Hardman Street Spinningfields Manchester M3 3AT Solicitors Legal Clarity Lawyers LLP 55 Newhall Street Birmingham B3 3RB Bankers Barclays Bank PLC 1st Floor 3 Hardman Street Spinningfields Manchester M3 3HF Registrar Share Registrars Limited The Courtyard 17 West Street Farnham, Surrey GU9 7DR Broker & Nominated Advisor Cairn Financial Advisors LLP 61 Cheapside London EC2V 6AX PR Adviser Capital M Consultants 1 Royal Exchange Avenue London EC3V 3LT Directors’ Report The Directors present their annual report and the audited financial statements for the year ended 30 April 2020. Results and Dividends The results for the year are set out on page 31. This shows a Group loss after taxation of £0.8m (2019: £0.1m profit). No interim dividend was paid (2019: 0.25p) during this financial period. There is no final dividend (2019: nil) recommended in respect of the year ended 30 April 2020. 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 activity of the Company and its subsidiaries is the manufacture and recycling of plastic injection, extrusion 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. It has been in operation since 1990, became a fully listed plc in 1995 and moved to the AIM market in 2011. Directors The current directors of the Company are given on page 13. During the year, no changes in directors took place. In 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’ Interests 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 Tinsley Ordinary shares of 1p each 30 April 2020 Number Ordinary shares of 1p each 30 April 2019 Number 5,893,337 2,048,333 980,000 223,078 162,783 9,307,531 5,323,337 1,948,333 930,000 186,564 162,783 8,551,017 Between the year-end date and the date of this report 40,000 and 41,914 additional shares were purchased by Mick Wood on 10 June 2020 and 22 September 2020 respectively, 400,000 shares by Joe Grimmond on 22 September 2020, 50,000 shares by Paul Freud on 24 September 2020 and 100,000 shares by David Low on 22 September 2020. P a g e | 14 Directors’ Report continued Substantial Interests As at 4 December 2020, 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: Jim Nominees Ltd Rathbone Nominees Ltd Bank of New York (Nominees) Ltd Hargreaves Lansdown (Nominees) Ltd Nortrust Nominees Ltd Vidacos Nominees Ltd Rene Nominees (IOM) Ltd Interactive Investor Services Nominees Ltd Barclays Direct Investing Nominees Ltd Rock Nominees Ltd Number of shares % of share capital 7,270,406 6,818,025 6,140,903 6,009,530 5,460,604 5,394,562 4,716,720 4,147,941 4,098,567 2,976,119 8.80 8.25 7.43 7.27 6.61 6.53 5.71 5.02 4.96 3.60 Share Capital At the 2019 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 Directors The Board’s role is to provide entrepreneurial 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 meeting. The Directors 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 Remuneration 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. It also considers the compensation commitments of its 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. In addition to an interim meeting, the Audit Committee meets at the year-end with the external auditors who have direct access to the non-executive directors for independent decisions. The Audit Committee 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. P a g e | 15 Directors’ Report continued 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. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the Group and Parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) 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 securities on the Alternative Investment Market. In preparing these financial statements, the directors are required to: • • • • 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 continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that 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 detection 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 preparation 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 importance and any failure in standards would significantly affect the confidence of our customers. There are stringent controls in place to ensure product safety and integrity. Product performance is monitored regularly to ensure compliance with standards. Insurance The Group has in place a Directors and Officers liability insurance policy that provides appropriate cover in respect of legal action brought against its directors. P a g e | 16 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. Shareholder Relations 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 executive directors and institutional 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. It is committed 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 facilities and other facilities in which it works. The Group will: • As a minimum comply with the requirements of all current relevant legislation, approved codes of practice and good working practices; Provide and maintain as far as is reasonably practicable, safe plant, equipment and systems of work; • • Maintain good general working conditions by the provision of adequate facilities such as heating, lighting and ventilation; • • Maintain a continuing interest in health, safety and welfare as they affect the Group’s activities, and in particular inform, consult Provide personal protective equipment where appropriate; and involve employees wherever possible; • • Provide such information, instruction, training and supervision that is 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. Notwithstanding 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 interaction with local staff during this time. Our Corporate Social Responsibility Committee demonstrates our commitment to our local and wider community. As well as working alongside local authorities to provide local jobs for local people, we strive to actively support those in our community through sponsorship events and volunteering opportunities. Our Safety-First 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. P a g e | 17 Directors’ Report continued Employment and Human Rights The Group is committed to providing and promoting equal opportunities for staff and job applicants. We are committed 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, irrespective of their 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 environment 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 acting ethically and with integrity in all our business dealings and relationships and to implementing and enforcing effective systems and controls to ensure modern slavery is not taking place anywhere in our own business or in any of our supply chains. The Group is also committed 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 children, and we expect that our suppliers will hold their own suppliers to the same high standards. Auditor In accordance with Section 489 of the Companies Act 2006 a resolution will be proposed at the Annual General Meeting that BDO LLP be re-appointed as auditor. Disclosure of Information 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 confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006. Post Balance Sheet Events A coronavirus business interruption loan (CBIL) of £1 million was received from Barclays Bank on 13 May 2020. This is on a 3-year term interest free for the first 12 months and repayment holiday for the first 6 months. The interest rate is 4.61% over base. The only covenant in place is that capital expenditure cannot be higher than £400,000 and during the term of the loan no dividend payments can be made. The invoice discounting facility was reviewed in June 2020 and renewed for a further 12 months. P a g e | 18 Directors’ Report continued Corporate Governance Code High standards of corporate governance are a key priority 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 with 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 (Quoted Companies Alliance) Code in compliance with 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 in the QCA 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 in this report how it addresses the ten principles of the new code. Research and Development During the year, the Group has spent £969,000 (2019: £739,000) on research and development. Annual General Meeting The AGM will be held on Wednesday 13 January 2021 in the offices of Coral Products PLC, North Florida Road, Haydock Industrial Estate, St Helens, WA11 9TP. The Notice of Meeting is contained on pages 68 to 70 of this report. At the meeting, resolutions will be prepared to receive the audited accounts and approve the Remuneration Report, to elect directors and to re-appoint BDO LLP as auditor. In addition, shareholders will be asked to renew both the general authority of the directors to issue shares and to authorise the directors to issue 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 commercially useful to have the authority should they need to allot shares for any purpose in the future. By order of the Board S Tinsley Company Secretary 8 December 2020 P a g e | 19 Directors’ Remuneration Report Introduction 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 opinion 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 audited and unaudited information. Unaudited information Remuneration Committee The Group has established a Remuneration Committee which is constituted in accordance with the recommendations of the Combined Code. The remuneration committee 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 remuneration of the non-executive directors is determined by the Board. No director plays a part in any discussions about his own remuneration. Remuneration Policy Executive remuneration packages are designed to attract, motivate and retain directors of the high calibre needed to progress and develop the Company and to reward them for enhancing value to shareholders. There are three main elements of the remuneration package for executive directors: • • • Basic annual salary and benefits Pension contributions Share options 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 position or responsibility. In deciding appropriate levels, the Committee considers the Group as a whole and by reference to other companies in the media and manufacturing sectors. The Group has a policy of allowing contracts of service to be no more than one year in duration. In addition to basic salary, the executive directors receive pension contributions and certain benefits-in-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 of 12% of basic salary towards funding each director’s pension plan. Performance Bonus There is a performance bonus in place. Additionally, the remuneration committee is empowered to make awards for special circumstances if appropriate. Share Options No share options were exercised during the year (2019: Nil). P a g e | 20 Directors’ Remuneration Report continued Performance Graph The graph below shows the Group’s share price movement over the last five years. 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 Mick Wood Sharon Tinsley Date of contract Notice period 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-executive 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 £50,000. The Board met 11 times during this financial period with 100% attendance from all Directors. P a g e | 21 Directors’ Remuneration Report continued Audited information Directors’ Remuneration The total amounts paid for Directors’ remuneration was as follows: Emoluments Pension contributions - defined contribution scheme Share based payment Emoluments – Executive Directors 2020 Basic salary 2020 Benefits-in-kind £’000 Paul Freud Sharon Tinsley Mick Wood £’000 99 66 112 277 Emoluments – Non-executive Directors David Low Joe Grimmond By order of the Board Joe Grimmond Chairman of the Remuneration Committee 8 December 2020 2020 Executive £’000 2020 Non- executive £’000 303 21 20 344 76 - - 76 2020 Pension £’000 2020 Share based payment £’000 - 1 25 26 - 8 13 21 - 4 16 20 P a g e | 22 2020 Total £’000 379 21 20 420 2020 Total £’000 99 79 166 344 2019 Total £’000 370 17 61 448 2019 Total £’000 100 84 186 370 2020 £’000 2019 £’000 27 49 76 28 50 78 Audit Committee Report During the year the Audit Committee met 2 times and there were also meetings between the Audit Committee Chair, the Group Finance Director and the external auditor. The Audit Committee discussed the scope and key audit matters before the commencement of the current audit. Financial Reporting The Committee has reviewed with both management and the external auditor the more significant areas of judgement and the appropriateness and application of the Group’s accounting policies. In particular, emphasis was placed on the new accounting standard of IFRS 16 (lease liabilities) adopted for the first time during the year. The adoption of IFRS 16 has changed the lease recognition policies applied by the Group and the Committee has reviewed the appropriateness of those updated policies with both management and the external auditor, the group has adopted the modified retrospective approach and chosen not to restate comparative balances. Further explanation of the impact of implementing IFRS 16 in the year is detailed in note 2. The Committee reports to the Board on whether the accounts are a comprehensive review of the current year’s activity. Risk management and internal control The Audit Committee has overall responsibility for the monitoring of internal controls, approving accounting policies and agreeing the treatment of significant accounting issues. The consideration and documentation of risks and opportunities is undertaken on an annual basis as part of the budgeting process which the full Board take part in. These matters are then monitored and adapted as required throughout the year by the means of regular management meetings and scheduled conference calls between the Executive Directors and the divisional management teams. The annual insurance renewal provides a further opportunity to assess risks and provide cover in areas where risk mitigation is not possible, or levels of risk are significant. The Board reviews monthly financial performance against budgets and forecasts and monitors bank facilities and other treasury functions with any policy changes approved by the Board. The Audit Committee receives feedback from the external auditors on areas of risk and accounting procedures which are used in adapting internal control processes as required. The Committee reviews any proposed due diligence of acquisition targets and the selection of the professional firm carrying out the work. Audit Independence The Committee is responsible for making recommendations to the Board on the appointment of the external auditor and for non-audit services such as taxation and acquisition due diligence. The Chair of the Committee met with the external audit partner to discuss independence before the commencement of the current year’s audit. The Audit Committee Report has been approved by the Board and signed on its behalf by: David Low Chairman of the Audit Committee 8 December 2020 P a g e | 23 Independent Auditor’s Report to the Members of Coral Products plc Qualified Opinion We have audited the financial statements of Coral Products plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 30 April 2020 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 reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) 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. In our opinion, except for the effects of the matter described in the basis for qualified opinion section, 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 2020 and of the group’s loss 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 qualified opinion With respect to inventory having a carrying value of £3,368,000 the audit evidence available to us was limited because, given the global COVID-19 pandemic, no inventory count was undertaken and we did not observe the physical inventory as at 30 April 2020. Owing to the nature of the group’s records, we were unable to obtain sufficient appropriate audit evidence regarding the inventory quantities by using other audit procedures to confirm existence at 30 April 2020. Consequently we were unable to determine whether any adjustment to this amount was necessary. In addition, were any adjustment to the inventory balance to be required, the strategic report would also need to be amended. We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the 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 relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: • • the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. P a g e | 24 Independent Auditor’s Report to the Members of Coral Products plc Continued 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 audit 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 opinion on these matters. In addition to the matter described in the Basis for qualified opinion section we have determined the matters described below to be the key audit matters to be communicated in our report. Impairment of Goodwill and Intangible Assets As described in Note 2 (Accounting policies), Note 3 (Critical accounting estimates and judgements), Note 14 (Goodwill) and Note 15 (Other intangible assets), the group has goodwill and intangible assets which, in accordance with IFRS requires management to test these balances for impairment at least annually. There is a high degree of management judgement and assumptions required in assessing the value in use of the Cash Generating Units (“CGU”) to which the Goodwill and Intangible assets are allocated and therefore determining any potential impairments, and as a result we determined this to be a key audit matter. How We Addressed the Key Audit Matter in the Audit We obtained the impairment analysis 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 had 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: • • • future trading projections and cash flow forecasts; 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 assist us in assessing the reasonableness of the underlying assumptions and this enabled us to check that the directors had adopted reasonable assumptions in each circumstance. We also reviewed the sensitivity analyses prepared by impact of management to understand the relative changes in the key assumptions within the impairment models, as well as to check that management’s disclosure of sensitivities (included in Note 14) in respect of the impairment review are reasonable and balanced. Key observations: Based on the work performed we consider that the judgments and assumptions made by management in assessing impairment are reasonable. P a g e | 25 Independent Auditor’s Report to the Members of Coral Products plc Continued Inventory Valuation How We Addressed the Key Audit Matter in the Audit As described in Note 2 (Accounting policies) and Note 18 (Inventories), the group carries inventory at the lower of cost and net realisable value. As at 30 April 2020, the group held inventories of £3.4m (2019: £3.5m). Judgement is required to assess the appropriate level of provisioning for items which may be sold at a value below cost as a result of a reduction in consumer demand, age of items held in inventory, 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 noted in relation to inventory valuation for items held within the subsidiary undertaking Coral Products (Mouldings) Limited and Tatra Rotalac Limited, given inventory count variances and significant inventory write-downs in previous years. We obtained evidence over management’s judgements applied in calculating the value of inventory provisions by: • • considering the carrying amount of a sample of inventory to confirm it is held at the lower of cost and net realisable value. Inventory cost was tested by verifying relevant supplier invoices and checking overheads incurred in bringing inventory to its present location and condition have been appropriately recorded. Inventory cost (plus any costs to complete) was compared to net realisable value by examination of post year-end invoices and sales prices for the sample of inventory tested; assessing the group’s inventory provisioning policy by reviewing usage of raw materials and sales of finished goods, with specific consideration given to slow moving or obsolete inventory lines; and • we also reviewed the basis of inventory provisioning applied by all group entities and considered whether these were being applied consistently and reflected the nature of the inventory held in each location. Key observations: Based on the work performed we did not identify any issues over management’s judgements in respect of inventory valuation. See the Basis for qualified opinion section above, in respect of existence of inventory. P a g e | 26 Independent Auditor’s Report to the Members of Coral Products plc Continued Going Concern and COVID-19 Uncertainty How We Addressed the Key Audit Matter in the Audit As described by the Directors in Note 2, the impact of COVID-19 on the business saw significantly decreased trade late in FY 2020 and early in FY 2021. Trading has recovered in recent months, however there still remains a risk given the economic uncertainty in the UK and the potential for further stricter lockdown measures. The resulting impact on forecast cash and loan covenants, gives rise to a significant risk over going concern. Management is required to make an assessment of the Group’s and each Company’s ability to continue as a going concern, considering all available information about the future of the business for a period of not less than twelve months following the date of approval of the financial statements. This process involves significant judgements and estimates to be made by management over future trading expectations and consider downside scenarios which reduce cash and covenant headroom on original forecasts. We have therefore determined going concern to be a key audit matter. We have performed the following procedures: • • • • • • reviewed and challenged the going concern paper prepared by management by verifying the numerical inputs, accuracy of the calculations and obtaining evidence to support managements decisions; evaluated the appropriateness of the assumptions utilised by management in assessing the group’s ability to continue as a going concern by comparing to previous periods and actual results achieved to date. These key assumptions include the timing of cash flows, projected growth rates, headroom on financing facilities and compliance with covenants; reviewed the forecasts prepared to 30 April 2022 and stress tests to understand the available headroom on all financing facilities, cash and loan covenants. We have challenged the assumptions within the stress test scenarios to understand the headroom impact of a reductions in revenue, reduction in gross profit margin and an increase in administration costs; challenged management on the inputs and assumptions used in the model. The model was originally prepared grouping invoice discounting facility and cash together and we requested new forecasts looking at the impact of both throughout the forecast period; reviewed post year end performance to consider the results compared with the original budget for the year, and analysing trends in performance to corroborate the prudence of trading expectations; and evaluated the compliance with both the existing and the revised covenants in place within loan facilities, both during the period and over the forecast period. Key observations: Our observations are set out it the Conclusions relating to going concern section above. P a g e | 27 Independent 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 into account the nature of identified misstatements, 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 materiality for the financial statements as a whole as follows: Group materiality Basis for materiality Rationale for the benchmark adopted £111,000 (2019: £123,000) 0.5% of revenue (2019: 0.5% of revenue). Revenue is determined to be a stable basis of assessing business performance and is considered to be an important determinant of performance used by shareholders and other users of the financial statements. In considering individual account balances and classes of transactions we apply a lower level of materiality (performance materiality) 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 £77,000 (2019: £86,000), representing 70% of materiality. We agreed with the audit committee that we would report to them all individual audit differences identified during the course of our audit in excess of £5,550 (2019: £6,150). 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 materiality ranged from £23,000 to £94,000 (2019: £27,000 to £100,000). Parent company materiality was £88,000 based on 80% of Group materiality (2019: £98,000 based on 80% of Group materiality). An overview of the scope of our audit Our group audit was scoped by obtaining an understanding of the group and its environment, including group-wide controls, and assessing the risks of material misstatement at the group level. The group has five significant 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% (2019: 100%) of revenue, 100% (2019: 100%) of profit before tax and 100% (2019: 100%) of net assets. P a g e | 28 Independent 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, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the inventory quantities of £3,368,000 held at 30 April 2020. We have concluded that where the other information refers to the inventory balance or related balances such as cost of sales, it may be materially misstated for the same reason. Opinions on other matters prescribed by the Companies Act 2006 Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of the 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 which we are required to report by exception Except for the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and directors’ report. In respect solely of the limitation on our work relating to inventory, described above: • we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and • we were unable to determine whether adequate accounting records had been kept by the parent company. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • • • 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. P a g e | 29 Independent Auditor’s Report to the Members of Coral Products plc Continued Responsibilities of directors As explained more fully in the directors’ report, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the 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. Gary Harding (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor Manchester United Kingdom 8 December 2020 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). P a g e | 30 Group Income Statement for the year ended 30 April 2020 Revenue Cost of sales Gross profit Operating costs Distribution expenses Administrative expenses before impairment and other separately disclosed items Other separately disclosed items Goodwill impairment Administrative expenses Operating (loss)/profit Finance costs (Loss)/profit for the financial year before taxation Taxation (Loss)/profit for the financial year attributable to the equity holders of the parent Earnings per share attributable to the equity holders of the parent Note 2020 £’000 2019 £’000 5 6 6 7 8 10 22,321 (14,329) 7,992 24,733 (15,861) 8,872 (1,296) (6,295) (433) (350) (7,078) (382) (439) (821) - (821) (1,246) (6,608) (539) - (7,147) 479 (438) 41 43 84 Basic and diluted earnings (loss)/profit per ordinary share 11 (0.99)p 0.10p Group Statement of Comprehensive Income for the year ended 30 April 2020 (loss)/profit for the financial year Total other comprehensive income Total comprehensive (loss)/income for the year attributable to equity holders of the parent The accompanying accounting policies and notes form an integral part of these financial statements. 2020 £’000 2019 £’000 (821) - (821) 84 - 84 P a g e | 31 Balance Sheets as at 30 April 2020 Company reference: 02429784 ASSETS Non-current assets Goodwill Other intangible assets Property, plant and equipment Right of use assets Investments in subsidiaries Total non-current assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total current assets Assets held for sale LIABILITIES Current liabilities Term loan Other borrowings Lease liabilities Trade and other payables Total current liabilities Liabilities on assets held for sale Net current assets/(liabilities) Non-current liabilities Term loan Other borrowings Lease liabilities Deferred tax Total non-current liabilities NET ASSETS SHAREHOLDERS’ EQUITY Share capital Share premium Other reserves Retained earnings Group Parent Company As at 30 April 2020 £’000 As at 30 April 2019 £’000 As at 30 April 2020 £’000 As at 30 April 2019 £’000 Note 14 15 16 17 13 18 19 21 22 22 22 20 21 22 22 22 10 25 5,145 1,124 2,790 4,365 - 5,495 1,401 9,411 - - 13,424 16,307 3,368 4,931 453 8,752 2,520 - 2,978 1,191 3,749 7,918 1,765 3,505 5,521 - 9,026 - 150 4,800 - 3,834 8,784 - - - 2,520 - 10,951 13,471 - 39 12 51 - 1,765 - - 677 2,442 - 1,589 242 (2,391) - - 2,509 398 2,907 12,106 826 5,288 1,567 4,425 1,303 1,965 - 368 3,636 12,913 826 5,288 1,567 5,232 - - - - - 11,080 826 5,288 1,567 3,399 - - 2,519 - 10,937 13,456 - 483 27 510 - 150 - - 59 209 - 301 1,303 - - - 1,303 12,454 826 5,288 1,567 4,773 TOTAL SHAREHOLDERS’ EQUITY 12,106 12,913 11,080 12,454 P a g e | 32 Balance Sheets continued An income statement is not provided for the parent Company as permitted by section 408 of the Companies Act 2006. The loss dealt with in the financial statements of Coral Products Plc was £1,388,000 due to a write off of £1,388,000 intercompany loans (2019: £nil). The financial statements on pages 31 to 67 were approved by the Board of Directors on 8 December 2020 and were signed on its behalf by: Joe Grimmond Director Sharon Tinsley Director The accompanying accounting policies and notes form an integral part of these financial statements. P a g e | 33 Statement of Changes in Shareholders’ Equity for the year ended 30 April 2020 Called Up Share Capital £’000 Share Premium Reserve £’000 Note Other Reserves £’000 Retained Earnings £’000 Total Equity £’000 Group At 1 May 2018 Profit 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 1 May 2019 Loss for the year Total comprehensive loss Contributions by and distributions to owners Credit to equity for equity settled share- based payments Dividend paid At 30 April 2020 Parent Company At 1 May 2018 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 1 May 2019 Loss for the year Total comprehensive loss Contributions by and distributions to owners Credit to equity for equity settled share- based payments Dividend paid At 30 April 2020 13,171 84 - 84 71 (413) 12,913 (821) (821) 14 - 12,106 Total Equity £’000 12,796 - - - 826 - - - - - 826 - - - - 826 5,288 - - 1,567 - - - - - 5,288 - - - - 5,288 - - - 1,567 - - - - 1,567 5,490 84 - 84 71 (413) 5,232 (821) (821) 14 - 4,425 24 12 24 12 Called Up Share Capital £’000 Share Premium Reserve £’000 Note Other Reserves £’000 Retained Earnings £’000 826 - - - - - 826 - - - - 826 5,288 - - - - - 5,288 - - - 1,567 - - - - - 1,567 - - - - 5,288 - 1,567 24 12 24 12 5,115 - - - 71 71 (413) 4,773 (1,388) (1,388) 14 - 3,399 (413) 12,454 (1,388) (1,388) 14 - 11,080 The accompanying accounting policies and notes form an integral part of these financial statements. P a g e | 34 Cash Flow Statements for the year ended 30 April 2020 Cash flows from operating activities (Loss)/profit for the year Adjustments for: Depreciation of property, plant and equipment Depreciation of right of use assets under IFRS16 (Profit)/loss on disposal of tangible assets Goodwill impairment Amortisation of intangible assets Share based payment charge Impairment of investment Interest payable Taxation charge/(credit) Operating cash flows before movements in working capital Decrease/(Increase) in inventories Decrease/(increase) in trade and other receivables (Decrease)/increase in trade and other payables Cash generated by operations UK corporation tax received Net cash generated from operating activities Cash flows from investing activities Proceed from disposal of property, plant and equipment Acquisition of property, plant and equipment Net cash used in investing activities Cash flows from financing activities New bank loans raised Dividends paid New lease liabilities Interest paid on borrowings Interest paid on lease liabilities Repayments of bank borrowings Repayments of obligations under lease liabilities Movements on invoice discounting facility Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 May Cash and cash equivalents at 30 April Group Parent Company Note 16 17 14 15 24 14 8 10 26 12 26 26 26 26 26 26 2020 £’000 (821) 1,032 681 - 350 277 14 - 439 - 1,972 137 563 (87) 2,585 - 2,585 - (322) (322) 500 - 58 (135) (304) (188) (1,180) (534) (1,783) 480 (27) 453 2019 £’000 2020 £’000 2019 £’000 84 (1,389) 1,461 - (23) - 289 71 - 438 (43) 2,277 (641) (69) (75) 1,492 2 1,494 33 (690) (657) - (413) 350 (438) - (151) (801) 118 (1,335) (498) 471 (27) - - - - - - 1,388 70 - 69 - 444 (770) (257) - (257) - - - 500 - - (70) - (188) - - 242 (15) 27 12 - - - - - - - - 63 - 63 - 549 53 665 - 665 - (11) (11) - (413) - (63) - (151) - - (627) 27 - 27 The accompanying accounting policies and notes form an integral part of these financial statements. P a g e | 35 Notes to the Financial Statements for the year ended 30 April 2020 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 Investment Market) market. The consolidated financial statements of the Group as at and for the year ended 30 April 2020 comprise the Company and its subsidiaries (together referred to as the ‘Group’). The address of the registered office is given on page 13. An overview of the business is given on pages 1 to 2. The nature of the Group’s activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Statement on pages 3 to 5. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Strategic Report on pages 6 to 12. 2. SIGNIFICANT ACCOUNTING 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 International 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 historical cost convention. 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 Interpretations The Group has adopted the following standards and interpretations which have been issued by the International Accounting Standards Board in these financial statements for the year ended 30 April 2020: • IFRS 16 – Leases (effective for periods on or after 1 January 2019). Other new amended standards and interpretations issued by the IASB that apply to the financial statements do not impact the Group as they are either not relevant to the Group’s activities or require accounting which is consistent with the Group’s current accounting policies. IFRS 16 Leases (effective from 1 January 2019, EU-endorsed) Adoption of IFRS 16 has resulted in the group recognising right-of-use assets and lease liabilities for all contracts that are, or contain, a lease. For leases previously classified as operating leases, under previous accounting requirements the group did not recognise related assets or liabilities, and instead spread the lease payments on a straight-line basis over the lease term, disclosing in its annual financial statements the total commitment. The Board has decided it will apply the modified retrospective adoption method in IFRS 16, and, therefore, will only recognise leases on balance sheet as at 1 May 2019 under which the cumulative effect of initial application is recognised in retained earnings at 1 May 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. P a g e | 36 Notes to the Financial Statements for the year ended 30 April 2020 On transition to IFRS 16, the company elected to apply the following practical expedients: • the company has not reassessed contracts that were not identified as leases under IAS 17 and IFRIC 4 to determine whether these is a lease under IFRS 16. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or modified on or after 1 May 2019. • for leases previously classified as operating leases under IAS 17 – o o o o o the company has applied a single discount rate to a portfolio of leases with similar characteristics. the company has adjusted the right-of-use assets by the amount of IAS 37 onerous contract provisions immediately before the date of initial application, as an alternative to an impairment review. the company has applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of remaining lease term at the date of application. the company has excluded initial direct costs from measuring the right-of-use asset at the date of initial application. the company has used hindsight when determining the lease term if the contract contains options to extend or terminate the lease. The following tables summarise the impacts of adopting new reporting standards on the company's financial statements. In measuring the lease liabilities at 1 May 2019, the weighted average incremental borrowing rate was determined to be 3.66%. For leases that were classified as finance leases under IAS 17, the carrying amount of the right-of-use asset and the lease liability at 1 May 2019 are determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date. Consolidated Balance Sheet ASSETS Property, plant and equipment Right of use assets LIABILITIES Current liabilities Other borrowings Lease liabilities Non-current liabilities Other borrowings Lease liabilities SHAREHOLDERS EQUITY Retained earnings As at 30 April 2019 £’000 IFRS 16 application £’000 As at 1 May 2019 adjusted balance £’000 9,411 - 4,800 - 1,965 - (3,391) 4,415 (1,260) 1,475 (1,965) 2,774 6,020 4,415 3,540 1,475 - 2,774 5,232 - 5,232 There are no IFRS 16 adjustments in the Coral Products PLC company only balance sheet. P a g e | 37 Notes to the Financial Statements for the year ended 30 April 2020 The following table reconciles the minimum lease commitments disclosed in the Group’s 30 April 2020 annual financial statements to the amount of lease liabilities recognised on 1 May 2019: Minimum operating lease commitment at 30 April 2019 Plus: Leases previously classified as finance leases under IAS 17 Less: Effect of discounting using the incremental borrowing rate as at the date of initial application Lease liability as at 1 May 2019 £’000 1,180 3,391 (322) 4,249 New Standards, Amendments and Interpretations Not Yet Effective At the date of authorisation of these financial statements, the following Standards and Interpretations 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): • • • Amendments to references to the Conceptual Framework in IFRS (effective 1 January 2020); IFRS 3 (amendments) business combinations – definition of a business (effective 1 January 2020); IAS 1 and IAS 8 (amendments) – definition of material (effective 1 January 2020); We are currently assessing the impact of these new standards and amendments; however, we do not expect them to have a material outcome on the group. Basis of Consolidation The Group’s financial statements consolidate those of the Company and its subsidiary undertakings drawn up to 30 April 2020. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control. Control is achieved when the Company: • • • has the power over the investee; is exposed, or has rights, to variable return from its involvement with the investee; and has the ability to use its power to affect its returns. The financial statements of subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting year as the parent Company and are based on consistent 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 acquisition method. This method involves recognition at fair value of all identifiable assets and liabilities at the acquisition 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. P a g e | 38 Notes to the Financial Statements for the year ended 30 April 2020 Going Concern In adopting the going concern basis for preparing the financial statements, the Board has considered the business activities as set out in the Chairman’s Statement and the Strategic Report as well as the Group’s principal risks and uncertainties 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. In March 2020 an outbreak of covid 19 hit the UK and impacted business confidence in our sector. This resulted in a few months of significantly decreased trade as the country was forced into a lockdown. After the initial drop the business has responded and in recent months has been back to trading at near pre covid levels. After the impact of coronavirus, the business reforecast and performed reverse stress sensitivities as highlighted in the strategic report. The forecast shows that the group will be able to continue in operational existence for the foreseeable future within current and expected to be available facilities. The downside sensitivities are not considered a reasonable position based on post year end trading data and the businesses response to covid 19 but has helped identify further mitigating actions that could be taken to improve cash flows if required. As presented in the balance sheet the group put its property up for sale, the proceeds of which will be used for future growth and increase working capital. Based on the results of the Group for the year ended 30 April 2020, the directors have assessed compliance with covenants on the invoice discounting facility and mortgage. Although these financial covenants have been passed in respect of the invoice discounting facility, calculations show that they have been breached on the mortgage with an outstanding balance of £1,765,000. The bank has reviewed the accounts and have provided a waiver to these breaches after the year end. It is noted that the invoice discounting facility was renewed in June 2020 as part of the annual renewal and the directors have discussed with the bank who have advised that they see no reason that the facility will not be continued at the next annual renewal in June 2021. For the year ended April 2021 the bank has agreed to temporarily reduce the covenants attached to the groups term loan by 20% to provide additional headroom in the compliance tests for the year due to the short-term impact in trade surrounding the coronavirus pandemic at the start of the year. We not are not forecasting a breach for the year ended April 2021, but a 19% drop in forecasted sales could possibly mean a breach. In carrying out their duties in respect of going concern, the directors have carried out a review of the Group's and the Company's financial position 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 into account specific business risks and the uncertainties brought about by the current economic environment. To ensure the continuation of the Group the directors regularly review the revenue generating activities, 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 annual renewal in June 2021. Conversations have been held with the bank and they have confirmed that there is an expectation that this facility will be renewed as it has in previous years when this renewal falls due. The situation regarding covid 19 is ever revolving. However, since the forecasts were done the business has continued to exceed these forecasts. 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 continue to adopt the going concern basis in preparing the annual report and financial statements. P a g e | 39 Notes to the Financial Statements for the year ended 30 April 2020 Underlying Profit In the opinion of the directors the disclosure of certain transactions should be reported separately for a better understanding of the underlying trading performance of the Group. These underlying figures are used by the Board to monitor business performance, form the basis of bonus incentives and are used for the purposes of the bank covenants. It 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. It is not intended to be a substitute for, or superior to, IFRS measures of profit. A reconciliation to statutory profit measures is detailed in note 6. Separately Disclosed Items 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 its operations have been reported as being one business segment. Information 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. Revenue Recognition 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. It applies to all contracts with 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 prior 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 value of the consideration received or receivable and represents amounts 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 acquisition. There have been no changes to the accounting for revenue during the year. Foreign Currencies Transactions 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 liabilities 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. P a g e | 40 Notes to the Financial Statements for the year ended 30 April 2020 Pension Contributions The Group contributes to defined contribution 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 items 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 liabilities 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 it is 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 neither the tax profit nor the accounting profit. Deferred tax liabilities 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 deferred tax asset relates to losses carried forward. 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 in equity. Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority. Goodwill Goodwill arises on the acquisition of subsidiaries. Goodwill representing 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 impairment. 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 acquisition 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. Impairment of Goodwill Impairment tests on goodwill are performed annually at the financial year end. Determining whether goodwill is impaired requires an estimation of the value in use of cash generating units to which goodwill has been allocated. The calculation of value in use requires management to estimate 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. As a result of the impairment review an impairment charge was recognised in the year. Further information can be found in note 14. There was no cash impact from this adjustment. P a g e | 41 Notes to the Financial Statements for the year ended 30 April 2020 Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment 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: Plant and equipment Fixtures and fittings 7-25% 10-33% - - 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 utilises a revaluation model of measurement for land and buildings with fair value being determined by reference to market-based evidence. Intangible Assets Intangible assets other than goodwill that are acquired by the Group are stated at cost less accumulated amortisation and are reviewed for impairment whenever there is an indication that the carrying value may be impaired. Intangible 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 estimated useful lives as follows: Customer relationships Brands Licences - - - 12.5-33% 10% 10% Impairment of Tangible and Intangible 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 impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order 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 individual cash-generating units, or otherwise they are allocated to the smallest Group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible 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. In 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 of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If 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 is treated as a revaluation decrease. P a g e | 42 Notes to the Financial Statements for the year ended 30 April 2020 Impairment of Tangible and Intangible Assets Excluding Goodwill (continued) Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its 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 unit) 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. Inventories Inventories 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. Financial Assets and Liabilities IFRS 9 ‘Financial Instruments’ 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. Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, trade and other payables. Initial recognition of financial assets and financial liabilities 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 financial asset/liability, as appropriate on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit 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 at the fair value 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 transaction, or over the reporting period until all model inputs will become observable where appropriate, or released in full when previously unobservable inputs become observable. Subsequent measurement of financial assets and financial liabilities Financial liabilities are subsequently measured at amortised cost. P a g e | 43 Notes to the Financial Statements for the year ended 30 April 2020 Financial Assets and Liabilities (continued) Financial assets On initial recognition, the Group classifies its financial assets into the following measurement categories: • • • Amortised cost; 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). Business model assessment: 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 objective 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. Assessment of whether contractual cash flows are solely payments of principal and interest (SPPI): The Group has undergone a Solely Payments of Principal and Interest (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. In making the assessment of whether the contractual cash flows have SPPI characteristics, the Group considers whether the cash flows are consistent with a basic lending arrangement. That is, the contractual cash flows recovered must represent solely the payment of principal and interest. Principal is the fair value of the financial asset on initial recognition. Interest 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 administrative 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. In making the assessment, the Group considers, inter alia, contingent events that would change the amount and timing of cash flows, prepayment and extension 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 mismatch). Contractual cash flows are assessed against the SPPI test in the currency in which the financial asset is denominated. Expected credit losses on financial assets Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 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 information 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. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. P a g e | 44 Notes to the Financial Statements for the year ended 30 April 2020 Financial Assets and Liabilities (continued) Amounts owed by subsidiary undertakings At initial recognition, the parent company makes an assessment as to the initial credit risk of the amounts owed by subsidiary undertakings by taking into account available relevant information about subsidiary undertakings current and expected operating performance and cashflow position. This incorporates forward looking information such as the general economic environment, consumer confidence and inflation, changing consumer demands and the competitive environment. 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 ratios. An assessment is made of significant increases in credit risk since initial recognition, using a qualitative assessment focusing on a comparison of forecasted KPIs over the expected life of the amounts owed by subsidiary undertakings at initial recognition to forecasted KPIs over the remaining expected life of the amounts owed by subsidiary undertakings at the reporting 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. Financial liabilities and equity Financial liabilities and equity are classified according to the substance of the financial instrument’s contractual obligations, 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 deposits with an original maturity of three months or less. For the purpose of the cash flow statement, cash and cash equivalents comprise cash and bank balances together with bank overdrafts that are repayable on demand. Leases The group enters into lease agreements for the use of buildings and motor vehicles. Leases are accounted for at inception by recognising a right of use asset and lease liability. The lease liability is measured at the present value of fixed payments under the lease. IFRS 16 requires payments to be discounted using the interest rate implicit in the lease. Where that rate cannot be readily determined, which is generally the case for the group’s leases, the group’s incremental borrowing rate is used, being the rate that the group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions. The initial value of the right of use asset is the present value of the fixed payments under the lease, any initial direct costs and an estimate of dilapidation costs under the terms of the lease. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. The group sometimes negotiates break clauses in its property leases, with the typical factor in deciding to negotiate a break clause being the length of the lease term. The carrying amounts of lease liabilities are not reduced by payments that would be avoided from exercising break clauses because, as at the point of lease inception, it was considered reasonably certain that the group would not exercise its right to exercise any break in the lease. Research and Development Research and development tax credits are included and offset against the research and development line within administration expenses. P a g e | 45 Notes to the Financial Statements for the year ended 30 April 2020 Share-based Payment Transactions The Group’s equity-settled share-based payments comprise the grant of options under the Group’s share option schemes. In accordance with IFRS2 “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 2020 Those fair values are charged to the income statement over the relevant vesting period adjusted to reflect the actual and expected vesting 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 receive dividends over the relevant holding period. The total amount to be expensed over the vesting period is determined with reference to the fair value of options granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in the assumptions about the number of options expected to vest. At each reporting date the Group revises its estimate of the number of options 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 transaction costs, are credited to share capital and share premium when the options are exercised. Investments in Subsidiaries Investments in subsidiaries are shown in the parent Company balance sheet at cost less any provision for impairment. 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 after the balance sheet date are not recognised as a liability at the balance sheet date. Dividends paid to shareholders are shown as a movement in equity. 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 circumstances. Actual results may differ from these estimates. The estimates and assumptions, which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities, are outlined below. Inventory Valuation Inventories are valued at the lower of cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks. Calculation of these provisions requires estimates to be made, which include forecast consumer demand, the promotional, competitive and economic environment, and inventory loss trends. Due to the nature of inventory provisions, it is impractical to disclose the assumptions that underlie estimates and quantify the impact of sensitivity on those provisions. P a g e | 46 Notes to the Financial Statements for the year ended 30 April 2020 Impairment Reviews The Board reviews the useful economic lives and residual values attributed to assets on an ongoing basis to ensure 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 fair value less costs to sell and value in use, where value in use is determined by discounting the future cash flows generated from the continuing use of the unit. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value (see note 14). Going Concern In adopting the going concern basis for preparing the financial statements, the Board has considered the business activities as set out in the Chairman’s Statement and the Strategic Report as well as the Group’s principal risks and uncertainties 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. 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 sensitivity planning. Uncertainties in preparing these forecasts are: • Movements in commodity prices • • Activities of competitors Reliance on key suppliers, particularly with 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 Brexit Covid-19 pandemic • • • • • Due to the uncertainty surrounding the coronavirus pandemic the board have done various forecasting scenarios to assess the going concern status of the Group. Details of the scenarios considered are shown in full in the strategic report. 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 Credit risk • • Policies for managing these risks are set by the Board following recommendations from the Finance Director. The policy for each of the above risks is described in more detail below. Further quantitative information in respect of these risks is presented throughout these financial statements. P a g e | 47 Notes to the Financial Statements for the year ended 30 April 2020 Principal Financial Instruments The principal financial instruments used by the Group, from which financial risk arises, are as follows: • Trade and other receivables excluding corporation tax recoverable and prepayments (note 19)* • Cash at bank* • Trade and other payables (note 20)** • Lease liabilities (note 23) • Bank loans, overdrafts and invoice discounting facilities (note 22)** • Other external loans (note 22)** *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. It is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest 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 input costs in 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 mitigate increases in input costs through a combination of continuous improvement activities to minimise increases in input 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 key vendors in its supply chain. This risk could manifest in 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 its customers’ end markets leading to reduced levels of activity 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. Interest Rate Risk The Group is exposed to movements in interest rates in currencies in which it has borrowings, namely Sterling and Euros, and this risk is controlled by managing the proportion of fixed to variable rates within limits. Interest 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 mitigate its interest rate exposure. During the current and prior financial year, 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 transaction costs and the translation 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. P a g e | 48 Notes to the Financial Statements for the year ended 30 April 2020 Liquidity Risk 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. Short term flexibility is achieved by bank overdraft and invoice discounting facilities. Credit Risk 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. Where a customer is deemed to represent an unacceptable level of credit risk, terms of trade are modified to limit the Group’s exposure. 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 continue as a going concern so that it can provide returns to shareholders and benefits for other stakeholders. In 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 minimise its exposure to cash flow interest rate risk and foreign exchange risk as described above, changes in interest 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 £30,000. 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 that date and on the annualised interest on that amount would, all other variables being held constant, have resulted in a decrease in the post-tax profit for the year of £27,000. A 5% weakening in the exchange rate would, on the same basis, have increased post-tax profit by £30,000. The other numerical disclosures required by IFRS7 in relation to financial instruments are included in notes 19, 20 and 22. 5. REVENUE A breakdown of Group revenues by geographical region, based on the location of the customer is shown as follows: Continuing operations: UK Rest of Europe Rest of the World P a g e | 49 2020 £’000 20,882 916 523 22,321 2019 £’000 23,269 715 749 24,733 Notes to the Financial Statements for the year ended 30 April 2020 5. REVENUE (continued) A breakdown of Group revenues by product group is shown as follows: Food containers Extrusion Trigger sprays and nozzles Injection & Blow Moulding 2020 £’000 6,550 6,042 2,661 7,068 22,321 2019 £’000 7,454 6,628 3,069 7,582 24,733 All Group revenue is in 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 2020 or the year ended 30 April 2019. There are no contract assets or liabilities arising from contracts with customers. 6. UNDERLYING PROFIT AND SEPARATELY DISCLOSED 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, amortisation of intangibles recognised on acquisition, acquisition costs, reorganisation costs, compensation for loss of office and goodwill impairment. Collectively these are referred to as separately disclosed items. In the opinion of the directors the disclosure of these transactions should be reported separately for a better understanding of the underlying trading performance of the Group. Operating (loss)/profit Separately disclosed items within administrative expenses Share based payment charge (note 24) Amortisation of intangible assets (customer relationships and brands) (note 15) Reorganisation costs Goodwill impairment (note 14) Total separately disclosed items Underlying operating profit Depreciation Underlying EBITDA Separately disclosed items (excluding amortisation and impairment) EBITDA 2020 £’000 (382) 14 277 142 350 783 401 1,713 2,114 (156) 1,958 2019 £’000 479 71 289 179 - 539 1,018 1,461 2,479 (250) 2,229 Separately disclosed items in the current year include reorganisation costs of £142,000 which included acquisition due diligence costs of £52,000, reorganisation costs of £54,000 and redundancy costs of £36,000. The share-based payment charge, amortisation charge and goodwill impairment have all been separately disclosed as they 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 £179,000 which included acquisition due diligence costs of £72,000, reorganisation costs of £38,000 and redundancy costs of £69,000. P a g e | 50 Notes to the Financial Statements for the year ended 30 April 2020 7. OPERATING PROFIT This is stated after charging/(crediting) the following Staff costs (note 9) Impairment loss recognised on trade receivables Impairment loss on goodwill (note 14) Cost of inventories recognised as expense Net foreign exchange gains Depreciation of property, plant and equipment (note 16) Amortisation of right of use assets (note 17) Amortisation of intangible assets (note 15) 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’ remuneration for statutory audit services to subsidiaries Non-audit fees of £nil (2019: £nil) were payable to the auditor. 8. FINANCE COSTS Interest payable on bank borrowings Interest payable on lease liabilities (2019: finance leases) Interest payable on term loans 2020 £’000 4,732 41 350 11,286 (27) 1,032 681 277 - - 969 20 58 2020 £’000 66 304 69 439 2019 £’000 5,114 34 - 13,576 (86) 1,461 - 289 43 128 739 20 48 2019 £’000 126 227 85 438 P a g e | 51 Notes to the Financial Statements for the year ended 30 April 2020 9. STAFF COSTS Average number of employees (including executive directors) comprised Production Selling and distribution Administration Their aggregate remuneration comprised Wages and salaries Social security costs Other pension costs Total remuneration before share option charge Share option charge/(credit) Total remuneration 2020 No. 107 18 28 153 2020 £’000 4,122 461 135 4,718 14 4,732 2019 No. 125 18 28 171 2019 £’000 4,477 458 108 5,043 71 5,114 Other than the Directors, the parent company had 1 employee (2019: 2). Details of Directors’ emoluments are shown in the Directors’ Remuneration Report on pages 20 to 22. Key management personnel compensation Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the directors of the Company and the site general managers. Their aggregate remuneration comprised Wages and salaries Social security costs Other pension costs Share option charge 2020 £’000 2019 £’000 492 59 29 1 581 502 63 13 10 588 P a g e | 52 Notes to the Financial Statements for the year ended 30 April 2020 10. TAXATION The (credit)/charge for taxation on the (loss)/profit 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 2020 £’000 (30) 30 - 2019 £’000 - (43) (43) The tax assessed for the year is different from that calculated at the standard rate of corporation tax in the UK of 19% (2019: 19%). The differences are reconciled as follows: Reconciliation of taxation credit Profit/(loss) on ordinary activities before tax Tax on (loss)/profit on ordinary activities at 19% standard rate of tax (2019: 19%) Non-deductible expenses Deferred tax not recognised Other differences Total taxation credit Deferred tax liability – Group At 1 May 2019 Adjustment in respect of prior year Reversal of temporary differences credited to profit and loss At 30 April 2020 Comprising: Accelerated capital allowances Losses Other temporary differences Liability arising on business combination 2020 £’000 (821) (156) 153 - 3 - 2020 £’000 368 - 30 398 271 (78) (17) 222 398 2019 £’000 41 8 42 (79) (14) (43) 2019 £’000 409 2 (43) 368 150 - (66) 284 368 The Group has not recognised a deferred tax asset of £nil (2019: £1,860) in relation to tax losses that can be carried forward indefinitely. Changes in tax rates and factors affecting the future tax charge There were no factors arising in the year that may affect future tax charges. The deferred tax liability at 30 April 2020 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. P a g e | 53 Notes to the Financial Statements for the year ended 30 April 2020 11. EARNINGS PER ORDINARY SHARE Number of Shares 2020 2019 Weighted average number of shares for the purposes of basic earnings per share Effect of share options Weighted average number of shares for the purposes of diluted earnings per share 82,614,865 - 82,614,865 82,614,865 4,000,000 86,614,865 A nil value has been used for effect of share options in the year, because the group has made a loss making these options antidilutive. Earnings per share Diluted earnings per share Underlying earnings per share Basic and underlying earnings per share have been calculated as follows: 2020 (0.99)p (0.99)p (0.05)p 2019 0.10p 0.10p 0.75p 2020 Weighted average number of shares Earnings per share (pence) (Loss)/ earnings £’000 2019 Weighted average number of shares (Loss)/ earnings per share (pence) Earnings £’000 (Loss)/profit for the year Separately disclosed items (note 6) (821) 82,614,865 (0.99) 84 82,614,865 0.10 783 539 Underlying (loss)/profit for the period (38) 82,614,865 (0.05) 623 82,614,865 0.75 Underlying earnings per share Underlying earnings per share has been presented in addition to basic earnings 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 superior to, the IFRS measure. 12. DIVIDENDS PAID AND PROPOSED Interim dividend £nil (2019: 0.25p paid 28 March 2019) Final dividend for 2018 0.25p paid 20 December 2018 (2018: 0.25p paid 20 December 2018) 2020 £’000 2019 £’000 - - - 206 207 413 No final dividend (2019: nil) is to be recommended at the forthcoming AGM. The final dividend is subject to approval by shareholders at the Annual General Meeting on 13 January 2021 and has not been included as a liability in these financial statements. P a g e | 54 Notes to the Financial Statements for the year ended 30 April 2020 13. INVESTMENTS: SHARES IN GROUP UNDERTAKINGS Parent Company Cost and net book value At 1 May 2019 Share options granted to employees in subsidiaries (note 24) Waiver of intercompany loan Impairment At 30 April 2020 2020 £’000 10,937 14 1,388 (1,388) 10,951 2019 £’000 10,866 71 - - 10,937 The intercompany loan was with Coral Products (Mouldings) Limited that is now considered unrecoverable. It is not deemed recoverable based on Mouldings CGU impairment review. Investments 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. Business activity Holding Registered office Company Interpack Limited Coral Products (Mouldings) Limited Tatra Rotalac Limited Importers and distributors of plastic containers Manufacture of plastic products using plastic injection moulding machines Manufacture of plastic mouldings and extrusions 100% 100% 100% Rotalac Plastics Limited Manufacture of plastic mouldings 100% Florida Road, Haydock Industrial Estate, Haydock, Merseyside, WA11 9TP Florida Road, Haydock Industrial Estate, Haydock, Merseyside, WA11 9TP Florida Road, Haydock Industrial Estate, Haydock, Merseyside, WA11 9TP Florida Road, Haydock Industrial Estate, Haydock, Merseyside, WA11 9TP 100% Hyde Park House, Cartwright Street, Newton Hyde, Cheshire, SK14 4EH £’000 5,495 (350) 5,145 Global One-Pak Limited and extrusions Design, packaging and distribution of lotion pumps, trigger sprays and aerosol caps 14. GOODWILL Group At 30 April 2019 Impairment At 30 April 2020 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: Goodwill At 30 April 2019 Impairment At 30 April 2020 Interpack Limited £’000 Tatra Rotalac Limited £’000 Global One- Pak Limited £’000 3,457 - 3,457 1,311 (350) 961 634 - 634 P a g e | 55 Other £’000 93 - 93 Total £’000 5,495 (350) 5,145 Notes to the Financial Statements for the year ended 30 April 2020 14. GOODWILL (continued) The Group tests goodwill and intangible assets annually for impairment. The recoverable amount of goodwill and intangibles arising on the acquisition of Interpack, Tatra and Global One-Pak in previous years is determined from value in 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 rates. Management estimates discount rates using pre-tax rates that reflect market assessments of the time value of money and the risks specific to the acquired subsidiaries. In assessing goodwill and intangibles for impairment, the directors 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 2020, management recognised an impairment where the recoverable amount of Tatra Rotalac does not exceed its carrying value at the balance sheet date, the value in use in the others each exceeds the total CGU carrying value. In performing this impairment review, the Group has prepared cash flow forecasts derived from the most recent financial budgets approved by the Board, an estimate for year two based upon expected growth and improved performance a year after the impact of the lockdown due to coronavirus and then estimates of revenue growth for the following years at 2.0% per annum, with overheads also assumed to increase at 2.0% per annum. Thereafter, a growth rate for pre-tax profit of 2.0% per annum is assumed into perpetuity. The growth rate of 2.0% exceeds the long-term average growth rate, however, management have estimated this based on a prudent view of future growth in demand. A pre-tax rate of 11.5% has been used to discount the forecast cash flow. The key assumptions are based on past experience for expected changes in future conditions. The Group has conducted a sensitivity analysis on the impairment test of each CGU carrying value. A decrease in the growth rate of profit to 0% (i.e. the current level of profit being generated remains constant) over the forthcoming five years would not cause the carrying value to be impaired for either Interpack, 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 12.0% (Interpack), and 14.5% (Global One-Pak) respectively would not create a potential impairment indicator, however such levels are not deemed to be reasonable by management. An increase in the discount rate to 12.5% for Tatra-Rotalac would lead to a further £325k of impairment being recognised. 15. OTHER INTANGIBLE ASSETS Group Cost At 1 May 2018, 1 May 2019 and 30 April 2020 Amortisation At 1 May 2018 Charge in the year At 1 May 2019 Charge in the year At 30 April 2020 Net book value At 30 April 2020 At 30 April 2019 Customer relationships £’000 Brands £’000 Licences £’000 Total £’000 2,653 1,215 257 1,472 245 1,717 936 1,181 322 70 32 102 32 134 188 220 573 573 - 573 - 573 - - 3,548 1,858 289 2,147 277 2,424 1,124 1,401 P a g e | 56 Notes to the Financial Statements for the year ended 30 April 2020 15. OTHER INTANGIBLE ASSETS (continued) Parent Company Cost At 1 May 2018, 1 May 2019 and 30 April 2020 Amortisation At 1 May 2018, 1 May 2019 and 30 April 2020 Net book value At 30 April 2020 At 30 April 2019 Licences £’000 Total £’000 403 403 - - 403 403 - - As set out in note 14, the Group tests goodwill and intangible assets annually for impairment. 16. PROPERTY, PLANT AND EQUIPMENT Group Cost or Valuation At 1 May 2018 Additions Disposals At 1 May 2019 Reclassification due to adoption of IFRS 16 (note 2) Additions Transferred to assets held for sale Disposals At 30 April 2020 Depreciation At 1 May 2018 Charge in the year Disposals At 1 May 2019 Reclassification due to adoption of IFRS 16 (note 2) Charge in the year Disposals At 30 April 2020 Net book value At 30 April 2020 At 30 April 2019 Land and buildings £’000 Fixtures and fittings £’000 Plant and equipment £’000 2,508 12 - 2,520 - - (2,520) - - - - - - - - - - - 2,520 320 17 - 337 - 19 - (1) 355 98 119 - 217 - 94 (1) 310 45 120 14,773 1,554 (547) 15,780 (4,245) 303 - - 11,838 8,204 1,342 (537) 9,009 (854) 938 - 9,093 2,745 6,771 Total £’000 17,601 1,583 (547) 18,637 (4,245) 322 (2,520) (1) 12,193 8,302 1,461 (537) 9,226 (854) 1,032 (1) 9,403 2,790 9,411 The net book value of plant and equipment includes £nil (2019: £3,415,000) in respect of assets held under finance leases. Depreciation for the year in respect of these assets was £nil (2019: £403,000). P a g e | 57 Notes to the Financial Statements for the year ended 30 April 2020 16. PROPERTY, PLANT AND EQUIPMENT (continued) Revaluation of land and buildings The company uses the revaluation model of measurement of land and buildings. The company 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. 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 14 February 2020. The previous revaluation was on 17 April 2018. If land and buildings were measured using the cost model, the carrying amounts would be as follows: Cost Accumulated depreciation Net carrying amount Parent Company Cost or Valuation At 1 May 2018 and 1 May 2019 Additions At 30 April 2020 Depreciation At 1 May 2018 and 1 May 2019 Revaluation At 30 April 2020 Net book value At 30 April 2020 At 30 April 2019 2020 £’000 2,103 (269) 1,834 2019 £’000 2,103 (227) 1,876 Land and buildings £’000 2,519 1 2,520 - - - 2,520 2,519 P a g e | 58 Notes to the Financial Statements for the year ended 30 April 2020 17. RIGHT OF USE ASSETS IFRS 16 was adopted on 1 May 2019 using the modified retrospective method and therefore the comparative numbers have not been restated. Property £’000 1,130 - - 1,130 386 113 - 499 631 - Plant and Equipment £’000 Motor Vehicles Total £’000 £’000 4,245 591 - 4,836 854 459 - 1,313 3,523 - 463 40 (154) 349 183 109 (154) 138 5,838 631 (154) 6,315 1,423 681 (154) 1,950 211 - 4,365 - Cost At 1 May 2019 Additions Disposals At 30 April 2020 Depreciation At 1 May 2019 Charge for the year Disposals At 30 April 2020 Carrying amount At 30 April 2020 At 30 April 2019 18. INVENTORIES Raw materials Work in progress Finished goods and goods for resale Group Parent Company 2020 £’000 1,394 324 1,650 3,368 2019 £’000 1,571 252 1,682 3,505 2020 £’000 2019 £’000 - - - - - - - - Write-downs of inventories to net realisable value amounted to £nil (2019 – £nil). P a g e | 59 Notes to the Financial Statements for the year ended 30 April 2020 19. TRADE AND OTHER RECEIVABLES Current Trade receivables Less: provision for impairment of trade receivables Amounts owed by subsidiary undertakings Corporation tax recoverable Prepayments and accrued income Group 2020 £’000 3,807 (41) 3,766 - 306 859 4,931 2019 £’000 4,645 (34) 4,611 - 288 622 5,521 Parent Company 2020 £’000 2019 £’000 - - - 8 - 31 39 - - - 455 - 28 483 The fair value of trade and other receivables approximates to book value at 30 April 2020 and 2019. 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 2020, or the year ended 30 April 2019. The carrying amount of the Group’s trade and other receivables are denominated in the following currencies: Sterling Euros US Dollars Group Parent Company 2020 £’000 3,710 11 45 3,766 2019 £’000 4,577 34 - 4,611 2020 £’000 2019 £’000 - - - - - - - - As 30 April 2020 the lifetime expected loss provision for trade receivables is as follows: Group Current £’000 Overdue less than 1 month £’000 Overdue 1 -2 months £’000 Overdue more than 2 months £’000 Total £’000 Expected loss ratio 0.1% 1.0% 2.0% 3.0% Gross carrying amount Loss provision 1,454 (1) 1,289 (13) 568 (11) 496 (16) 3,807 (41) P a g e | 60 Notes to the Financial Statements for the year ended 30th April 2019 19. TRADE AND OTHER RECEIVABLES (continued) Movement in the loss provision for trade receivables has been included in administrative expenses in the financial statements and receivables are shown net of allowance. 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 information 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. The movement in the loss provision has been as follows: Opening provision for impairment Utilised in the period/unused provision released Provided in the period Closing Provision Group 2020 £’000 34 (34) 41 41 2019 £’000 186 (186) 34 34 Parent Company 2020 £’000 2019 £’000 - - - - - - - - The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable set out above. The Group did not hold any significant interest rate swaps or forward foreign exchange contracts at the year-end. 20. TRADE AND OTHER PAYABLES Trade payables Other taxes and social security Accruals and deferred income Amounts owed to group undertakings Other payables Group Parent Company 2020 £’000 3,047 387 315 - - 3,749 2019 £’000 2,938 408 464 - 24 3,834 2020 £’000 6 - 61 610 - 677 2019 £’000 12 - 47 - - 59 Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The directors consider that the carrying amount of trade payables approximates to their fair value. P a g e | 61 Notes to the Financial Statements for the year ended 30 April 2020 21. ASSETS/LIABILITIES HELD FOR SALE Assets Land and buildings at Haydock Liabilities Term loan on land and buildings Total assets/liabilities held for sale Group 2020 £’000 2,520 (1,765) 755 2019 £’000 - - - The land and buildings at the Haydock site are currently being marketed for sale and were being as at 30 April 2020. The term loan held in the group was a mortgage made against the property which is held as collateral in the loan arrangement. When the property is sold the loan must be repaid so we have deemed this loan to also be classed as held for sale at the year end. The manner of disposal would be on a sale and leaseback basis, disposal was expected to occur during the financial period but had been delayed due to the coronavirus pandemic. The proceeds were to assist with growth and to add to working capital. 22. FINANCIAL LIABILITIES The maturity profile of the non-current financial liabilities as at 30 April 2020 is set out below: Borrowings Current Term loan Bank overdraft Invoice discounting facility Lease liabilities (2019: finance leases) Non-current Lease liabilities (2019: finance leases) Term loan Liabilities held for sale outside of current and non-current Term loan (note 21) The effective interest rates at the balance sheet date are as follows: Invoice discounting facility Term loan Lease liabilities P a g e | 62 Group Parent Company 2020 £’000 2019 £’000 2020 £’000 2019 £’000 - - 2,978 1,191 4,169 2,509 - 2,509 1,765 1,765 150 27 3,513 1,260 4,950 1,965 1,303 3,268 - - 1,765 - - - 1,765 - - - - - 150 - - - 150 - 1,303 1,303 - - 2020 2019 2.3% over base 3.0% over base 3.7% 2.3% over base 3.0% over base - Notes to the Financial Statements for the year ended 30 April 2020 22. FINANCIAL LIABILITIES (continued) The bank loans and overdraft are secured by a fixed and floating charge over the Group's assets. Lease liabilities are secured on the assets to which the contracts relate. The invoice discounting facility is secured over trade receivables. The directors estimate that the fair value of the Group's borrowings is the same as the above book values as at 30 April 2020 and as at 30 April 2019. The maturity profile of the non-current financial liabilities as at 30 April 2020 is set out below: In more than one year but not more than two years Lease liabilities (2019: finance leases) Term loan In more than two years but not more than five years Lease liabilities (2019: finance leases) Term loan In more than five years Term loan Group Parent Company 2020 £’000 1,035 - 1,474 - - 2,509 2019 £’000 1,053 150 912 451 702 3,268 2020 £’000 2019 £’000 - - - - - - - 150 - 451 702 1,303 Undrawn borrowing facilities The Group has a maximum Invoice Discounting Facility of £5.1m, subject to debtor levels and restrictions, together with a £50,000 bank overdraft facility and a trade facility of £500,000. 23. LEASE LIABILITIES IFRS 16 was adopted on 1 May 2019 using the modified retrospective method and therefore the comparative numbers have not been restated. At 1 May 2019 Additions – new leases Discounted payments At 30 April 2020 Current liabilities Non-current liabilities At 30 April 2020 Property £’000 744 - (110) 634 110 524 634 Plant and Equipment £’000 Motor Vehicles £’000 3,225 591 (965) 2,851 999 1,852 2,851 280 40 (105) 215 82 133 215 Total £’000 4,249 631 (1,180) 3,700 1,191 2,509 3,700 P a g e | 63 Notes to the Financial Statements for the year ended 30 April 2020 23. LEASE LIABILITIES (continued) The maturity analysis for lease liabilities is shown below: 2020 Interest £’000 324 347 655 1,326 2020 discounted payments £’000 2020 Total repayment £’000 1,190 1,035 1,475 3,700 1,514 1,382 2,130 5,026 2019 interest £’000 266 269 441 976 2019 discounted payments £’000 2019 Total repayment £’000 1,260 1,053 912 3,225 1,526 1,322 1,353 4,201 Lease liabilities (2019: finance leases) < 1 year Lease liabilities (2019: finance leases) 1 - 2 years Lease liabilities (2019: finance leases) 2 - 5 years Total 24. 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 1p 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. 4 employees, including 1 director, with options totalling 800,000 1p ordinary shares have left the Company. 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 1p 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. On 22 August 2017 share options 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. On 1 June 2019 share options were granted to 1 employee under the EMI scheme. Options were granted over 100,000 1p ordinary shares of the company with an exercise price of 16p. The share price at the grant date was 8.5p. The employee has since left the company. 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. The weighted average fair value of the options as at 30 April 2020 was £170,750 based on a fair value of 4.4p per share and 3,800,000 options. The assumptions used in the calculation are as follows: Option pricing model used Expected volatility Option life Risk-free interest rate Expected dividend yield 8 December 2014 Black-Scholes 30% 10 years 1.9% 3.45% 30 May 2017 Black-Scholes 46% 10 years 1.09% 4.7% 22 August 2017 Black-Scholes 45% 10 years 1.09% 4.8% A debit of £14,000 (2019: £71,000) has been recognised in the income statement in the current year in relation to these share options. No options have been exercised in the year (2019: none). The maximum term on the options is 10 years from the issue date, which remains the weighted average remaining life. P a g e | 64 Notes to the Financial Statements for the year ended 30 April 2020 25. SHARE CAPITAL Group 2020 £’000 2019 £’000 Parent Company 2020 £’000 2019 £’000 Allotted, called up and fully paid 82,614,865 ordinary shares of 1p each 826 826 826 826 26. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Net increase/(decrease) in cash and cash equivalents Decrease/(increase) on invoice discounting facility (Increase)/decrease in bank loans and other loans (Decrease)/increase in lease liabilities Movement in net debt for the period Net debt at beginning of period Net debt at end of period Group Parent Company 2020 £’000 480 534 (312) (475) 227 (8,217) (7,990) 2019 £’000 (498) (118) 151 (441) (906) (7,311) (8,217) 2020 £’000 (15) - (312) - (327) (1,426) (1,753) 2019 £’000 27 - 151 - 178 (1,604) (1,426) Other than the movement in lease liabilities, the Group had no non-cash changes arising from financing activities. 2019 £’000 Repayments of principal £’000 Interest Charged £’000 Interest paid £’000 New borrowings £’000 Non cash additions £’000 2020 £’000 Lease liabilities Liabilities held for sale (2019: term loan) 4,249 1,453 (1,180) (188) 304 65 (304) (65) 58 500 573 - 3,700 1,765 P a g e | 65 Notes to the Financial Statements for the year ended 30 April 2020 27. 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 consolidation for the Group and are not disclosed in this note. All related party transactions are conducted on an arms’ length basis. Key management personnel Details of the compensation of the key management personnel have been disclosed in note 9, no other transactions were entered into with 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 19. The transactions entered into between the Company and its subsidiaries were as follows: Rentals received from Group undertakings Recharge of overheads to Group undertakings 28. POST BALANCE SHEET EVENTS 2020 £’000 300 388 2019 £’000 300 324 A coronavirus business interruption loan (CBIL) of £1 million was received from Barclays Bank on 13 May 2020. This is on a 3- year term interest free for the first 12 months and repayment holiday for the first 6 months. The interest rate is 4.61% over base. The only covenant in place is that capital expenditure cannot be higher than £400,000 and during the term of the loan no dividend payments can be made. The invoice factoring facility with Barclays was reviewed in June 2020 and renewed for a further twelve months. 29. ULTIMATE CONTROLLING PARTY In the opinion of the directors there is no ultimate controlling party. P a g e | 66 Five Year Record (unaudited) 2020 £’000 2019 £’000 2018 £’000 2017 £’000 2016 £’000 Turnover 22,321 24,733 23,405 21,432 18,714 Profit Underlying operating profit Net interest payable Underlying profit before taxation Separately disclosed items Goodwill impairment Taxation Profit/(loss) after taxation Interest cover (times) Underlying earnings per share (pence) Dividend per share (pence) Assets employed Non-current assets Other net (liabilities)/assets Net assets Financed by Share capital Reserves Shareholder’s funds Gearing (%) Net assets per share (pence) 401 (439) (38) (433) (350) - (821) 0.9 (0.05) 0.0 13,424 (1,318) 12,106 826 11,280 12,106 66 15 1,018 (438) 580 (539) - 43 84 2.3 0.75 0.25 16,307 (3,394) 12,913 826 12,087 12,913 64 15 879 (311) 568 (1,065) - 127 (370) 2.7 0.84 0.4 16,484 (3,313) 13,171 826 12,345 13,171 56 16 1,093 (228) 865 (400) - (7) 458 4.8 1.04 1.0 15,944 (2,147) 13,797 826 12,971 13,797 41 17 1,649 (180) 1,469 (711) - (15) 743 9.2 2.20 0.8 14,402 (714) 13,688 826 12,862 13,688 24 17 P a g e | 67 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 the offices of Coral Products PLC, North Florida Road, Haydock Industrial Estate, St Helens, WA11 9TP, on Wednesday 13 January 2021, 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 Resolutions, to be passed with at least three-quarters of the votes in favour of the Resolution. The Board strongly urges Shareholders to comply with Government public health instructions in respect of the COVID-19 pandemic and its advice in relation to social contact, public gatherings and non-essential travel. Please note that the Company currently intends to refuse entry to Shareholders who do attempt to attend the Annual General Meeting in order to comply with those public health instructions. The health of the Shareholders, as well as its officers and employees, is of paramount importance. It is expected that the attendance by certain of the Directors in person at the Annual General Meeting will be limited to satisfy the requirements of a quorum. The Annual General Meeting will end immediately following the formal business required and there will be no corporate presentations, Q&A or refreshments. Social distancing measures will be in place and strict hygiene arrangements in force. Shareholders are therefore instructed to participate in the Annual General Meeting by proxy rather than attend the Annual General Meeting in person. The results of the Annual General Meeting will be available on the Company’s website shortly after the Annual General Meeting has closed. The Board continues to follow advice issued by the Government with respect to the COVID-19 pandemic and will issue further guidance if necessary. In light of this request to not attend the Annual General Meeting, the Board shall accept any questions relating to the business being dealt with at the Annual General Meeting to be submitted by Shareholders in advance to the Company and the Company shall, where considered appropriate, publish the question and the response on the Company website in advance of the Annual General Meeting. Any such questions should be sent to the following email address CHAIRMAN@CORALPRODUCTS.COM so as to be received by no later than 1 p.m. on 11 January 2020. Ordinary business Ordinary resolutions 1. 2. 3. 4. 5. 6. 7. To receive and adopt the audited accounts for the year ended 30 April 2020, together with the Reports of the Directors and Auditors. To re-elect Joe Grimmond, who retires by rotation as a Director 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 fix their remuneration. To declare a final dividend of 0.00p per ordinary share in respect of the year ended 30 April 2020. To approve the Board Report on Directors’ Remuneration for the year ended 30 April 2020. That the Directors be generally and unconditionally authorised pursuant to and in accordance 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 rights to subscribe for or to convert any security into shares in the Company (“Rights”) up to an aggregate nominal amount of £550,765, provided that this authority shall, unless renewed, varied or revoked by the Company, expire at the end of the Company’s annual general meeting in 2021, save that the Company may, before such expiry, make an offer or agreement which would or might require shares to be allotted or Rights 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 authorities. P a g e | 68 Notice of the Annual General Meeting continued 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 equity 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 limited to: 8.1.1 the allotment of equity securities in connection with an offer of equity securities: (a) to the holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and (b) to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary; 8.1.2 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 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 8.3 expire at the end of the Company’s annual general meeting in 2021 (unless renewed, varied or revoked by the Company prior to or on that date), save that the Company may, before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired. Special business Special resolution 9. That the Company be generally and unconditionally authorised for the purposes of Section 701 of the 2006 Act to make market purchases (within 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 time to time determine, provided that: (a) (b) the minimum price which may be paid for an ordinary share is 1 pence (being the nominal value of the ordinary share) the maximum number of ordinary shares which may be purchased is 12,392,230; (c) exclusive of expenses; 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 last 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 authority to purchase hereby conferred shall expire at the end of the next annual general meeting in 2021, save that the Company may make a contract to purchase ordinary shares under this authority before the expiry of the authority 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 Board Sharon Tinsley Company Secretary 8 December 2020 Registered Office North Florida Road Haydock Industrial Estate Haydock Merseyside WA11 9TP P a g e | 69 Notice of the Annual General Meeting continued Notes 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. A member entitled to attend and vote at the Annual General Meeting may appoint another person(s) (who need not be a member of the Company) to exercise 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 appointed to exercise the rights attaching to different shares held by him. 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 instruct and must attend the Annual General Meeting for your vote to be counted. Appointing a proxy does not preclude you from attending the Annual General Meeting and voting in person. A Proxy Form which may be used to make this appointment and give proxy instructions accompanies this Notice of Annual General Meeting. Details of how to appoint a proxy are set out in the notes to the Proxy Form. If you do not have a Proxy Form and believe that you should have one, or if you require additional forms, please contact the Company. In order to be valid an appointment of proxy must be returned (together with any authority under which it is executed or a copy of the authority certified) in hard copy form by post, by courier or by hand to the office of the Share Registrars Ltd, The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR, 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 Registrars. 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 notice to the Registrars stating your intention to revoke the proxy instruction, to be received by the Registrars no later than 48 hours prior to the meeting. Any attempt to terminate or amend a proxy appointment received 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 meeting, the one which is last sent shall be treated as replacing and revoking the others. A copy of this Notice of Annual General Meeting may have been sent for information only to persons who have been nominated by a member to enjoy information rights under section 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 appointed as a proxy for the Annual General Meeting or to have someone else so appointed. If a Nominated Person does not have such a right or does not wish to exercise it, he may have a right under such an agreement to give instructions to the member as to the exercise of voting rights. To be entitled to attend and vote at the Annual General Meeting, members must be registered in the register of members of the Company 48 hours prior to the meeting (or, if the meeting is adjourned, 48 hours prior to the date of the adjourned meeting). Changes to entries 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 meeting. Voting 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 practicable following the Annual General Meeting, 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 representative(s) at the Annual General Meeting. In 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 it were an individual member of the Company, provided that they do not do so in relation to the same shares. It is no longer necessary to nominate a designated corporate representative. The Company must cause to be answered at the Annual General Meeting any question relating to the business being dealt with at the Annual General Meeting which is put by a member attending the Annual General Meeting, except in certain circumstances, including if it is undesirable in the interests of the Company or the good order of the meeting that the question be answered or if to do so would involve the disclosure of confidential information. As at 22 September 2020 (being the last Business Day prior to the publication of this Notice of Annual General Meeting), the Company’s issued share capital consists of 82,614,865 ordinary shares of 1p each with voting rights. Therefore, the number of total voting rights in the Company is 82,614,865. The contents of this Notice of Annual General Meeting and details of the total number of shares in respect of which members are entitled to exercise voting rights at the Annual General Meeting and, if applicable, any members’ statements, members’ resolutions or members’ matters of business received by the Company after the date of this Notice of Annual General Meeting will be available on the Company’s corporate website: www.coralproducts.com. 13. You may not use any electronic address provided in this Notice of Annual General Meeting to communicate with the Company for any purposes other than those expressly stated. P a g e | 70 Financial Calendar Annual General Meeting Payment of Final Dividend Provisional - Interim results 13 January 2021 N/A December 2020 Shareholder Information Coral Products shareholders register is maintained by Share Registrars Limited who are responsible for updating the register, including details of shareholders’ addresses. If you have a query about your shareholding in Coral Products, you should contact Share Registrars by telephone on 01252 821390, by email to enquiries@shareregistrars.uk.com or in writing to Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR. The Coral Products website at www.coralproducts.com provides news and details of the Group’s activities plus information for Shareholders. The investor section of the website contains real time and historical share price data as well as the results and announcements. P a g e | 71 

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