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BUILT TO PERFORM
TRUSTED TO DELIVER
Coats Group plc
Annual Report and Accounts 2025
BUILT TO PERFORM
TRUSTED TO DELIVER
At Coats, performance is not promised – it is proven.
It is built into every thread, every critical component and essential material,
every customer relationship and every end-product.
Over the past year, we have transformed our portfolio for growth and reasserted
our position as a world-leading Tier 2 partner to the apparel and footwear industry.
Our commitment to sustainability, innovation and digital leadership continues
to accelerate growth and create long-term shareholder value. And our employees
around the world remain connected by a commitment to excellence, care for our
communities and a shared mission to shape the future of apparel and footwear.
At Coats, trusted and reliable performance is not just a goal, it is who we are.
Strategic Report
1
Highlights 1
Coats at a glance 2
Investment case 3
Chair’s statement 4
Group CEO’s review 6
Strategic framework 12
Business model 13
Key performance indicators 14
Strategic enablers 16
Operating review 22
Financial review 25
People and culture 28
Stakeholder engagement 30
Section 172 statement 34
Non-financial and sustainability information statement 37
Principal risks and uncertainties 38
Viability statement 47
Corporate Governance
48
Chair's Introduction to Governance 49
Corporate Governance Report 51
Nomination Committee Report 62
Audit and Risk Committee Report 66
Sustainability Committee Report 72
Remuneration Committee Report 73
Remuneration Policy Report 78
Directors' Remuneration Report 86
Directors' Report 99
Financial Statements
105
Climate-Related Financial Disclosures
178
Other Information
200
CONTENTS
Scan the code to learn more about
our business andperformance online.
Visit: coats.com
Our Purpose is to Connect Talent, Textiles and Technology
to Make a Better and More Sustainable World.
Coats Group plc Annual Report and Accounts 2025
A full copy of this Annual Report canalso
be downloaded from coats.com/investors
About this report
This report has been produced in landscape
formattooptimise thereading experience online.
Strategic Highlights
– Continued gaining market share, outperforming core thread
andfootwearend markets
– Exit from non-core Americas Yarns business improved Group margin
by+100bps
– Landmark acquisition of OrthoLite to accelerate our strategy,
underpinninggrowth
– Target adjacencies contributed one percentage point to Group revenue
growth, withgoodmomentum
– Streamlined Group into two divisions: Apparel and Footwear
4
– Continued market leadership in 100% recycled threads,
withCERrevenuegrowing 43% to $554m
Financial Highlights
– Robust performance with Group revenue flat on an organic basis:
– Strong performance in Apparel with1%revenue growth, significantly
outperformingmarket declines
– Market share growth and further margin improvement in Footwear,
amidst a more challenging backdrop than Apparel
– Performance Materials back to growth in H2, alongside strong
operational and margin improvement; Q4 margin run rate of 11.8%
close to divisional medium-term target range
– OrthoLite delivered full year profit in line with our expectations; good
revenue growth above market and strong levels of cash generation
– Group operating margin increased 80bps to 19.8% (180bps including
Americas Yarns in prior year comparator), reflecting pricing and cost
discipline with all divisions improving margins
– Adjusted basic EPS 9.3 cents in line with expectations (2024: 9.7 cents);
Increased EBIT offset by higher interest charges related to 2024 pension
buy-in payment and timing of share placing in July 2025
– Record cash generation with free cash flow of $160m (2024: $2m) reflective
of future potential
5
– Net debt at $815m with proforma leverage of 2.2x
6
as expected, following
OrthoLite acquisition. We continue to expect leverage to reduce to below
2x by end of 2026
– Proposed final dividend of 2.28 cents, bringing total dividend to 3.28 cents,
up 5%, reflecting a good financial performance in a challenging market
HIGHLIGHTS
1
Revenue
$1,465m
(2024: $1,433.0m)
0%
Operating profit
$290m
(2024: $272m)
+3%
Operating margin
19.8%
(2024: 19.0%)
+80bps
Free cash flow pre-dividends
and M&A
5
$160m
(2024: $2m)
+$158m
Basic earnings per share
9.3 cents
(2024: 9.7 cents)
-5%
Revenue
$1,465m
(2024: $1,433.0m)
+2%
Operating profit
$241m
(2024: $224m)
+7%
Operating margin
16.5%
(2024: 15.7%)
+80bps
Net cash generated by
operating activities
$225m
(2024: $96m)
+$129m
Basic earnings per share
6.8 cents
(2024: 6.7 cents)
+2%
Adjusted
2,3
Reported
2
1. All highlights on this page relate to continuing operations.
2. All 2024 numbers represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 32).
3. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest
corresponding statutory measure in note 37.
4. Effective 1
st
January 2026.
5. Free cash flow after interest, tax, minority interests and exceptionals, before dividend distributions and M&A.
6. Leverage calculated on a frozen GAAP basis and therefore excludes the impact of IFRS 16 on both adjusted EBITDA and net debt.
See note 37b for details.
Coats Group plc Annual Report and Accounts 20251
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Our Business at a Glance
Revenue by Production Region
Asia 70%
Americas 11%
EMEA 19%
Headquarters
OrthoLite
Presence in market
Innovation / Sustainability Hub
Manufacturing site
50+
countries
25,000+
customers globally
c. 19,000
permanent employees
1,300+
brand partners
Some of our Customers
Apparel
Market leader in premium
industrial sewing threads.
Footwear
Delivering innovative
structural components,
threads and insoles that
power performance.
Performance Materials
Supplying highly engineered
solutions for industrial
applications.
BUILT TO
PERFORM
Coats is a world-leading Tier 2 manufacturer and trusted
partner for the apparel and footwear industries, delivering
theessential materials, components, and software solutions
thathelp our customers grow, compete and win.
We help the apparel and footwear industry perform at its
bestthrough impactful sustainability solutions, insight-led
innovation and industry-leading technology platforms.
Coats Group plc Annual Report and Accounts 20252
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
c. $1BN
of free cash flow to
be generated over
next 5 years*
* Free cash flow after interest, tax, minority interests and exceptionals, before dividend distribution and M&A.
World No.1 Status
A leading Tier 2 supplier of critical components to the apparel and footwear industry.
Consistently Outperforming our Markets
Unrivalled global manufacturing capability, proprietary technology platforms
and sustainability-led innovation.
Improved Quality of Portfolio - Now Focused on Delivery
Acquired No.1 supplier of premium insoles; sold under-performing US Yarns business.
Track Record of Improving Operating Margins
Reflects value to customers and operational excellence.
Strong Cash Generation
Powerful dynamic of high-margins and low-capital intensity.
Driving Long-Term Growth
THE COATS INVESTMENT CASE
Coats Group plc Annual Report and Accounts 20253
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Chair’s Statement
TRUSTED TO DELIVER
I am happy to present our
2025 Annual Report, themed
Built to Perform, Trusted to
Deliver – a fitting message
in another year marked
by geopolitical instability,
environmental challenges
and tariff volatility.
Despite current headwinds, Coats delivered
steady, consistent results – with our global
capabilities, scale and resilience solidifying
our position as a trusted Tier 2 partner
totheapparel and footwear industries.
2025 was also a year of transformation
andwe achieved significant milestones
thatposition us strongly for the future.
Updates to our Board
At this time last year, we had already
welcomed David Paja as Executive Director
and Group CEO. He has been instrumental
insteering Coats into the future – driving
significant changes to our portfolio, clarifying
strategic direction and laying the foundation
for aperformance-led culture.
Hannah Nichols joined the Board as Executive
Director and Group Chief Financial Officer
(CFO) designate in April 2025 and became
Group CFO in May 2025. Hannah was
previously CFO at Hill & Smith PLC, theFTSE
250 international provider of infrastructure
solutions and is also a Non-Executive Director
of Oxford Instruments plc. Jackie Callaway
stepped down from her role as Coats Group
CFO and from the Board inMay 2025.
The Board is pleased with the successful
transition of these two key leadership
positions.
In addition, we were delighted that Wu
Gang joined the Board in July as
aNon-Executive Director. With a strong
Strengthened Structure
To support our long-term ambition of
becoming a premium industrial company, we
streamlined our organisational structure from
three divisions to two: Apparel and Footwear.
This structure reflects the strategic
importance of both divisions in driving
long-term profitablegrowth.
It will enable the business to focus on key
priorities, while a dedicated Coats and
OrthoLite integration team works together
tounlock new growth, accelerate innovation
and add more value – without disrupting
day-to-day delivery and execution.
This streamlined approach will also help
usde-lever in 2026, grow our core, expand
into strategic adjacencies, and
outperformthe market.
External reporting will reflect the two-division
structure for the financial year ending
December 2026.
“Our new two-division
structure reflects the
strategic importance of
Apparel and Footwear in
driving long-term profitable
growth.”
strategic and financial advisory background,
Wu Gang brings a wealth of international
experience gained from a career of over
25years in investment banking in Asia
andEurope.
“2025 was a year of
transformation and
we achieved significant
milestones to position
us strongly for the future.”
Portfolio Transformation
In the first half of the year, we exited our
under-performing Americas Yarns business,
unlocking additional resources for growth.
In July, we announced our acquisition of
OrthoLite Holdings LLC (‘OrthoLite’), the
global leader in premium insoles, and
completed the process in October 2025.
Building on previous acquisitions of Texon
and Rhenoflex, our combined capabilities
mean that Coats can deliver more innovative
solutions across more of the shoe – and
feedback from customers has already
beenpositive.
The acquisition of OrthoLite has also enabled
us to upgrade elements of our medium-term
financial framework.
Coats Group plc Annual Report and Accounts 20254
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
“Our combined capabilities
mean Coats can deliver more
innovative solutions across
more of the shoe.”
Forward Momentum
2025 was a year of strong progress and
momentum, setting the stage for a more
growth-oriented, streamlined Coats.
The Board is proud of everything achieved
last year and excited about the future as we
continue to deliver value through impactful
sustainability practices, innovation, digital
leadership and scale.
We continue to review long-term capital
allocation and remain confident in our ability
to navigate evolving market dynamics, with
ourstrengthened portfolio, stable global
operations, and diverse customer base giving
us the resilience to keep growing.
On behalf of the Board, I thank our teams
worldwide for their leadership and focus
throughout 2025.
Onward to 2026!
David Gosnell
Chair
Productive Stakeholder Engagement
2025 was a pivotal year for deepening
stakeholder relationships.
We have seen investor confidence grow as
we continue to progress our pension buy-out
journey. We have also seen new, growth-
oriented investors join the shareholder
register following the announcement of our
OrthoLite acquisition, a reflection of the clear
strategic rationale and value creation
opportunity arising from the transaction.
We partnered closely with customers and
suppliers to help navigate changing market
conditions – leaning into our global footprint
and capabilities to simplify complex supply
chain issues, unlock additional value, and
ensure seamless delivery. We will continue
towork at earning trust among our Tier 1
and Brand customers every day.
Our commitment to our communities,
ourpeople, and the environment remained
akey imperative forCoats.
We made good progress against our
sustainability goals and achieved several of
our 2026 targets ahead of schedule, which
we explain in more detail on page 15 of
thisreport.
Employees continued to help shape our
culture into a competitive advantage and,
foranother year in a row, Coats was
accredited as a Great Place toWork®
(GPTW) – achieving certification in
23countries: 99%of our global population.
A Year of Action and Strategic Progress
Effective and robust governance practices
underpin the Board’s activities, enabling
the effective stewardship of Coats.
See page 60 for more
on the Board’s activities
in 2025
CHAIR’S STATEMENT CONTINUED
Coats Group plc Annual Report and Accounts 20255
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Completing my first full year as Group CEO
has given me invaluable perspective on what
makes Coats exceptional. As we present our
2025 results, one theme stands out above all
others: momentum.
This past year, we advanced at pace –
transforming our business, delivering
consistent results and strengthening our
foundations for long-term, profitable growth.
We have become a simpler, stronger and more
connected company, with an organisation
built not just to perform today but to grow
for tomorrow.
That momentum can be felt everywhere –
through our strides in sustainability, our
commitment to innovation and our integration
of new technologies that sharpen our
competitive edge.
Our global scale, culture of excellence and
highly engaged people have reinforced our role
as a trusted and critical partner for the apparel
and footwear industries. We have shown
resilience, focus and a shared commitment
toshaping the future of our industry.
2025: Market Overview and
Performance
Coats delivered a resilient performance in the
year against a background of macro-
economic and tariff uncertainty from the
second quarter onwards.
At $1,465m, revenue was flat compared to
last year on an organic constant exchange
rate (‘organic’) basis, comfortably
outperforming our core thread and footwear
end markets, which we estimate were down
Group CEO’s Review
BUILT TO PERFORM
managing down inventory further at the end
of the year in response to an uncertain 2026
outlook. The division is estimated to have
further increased its market share organically
to c.30%, following two years of strong
share gains. Operating profit was flat on an
organic basis, which reflects the benefit of
the operational initiatives implemented in the
past year and an effective pricing strategy,
with EBIT margin increasing to 23.9%.
As expected, we saw a return to growth in
Performance Materials in the second half of
the year driven by accelerated growth in two
target adjacencies, safety fabrics and energy
tapes, alongside market share gains in
automotive thread which offset softness in
Telecom end markets.
We estimate that in aggregate our end
markets continued to decline in 2025,
highlighting the importance of our
adjacencies strategy. Operating margins were
significantly ahead of prior year reflecting the
benefit of operational improvements across
the division, which included site initiatives in
Turkey and Mexico.
We were encouraged by the operating
margin run rates in Q4 which were
approaching the bottom end of our medium-
term target range.
low to mid-single digits year-on-year. This
demonstrates the strength and agility of our
global footprint and service capabilities which
enable us to grow and protect share, even
under challenging market conditions. It also
reflects the good progress made in our target
organic adjacencies, which are focused on
faster growing market segments, and
contributed 1% of Group revenue growth in
2025. Sustainability remains fundamental to
our growth strategy and in 2025 revenue
from sales of 100% recycled thread once
again increased strongly by 43% on a CER
basis to $554m.
In addition, we successfully managed pricing
pressures and flexed our cost base during the
year. As a result, Group operating profit grew
3% on an organic basis with Group operating
margin increasing by 80bps to 19.8%
(180bps improvement including Americas
Yarns results in the prior year comparator).
Apparel delivered a strong performance with
1% organic revenue growth, continuing to
win share with major brands against a
challenging market back-drop, underpinned
by a strong focus on customer service and
operational agility. As a result, our Apparel
market share is estimated to have grown by
100bps to c.27%. The division achieved high
operating margins of 20.2% reflecting
pricing discipline and favourable mix with
customers valuing our premium and
sustainable thread offerings.
Footwear revenue declined by 2% on an
organic basis, a reflection of cautious
customer ordering from April and brands
“2025 was a transformational year
for Coats. We achieved record
profit and free cash generation,
reshaped the portfolio for
accelerated growth, and
reorganised the group for
simplicity. We have upgraded our
medium-term financial targets and
look at 2026 with confidence.”
David Paja
Group CEO
Coats Group plc Annual Report and Accounts 20256
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
$71M
2025 EBIT
1
550+
Brand Partners
THE LEADER IN PREMIUMINSOLES
Founded in 1997, OrthoLite is the global
leader in premium insoles and a trusted partner
to many of the world’s largest footwear brands.
Its proprietary open-cell foam technology, backed by nearly three decades
ofcontinuous innovation, has established the business asan essential contributor to
comfort, performance and product differentiation across theindustry.
OrthoLite operates a fully integrated manufacturing model, with facilitiesinChina,
Vietnam, India, Indonesia and Spain. In2025,itbroadened its footprint with a new
manufacturing facility inNorth Vietnam – marking a significant step in its
`localisation’ strategy, expanding regional capacity and improving supply-chain
resilience for globalcustomers.
It also introduced two new technologies in 2025, adding to its portfolio of500+
formulations: Slo-Mo
TM
, designed for slower recovery, and Float
TM
, alightweight, high
rebound insole.
OrthoLite’s strong market position is underpinned by deep technical expertise, rigorous
quality and safety standards, and a growing suite ofmoresustainable solutions. These
capabilities have helped the business build long-standing, collaborative relationships
with leading brands and Tier 1 manufacturers, becoming widely recognised as a
benchmark for quality and performance.
In October 2025, Coats completed its acquisition of OrthoLite, marking astrategically
important expansion of its footwear division and a key milestone in the Company’s
long-term growth plans.
GROUP CEO’S REVIEW CONTINUED
1. Excluding Cirql® losses
$274M
2025 sales
365M+
pairs of co-branded
insoles
570M+
pairs supplied
3,000+
Employees across
13 countries
I am particularly pleased with our strong cash
performance with a record $160m of free
cash flow generated in the year,
demonstrating the powerful dynamics of
high margins and the low capital intensity of
the Group. For reference, the cumulative free
cash flow in the ten years prior to 2025 was
an outflow of $14m, including strategic
projects and pension payments, which have
now ended. Consistent with previous
guidance, year-end leverage increased to
2.2x due to the completion of the OrthoLite
acquisition in October. We continue to
expect leverage to fall below 2x by the end
of 2026, underpinned by the cash generative
characteristics of the enlarged Group.
A Stronger Portfolio
Over the past year we have taken significant
steps to enhance the quality of our portfolio
and, as a result, the business we have today
has improved margin performance and
growth potential, and is more capable of
consistently outperforming end markets
through the cycle.
In June 2025, we fully exited from the
non-core US Yarns business based in Kings
Mountain, North Carolina. This followed a
strategic review of the Americas Yarns
operations which started in Q4 2024 and
resulted in the closure of the Toluca,
Mexico facility in December 2024.
The exit from the Americas Yarns business has
improved the Group’s margin by around
100bps and enables us to focus on growing
other attractive parts of the portfolio. This exit
has also improved the Group’s revenue growth
profile given the lower growth expectations.
Coats Group plc Annual Report and Accounts 20257
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Our 2026 priorities include the
commencement of the footprint optimisation
project, with Indonesia as the first site, the
delivery of cost synergies and the
acceleration of joint innovation initiatives.
Our Building Blocks for Growth
Our strategy is to build on our organically
and inorganically developed market-leading
positions in those parts of our markets
with the most attractive structural growth
characteristics.
We have an overall goal of delivering over 5%
revenue growth on average through the cycle.
We aim to grow organically not only by
benefiting from growth in our underlying
markets, expected to be around 3% per
annum over the medium term, but also
through share gains, supported by our
focus on customer service and sustainability
led innovation.
Our global footprint and digital technology
platforms remain tangible points of
differentiation, making it easy for our
customers to do business with us.
We can be trusted to deliver and have
developed deep Tier 1 and brand
relationships, which enables us to align with
faster growing brands globally - winning
where it matters.
In addition, we target organic growth from
certain attractive fast growing adjacent
markets. These include safety fabrics where
we saw substantial growth in 2025 through
innovative solutions and global access to
existing thread customers.
GROUP CEO’S REVIEW CONTINUED
At the end of October, we completed the
acquisition of OrthoLite for an enterprise
value of $770m.
OrthoLite is the global market leader in
open-cell insoles and operates in an attractive,
fast-growing segment of the footwear market
with strong growth tailwinds as brands
increasingly adopt open-cell technology due
to its superior benefits in terms of comfort,
performance and sustainability.
The acquisition accelerates our strategy to
create a leading Tier 2 supplier in critical
footwear components, strengthening our
product offering to brands and creating
exciting commercial opportunities to deepen
customer relationships and accelerate
growth, leveraging our combined strengths
in technology and access to customers.
OrthoLite is a high-quality business, with a
strong track-record of growth, averaging
high single digits over the last five years,
and the acquisition is accretive to Group
EBIT margins and EPS from the first full
year of ownership.
Return on Invested Capital (ROIC) is expected
to exceed WACC by 2028, at the latest. In
addition, the business has an attractive
operating cash conversion of 90%+, which
will support and accelerate the Group's free
cash flow growth over the medium term.
In 2025, the OrthoLite business delivered full
year profit in line with our expectations, with
good revenue growth above the market and
strong levels of cash generation.
Our Building Blocks for Growth
Our strategy is to build on our market leading positions organically and inorganically in the
parts of our markets with the most attractive structural growth characteristics.
Market
growth
Market
share gains
Organic
adjacencies
Inorganic
growth
We also see exciting opportunities in other
adjacencies including: composite tapes for
energy market applications, Coats Digital our
software as a service business, woven uppers
for footwear and structural components for
premium leather handbags.
Together, these adjacencies represent an
additional addressable market estimated at
$2bn growing at a CAGR of >5%. In 2025
our target adjacencies delivered c.$45m of
revenue, contributing 1% of Group revenue
growth, with further strong growth
anticipated in 2026.
Our strong and growing operating margins
are underpinned by multiple competitive
advantages that combine to provide
significant barriers to entry.
Those competitive advantages include, but
are not limited to, having the broadest well
invested global footprint, the most advanced
ordering and planning systems, the ability to
exactly colour match hundreds of thousands
of threads, having a fully established supply
chain to provide sustainable threads at scale,
a leading innovation capability and a strong
balance sheet.
We have a disciplined approach to capital
allocation and aim to invest in high quality,
highly complementary businesses which
generate attractive returns and support or
accelerate our growth ambitions.
The recent acquisition of OrthoLite, enables
us to benefit from additional technology
adoption growth tailwinds and will support
with our ambition of delivering a more
consistent growth profile through the cycle.
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As an additional enhancement, we have
redefined the measure as free cash flow after
interest, tax, minority interests and
exceptionals, but before dividend distribution
or M&A (previously exceptional cash flows
were excluded).
This new metric and target will be aligned to
executive incentive plans.
Disciplined Capital Allocation
With the expected strong cash generation
and low organic investment needs of the
business, we are taking a disciplined, flexible
and returns focused approach to capital
allocation.
After investing in organic growth, we will use
our free cash flow to maintain a growing
dividend and execute disciplined and
accretive M&A to further enhance our
position in certain of our markets. The Board
will continue to evaluate the potential for
additional shareholder returns including
share buybacks.
We believe a strong financial position is key
to our long-term ambitions and will aim to
maintain a target leverage ratio of 1-2x net
debt: EBITDA.
As anticipated, our leverage ratio was 2.2x at
the year-end due to the completion of the
OrthoLite acquisition. Our priority in the near
term is to reduce leverage. Based on the
highly cash generative characteristics of the
enlarged Group we expect leverage to fall
below 2x by end of 2026.
GROUP CEO’S REVIEW CONTINUED
UPDATED MEDIUM-TERM
FINANCIAL FRAMEWORK
Revenue Growth
>5%
on average through the cycle
Cumulative Free Cash Flow
1, 2
c.$1 billion over 5 years
(previously $750m)
Total EPS
1
CAGR
>10%
1. From a 2026 baseline.
2. Free cash flow after interest, tax, minority interests and exceptionals, before dividend distribution and M&A.
Our Upgraded Medium-Term Targets
Given the transformation of the business over the past year, including bringing OrthoLite into
the Group, we have reviewed our medium-term targets set out in March 2025 to ensure that
they continue to appropriately reflect our ambitions for the business. Based on our review, we
have upgraded and simplified certain elements of the framework. The refreshed framework is
summarised below:
EBIT%
21-23%
(previously 19-21%)
While we are maintaining our ambition of
delivering above 5% revenue CAGR, we
expect that the quality of the portfolio we
have today will support a more consistent
delivery, enabling us to outperform end
market growth by 200+bps on average
through the cycle.
As set out in our growth strategy, we are well
positioned to deliver this level of growth
through a combination of market growth,
market share gains, target adjacencies and the
benefit of the additional technology
penetration tailwinds and innovation
capabilities that OrthoLite brings to the Group.
Given the strong margin performance in
2025, with the Group EBIT margin currently
at 19.8%, and the addition of OrthoLite,
which is margin accretive, we are stepping
up our margin target range to 21-23%
(previously 19-21%).
We continue to expect to deliver EPS CAGR
of >10% post-M&A or share buybacks.
The key upgrade to our medium-term
targets relates to the cash generation of the
Group, with a new target of generating
c. $1bn of cumulative free cash flow in the
next five years.
This is a significant step up from our previous
target and reflects the low capital intensity
and cash generative nature of the enlarged
Group including OrthoLite, which has an
attractive operating cash conversion profile of
90%+, in line with the rest of our business.
200+bps
out-performance vs growing market
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GROUP CEO’S REVIEW CONTINUED
Divisional Structure Change
As previously announced, we have
streamlined our organisation structure
into two divisions: Apparel and Footwear,
to reflect the transformation of the Group’s
profile following the exit from the Americas
Yarns business and the acquisition of
OrthoLite. This change reduces internal
complexity and aligns the divisions more
closely with the underlying textile engineering
and polymer science technologies. We will
report under this new structure at our half
year results in July 2026.
Strengthening Our Leadership Team
We were thrilled to welcome Hannah Nichols
as Group CFO in April 2025. Her leadership
was pivotal in ensuring a disciplined
approach to capital allocation and securing
funding for the OrthoLite acquisition.
During the year, we were also pleased
towelcome Pasquale Abruzzese, first
asPerformance Materials CEO, then as
Footwear CEO and Chief Operating Officer.
We also welcomed Megan Giannini as Chief
People Officer, further strengthening our
talented Group Executive Team (GET).
Progress in Sustainability
At Coats, sustainability is embedded
throughout the business; from the impact of
our operations to our investment in innovation.
The result of this approach is a strong
competitive advantage and an enhanced
reputation with customers and suppliers
in our markets.
This year momentum across our sustainability
programme has remained strong. We made
good progress against our sustainability goals
which cover energy, materials, waste, water
and people. We are pleased to report that
OUR DIVISIONS
Following our acquisition of OrthoLite, we introduced anew organisational
structure focused on our Apparel andFootwear businesses. The Performance
Materials businesswas folded into the two new divisions.
– Apparel and
industrialthread
– Safety fabrics and trims
– Coats Digital
– Footwear thread
– OrthoLite (Insoles
andmid-soles)
– Structural components
– Composites
Footwear
95%
Polymer
Science
Apparel
95%
Textile
Engineering
we have already reached or surpassed our
2026 commitments (one year in advance) in
several targeted areas, including:
– Achieved a 30% reduction in Scope 1 & 2
emissions versus the 2022 baseline,
exceeding our 2026 target of 22%
reduction
– Zero waste
1
to landfill, meeting our 2026
commitment one year early
– 33% female representation in leadership
roles, ahead of our target to achieve 30%
representation by 2026
– 99% Great Place to Work (GPTW)
certification, with special recognition in
2025 across several categories including
being in the top five and top 15 best large
workplaces in Vietnam and Asia respectively
We are currently evaluating the
environmental impact of OrthoLite, having
only completed the acquisition in Q4 2025.
As a consequence, the sustainability related
metrics disclosed above, as well as Coats'
2026 and 2030 ESG targets, do not currently
include OrthoLite.
1. Excluding medical and asbestos waste.
Coats Group plc Annual Report and Accounts 202510 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
GROUP CEO’S REVIEW CONTINUED
Our focus on sustainability and
environmental transparency continues to
bring external recognition.
In December 2025 we featured on the
Carbon Disclosure Project’s (CDP) A List for
the first time, achieving an A- rating for
Climate Change and A rating for Water.
Dividend
We have delivered a robust financial
performance in a challenging market,
continuing to gain market share, increase
operating margin and generating strong free
cash flow. Given these factors and our
confidence in the Group’s future growth
prospects, the Board is proposing a final
dividend of 2.28 cents per share, a 4%
increase on the prior year. This equates to a
full year dividend of 3.28 cents per share, an
increase of 5%. Subject to approval at the
AGM, the final dividend will be paid on
28 May 2026 to ordinary shareholders on the
register at 8 May 2026, with an ex-dividend
date of 7 May 2026.
The Board will continue to review the level
of dividend payment to shareholders on the
basis of the performance of the business,
the opportunity to reinvest capital in
high returning projects and its longer-
term potential.
We have responsibility for the environmental
impact along our value chain, not just within
our own operations.
We are committed to using recycled material
in our products and, in 2025 made excellent
progress in material transition, with our sales
of 100% recycled thread growing 43% on a
CER basis to $554m (2024: $387m) and our
use of non-virgin oil based materials
representing 52% of our total Group primary
materials (2024: 46%)
1
.
Going forward, with growth in recycled sales
expected to moderate, supplier
decarbonisation will become an important
lever to achieve our Scope 3 emissions
reduction targets. After a successful first
supplier decarbonisation workshop in
November 2025, we will continue to invest in
initiatives to help our partners understand
and reduce their emissions.
In 2026, we will expand product lifecycle
assessments for primary raw materials and
evolve our Scope 3 related targets to include
supplier decarbonisation, ensuring the right
levers are incorporated to help us achieve our
Science Based Target initiative targets.
In support of this we have begun to onboard
strategic suppliers to Cascale’s Higg
framework, a tool used by 350+ brands and
retailers, to drive emissions reduction and
increase data transparency.
Outlook
Our assumption is that our core apparel and
footwear end markets will remain uncertain
in 2026, with comparatives becoming easier
as the year progresses.
We expect to grow organically in 2026, even
under conditions of market uncertainty. That
said, we are mindful of the potential impact
on demand and supply chains as a result of
the conflict in the Middle East, which we are
assessing, however it is too early to provide
an update.
Delivering growth will be achieved through
execution of our growth playbook,
leveraging the powerful combination of
continued share gains and strategic
adjacency growth.
In addition, OrthoLite is expected to
significantly outperform the underlying
footwear market based on technology
penetration tailwinds and new business wins.
We expect further modest organic operating
margin improvement in 2026 in addition
to the margin enhancement benefit of
bringing OrthoLite into the Group. We
also expect another strong year of free cash
flow generation.
MARKET TRENDS
1. MARKET UNCERTAINTY
We are operating in a volatile
environment driven by the macro
economic context and weak consumer
sentiment, and we continue to
outperform our end markets.
2. SOURCING SHIFTS
Tariffs are driving some near-shoring
andcontinued diversification. Our global
footprint andagility help customers
build resilient, multi-country
supply chains.
3. DIGITAL & AI ACCELERATION
AI, automation and new e-commerce
behaviours are compressing fashion
cycles and changing consumer
expectations. We are using technology
toimprove speed, accuracy and cost
forcustomers.
4. SUSTAINABILITY MATTERS
Brands face ongoing pressure to deliver
lower impact materials, supply chain
transparency and progress on Scope 3
emissions – without adding cost or time.
We continue to deliver impactful
sustainability at scale.
1. Does not include OrthoLite.
Coats Group plc Annual Report and Accounts 202511 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Our Strategic Framework
OUR STRATEGY TO DRIVE GROWTH
Our ambition is to be a premium industrial
company defined by through-the-cycle growth,
high margins and strong cash conversion.
Our strategy is to organically and inorganically
accelerate profitable sales growth in the most
attractive markets, transform our business, and
create value for our stakeholders.
We deliver this through impactful sustainability
practices, insight-driven innovation and digital
technology platforms that unlock better quality,
efficiency and performance for our customers.
Our global footprint gives us the scale, expertise
and infrastructure to grow alongside our
customers, and deliver with speed and precision.
At the heart of Coats are talented people who live
our values and power our culture of excellence.
PEOPLE & CULTURE
SUSTAINABILITY
Pioneering
a sustainable
future
INNOVATION
Developing
innovative
solutions
DIGITAL
Delivering
industry-leading
technology platforms
PREMIUM INDUSTRIAL COMPANY
OPERATIONAL EXCELLENCE
COMMERCIAL EXCELLENCE
Coats Group plc Annual Report and Accounts 202512
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Our Business Model
PROVEN PERFORMANCE
Read more
onpage 22
Read more
onpage 23
Read more
onpage 24
OUR BUSINESS
1
OUR KEY DIFFERENTIATORS THE VALUE WE CREATE
Apparel
Footwear
The global market leader in premium
sewing thread, providing critical
components, services and
softwarefor apparel brands
andmanufacturers.
Shaping the future of footwear
through sustainable and innovative
solutions, with a portfolio made up
of structural components, threads
and insoles targeted at the attractive
athleisure performance, fashion and
sports markets.
Delivering engineered solutions,
including performance thread, safety
fabrics, and composite products for
Telecom & Energy applications.
Delivering our
Sustainability Goals
52% preferred primary
raw materials
30% reduction in Scope 1 and 2
emissions, from 2022 baseline
0% waste to landfill
2
Delivering Value
for Shareholders
Adjusted basic earnings per
share: 9.3 cents
Total 2025 dividend per share:
3.28 cents
Creating a Great Place to Work
99% Great Place to Work
(GPTW) certification
86% average employee
engagement score
33% women in senior
leadership roles
Our People & Culture
Our people are the foundation
ofour strategy, connected
byaculture of innovation,
careforour communities,
andacommitment toexcellence.
Our Brands and Proprietary
Technology Platforms
We are growing our core
bystrategically investing into our
brands and technology platforms
to solve complex issues across the
apparel and footwear industry.
Sustainability-Led Innovation
Innovation is at the heart of
whatwe do, enabling us to
meet evolving market demands
with highly engineered,
differentiated solutions.
Our Financial Framework
Our financial framework is focussed
on growth, improving premium
margins and strong cash generation.
Operational & Commercial
Excellence
As a trusted Tier 2 partner to the
apparel and footwear industry, we
have the expertise, technology and
infrastructure to deliver for our
customers with speed and precision.
Our World-Leading Global
Manufacturing Capability
Operating in over 50 countries
across six continents, our global
footprint provides unrivalled
access to markets and customers.
Performance Materials
1. Effective 1
st
January 2026, we introduced a new structure focused on Apparel and Footwear, with Performance Materials integrated into these divisions.
2. Excluding medical and asbestos waste.
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Key Performance Indicators
Revenue Growth
1
We delivered flat organic revenue growth
in 2025, outperforming our core apparel
and footwear end markets, which we
estimate were down low to mid-single
digits year-on-year.
Annual organic growth in sales at like-for-like
exchange rates.
Cash generated from continuing activities
less capital expenditure, interest, tax,
dividends to minority interests and other
items, and excluding exceptional and
discontinued items, acquisitions, and UK
pension recovery payments.
We delivered a very strong cash
performance, reflecting the powerful
dynamics of high margins and the low capital
intensity of the Group alongside the
contribution from OrthoLite.
The 80 basis point improvement in Group
operating margins reflects increases delivered
across all divisions with a focus on price,
mixand operational improvements.
Adjusted EBIT as a proportion of revenue.
Pre-exceptional operating profit from
continuing operations adjusted for the full
year impact of acquisitions for the year
divided by capital employed (property,
plantand equipment, acquired intangibles,
right-of-use assets and lease liabilities plus
net working capital) at year-end.
The Group continues to deliver high levels
ofreturn on capital employed. As expected,
adjusted ROCE decreased following the
purchase of OrthoLite and corresponding
increase to the group's capital employed.
EBIT grew by 3% on an organic basis as
wesuccessfully managed pricing pressures
and flexed our cost base.
Annual organic growth in operating profit,
adjusted for exceptional and acquisition-
related items, at like-for-like exchange rates.
Multiple of Net Debt (excluding leases)
toEBITDA calculated on a proforma basis
(includes the full year impact of acquisitions).
Consistent with guidance, 2025 leverage
increased to 2.2x due to the completion of
OrthoLite. We expect leverage to fall below
2x by the end of 2026, underpinned by the
cash generative characteristics of the
enlarged Group.
Increased EBIT was offset by the increased
number of shares in issuance following the
successful capital raise that took place in July
2025 to part fund the OrthoLite acquisition
and higher pension related interest charges
following the 2024 pension buy in.
Annual growth in reported EPS from
continuing activities, excluding exceptional
and acquisition-related items.
Adjusted Free Cash Flow
Adjusted EBIT Growth
1
Leverage
EBIT Margin
Adjusted Return on Capital
Employed (ROCE)
Adjusted earnings
per share growth
Alignment to Our Strategy
FINANCIAL PROGRESS
Accelerate
profitable
sales growth
Transform
the business
Create
value
R
Remuneration Measure – see page 87
R
R
R
R
R
R
2025
2024
2023
0%
9%
-14%
2025
2024
2023
3%
18%
-4%
2025
2024
2023
19.8%
19.0%
16.7%
2025
2024
2023
-5%
18%
0%
2025
2024
2023
$184m
$158m
$131m
2025
2024
2023
2.2x
1.5x
1.5x
2025
2024
2023
22%
38%
30%
1. Does not include OrthoLite and VizReflectives.
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Energy Materials Water
Waste
Waste People People
Scope 1 and 2 emissions target: 22% reduction
inScope 1 and 2 mkt based emissions by 2026.*
Commentary: Transition to renewable electricity
remains the primary lever for our Scope 1 and 2
emissions reduction. In 2025, regulatory changes
in India resulted in our percentage of green
certified electricity falling from 77% to 62%.
Despite this, we continue to exceed our 2026
target, with a 30% reduction in Scope 1 and 2
emissions between 2025 and 2022.
Preferred material percentage target: 60%
non-virgin oil-based raw materials by 2026.
Commentary: We continued to qualify new
suppliers ofpreferred non-virgin oil-based
materials, without impacting quality of our finished
products. As a result, our preferred raw materials
increased from 46% in 2024 to52% in 2025.
Water recycling rate target: Increase rate
ofwaterrecycling by 33% by2026.*
Commentary: Newly installed water recycling
capacity in Indonesia, coupled with further
improvements in water recycling, have increased
our 2025 water recycling rateto 30%, a25%
increase from our baseline of 24% in 2022. We
have also reduced freshwater extraction intensity
by15% since 2022.
Waste to landfill target: Zero waste tolandfillby
2026.*
Commentary: Continued focus on circularity
andrecycling initiatives has seen us deliver
ourzerowaste tolandfill target one year
aheadoftarget.
Effluent quality target: 100% compliance with
ZDHC (ZeroDischargeof Hazardous Chemicals)
standard by 2026.
Commentary: Continued enforcement of our
restricted substances list with suppliers ensures
we prevent the discharge of hazardous chemicals
in our effluent treatment plants. In 2025,
we achieved ourhighest reported compliance
rate of 99.97%
Great Place to Work® (GPTW) certification
target: 88%employees covered by GPTW®
certification by 2026.
Commentary: We achieved 99% GPTW®
certification across 23 countries, with an impressive
89% Trust Index score, far surpassing our2026
target. Our efforts earned global and regional
recognition, including Best Workplace in Asia and
awards for manufacturing and production
excellence in India, the UK, and Turkey.
Diversity and inclusion target: 30% females in
senior leadership roles by 2026.
Commentary: Female representation in senior
leadership roles reached 33% in 2025, exceeding
our 2026 target ahead of schedule. This reflects
our commitment to equitable opportunities and
inclusive practices across our business.
Key Performance Indicators Continued
SUSTAINABILITY KPIS
Performance
30%
reduction
Performance
52%
Performance
25%
increase
Performance
100%
Performance
99.97%
Performance
99%
Performance
33%
Definition: Absolute Scope 1 and 2 CO
2
e emissions in tonnes.
*Refer to 2022 baseline and restated to exclude Americas
Yarns/Toluca.
Definition: Percentage of effluent that is compliant to ZDHC
Foundational standards for effluent and sludge.
Definition Percentage of employees in Coats business units with
a Great Place To Work® (GPTW) or equivalent certification.
Definition Percentage of females in senior leadership roles.
Definition: Percentage of in-scope raw materials volume
purchased, and goods receipted which are non-virgin oil-based.
Definition: Percentage of water that is recycled.
*Refer to 2022 baseline and restated to exclude Americas
Yarns/Toluca
Definition: Zero waste generated within our facilities being
diverted to landfill sites.
* Excluding medical and asbestos waste. Restated to exclude Americas Yarns and Toluca.
OrthoLite energy consumption is <5% of
Coats legacy, having an immaterial impact
on our emissions.
Preferred materials use is a core part of
OrthoLite’s sustainability strategy. We will
integrate this reporting in2026.
OrthoLite water consumption represents
<3% ofCoats,with no water recycling in
place given lowwaterintensity processes.
Landfill data from OrthoLite is not yet
measured. Tracking will begin in 2026. Waste
levels are expected to be immaterial, though
they are not currently zero-waste-to-landfill.
OrthoLite does not have wet processing
dyehouse facilities, making this metric
outof scope.
2025 GPTW assessments were
completed prior to our acquisition of
OrthoLite.
Inclusion of OrthoLite senior leadership
roles is immaterial.
2025
2024
2023
2022
122,952
86,619
111,476
175,985
2025
2024
2023
2022
99.97%
99.85%
99.83%
99.76%
2025
2024
2023
2022
99%
95%
87%
86%
2025
2024
2023
2022
33%
30%
23%
19%
2025
2024
2023
2022
52%
46%
35%
31%
2025
2024
2023
2022
30%
27%
27%
24%
2025
2024
2023
2022
0
237
1,359
2,102
We remain on track to deliver our 2026 targets
across all five ofour sustainability pillars:
Energy, Materials, Water, Waste and
People. 2025 is our second-year reporting ESG
metrics which have undergone external limited
assurance. Our limited assurance statement
from our auditors canbe found on page 196.
All sustainability data reported in this Annual
Report excludes OrthoLite, which was
acquired in October 2025. An initial
assessment indicates that OrthoLite’s impact
on the Group’s 2025 sustainability
performance is not material, with the
exception of landfill waste, which is currently
being assessed. Where relevant, commentary
on OrthoLite has been included. We will
continue to integrate OrthoLite into our
sustainability reporting processes, controls,
and disclosures throughout 2026.
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Our Strategic Enablers
PIONEERING A SUSTAINABLE FUTURE
It is also a powerful competitive
differentiator: as the apparel and footwear
industries accelerate their transition to low
carbon and circular solutions, customers
arerelying on suppliers to deliver both
performance and environmental impact
reductions, at scale. Coats is uniquely
positioned to meet this need.
A Strategy Built on Credibility,
Innovation and Scale
Our commitment to be Net Zero by 2050,
validated by the Science Based Targets
initiative (SBTi), underscores our approach
across our operations and supply chain. It
gives customers confidence that our actions
– and the materials we produce – align with
the industry’s decarbonisation trajectory.
Achieving this requires deep operational
discipline, strong partnerships across our value
chain and continuous innovation. Our global
Sustainability and Innovation Hubs in
Shenzhen, China, and Madurai, India, support
this journey, enabling us to trial new materials,
convert technical breakthroughs into
commercial products and help customers
reduce their own emissions.
2025 saw the impact of this strategy become
even clearer. Our shift to non-virgin oil-based
materials accelerated, we delivered
operational emissions reduction ahead
ofour2026 targets, and we continued
totransparently report on our results.
At the same time, our acquisition of
OrthoLite strengthened our ability to deliver
sustainable material solutions across the
footwear market – one of the fastest moving
segments for environmental innovation.
Creating Long-Term Value Through
Sustainability
Our commitment to impactful sustainability
practices sets us apart in the industry:
– Differentiates our products:
Revenuefrom products made with
recycled or bio-based materials has
continued to increase, and our investment
in textile totextile technologies positions
us at the forefront of circularity – an area
of rising customer demand.
– Strengthens customer partnerships:
Brands are prioritising suppliers who can
support their Net Zero roadmaps with
certified, traceable, low impact materials.
Our Science Based Targets give customers
confidence that Coats can deliver.
– Reduces risk and increases resilience:
By improving energy efficiency, reducing
waste and transitioning to lower carbon
inputs, we protect the business from
volatility in energy markets, regulatory
change and raw material constraints.
Driving Meaningful Progress
In 2025, we delivered strong progress across
our sustainability goals:
– Advanced our material transition agenda,
with sales of 100% recycled thread
increasing to $554m, and non-virgin
oil-based materials representing 52% of
our total Group primary materials.
– Exceeded 2026 target for Scope 1 and 2
emissions through transition to certified
renewable electricity sources, energy
efficiency projects and site level
improvements.
– Achieved zero waste to landfill* one year
ahead of goal.
– External recognition, including an A-
fromthe Carbon Disclosure Project (CDP)
for our work on climate change and an
Aforour disclosures on water security.
Looking Ahead
In 2026, we will refine our targets for
2027–2030, expand lifecycle assessments
forour key materials and embed supplier
decarbonisation even more deeply
intoourScope 3 plans. Results on this page
exclude OrthoLite. Following the acquisition,
we will integrate OrthoLite’s operations into
our sustainability framework and align its
roadmap with our 2027–2030 targets.
At Coats, sustainability is a core part of how we grow, innovate
and build long term value for our stakeholders. It shapes the
decisions we make, the materials we choose, the partners we
work with and the investments we commit to.
Comprehensive basis of reporting documents
are published and available from the
downloads section of coats.com
Details of our external auditors assurance
statement can be found after the TCFD
section, on page 196 of this report
Our Sustainability Targets
Reduction in
Scope 1 and 2
emissions
1
22%
Transition in
preferred primary
raw materials
60%
Effluent
compliance
100%
GPTW™
coverage
88%
2026 targets
Reduction in
Scope 1 and 2
emissions
2
46%
Renewable
electricity
100%
Our 2030 ambitions
Net Zero
Emissions in our value chain by 2050
1. Refer to 2022 baseline.
2. Refer to 2019 baseline.
Our long-term target
Increase in water
recycling rate
1
33%
Waste to
landfill
0%
Women in leadership roles
30%
Reduction
in Scope 3
emissions
2
33%
Products
from virgin
oil-based
materials
0%
Women in
leadership
roles
40%
* Excluding medical and asbestos waste.
Coats Group plc Annual Report and Accounts 202516
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
SUPPLIER DECARBONISATION PROGRAMME
In November 2025, we launched our Supplier Decarbonisation Programme,
bringingtogether key suppliers across Asia to align with our climate goals and build
capability in emissions measurement, target setting and reduction planning.
Participants are currently being on-boarded onto Cascale’s Higg platform, providing
acommon system for data, benchmarking and transparency. This work marks an
important evolution in our Scope 3 strategy, reflecting our belief that meaningful
decarbonisation requires collaboration across the entire value chain and that we
canhelpdrive this at scale.
TURNING TEXTILE WASTE INTO PREMIUM THREADS
In 2025, we launched our first textile-to-textile 100% recycled polyester thread,
nowavailable under our Epic
TM
and Gramax
TM
brands. Using Polyester thread waste
frompost-consumer and post-industrial textile waste , this innovation directly supports
circularity and reduces our reliance on virgin raw materials.
As brands accelerate efforts to decarbonise their portfolios, this technology positions
Coatsas a partner able to deliver high performance, low impact solutions at scale.
Italsoopens future opportunities across a wider range of materials and end uses.
PIONEERING A
SUSTAINABLE FUTURE
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Our Strategic Enablers
INNOVATING FOR GROWTH
With more than 250 years of deep materials
expertise, we develop solutions that help
customers improve performance, reduce
environmental impact and respond to
fastchanging consumer expectations.
A Scalable, Platform-Led Approach
In 2025, we continued to strengthen our
innovation foundations, delivering $15m
inincremental revenue from breakthrough
innovation, primarily in Safety Fabrics
andEnergy.
Innovation is focussed on textile engineering,
polymer science, surface science, colour
science and fire science – platforms with
great potential and value for the apparel and
footwear industries, and adjacent markets.
This focused approach allows us to prioritise
breakthrough technologies and makes
ourpipeline more predictable, scalable
andvalue-accretive.
Leading our Materials Transition
Innovation is central to our materials
transition. Our Coats EcoVerde™ thread
portfolio, which is made from 100%
recycledmaterials, continues to steadily drive
growth for the business. 2025 marked a
further milestone with thelaunch of our
textile-to-textile recycled threads – helping
our customers reduce theenvironmental
impact of their products, while supporting
our own sustainability commitments.
Expanding in Footwear
In Footwear, we are extending our reach
intohigh-growth segments with technologies
like ProWeave™ – our lightweight, durable
woven performance-led shoe upper with
incredible potential across sports, athleisure
and even luxury applications. The integration
of OrthoLite further strengthens our ability to
deliver next generation comfort, performance
and sustainable solutions across a wider
range offootwear components.
In 2025, it introduced two new
technologies,adding to its portfolio
of500+formulations: Slo-Mo™, designed
for slower recovery, and Float™, a
lightweight, high rebound insole.
Scaling Breakthrough Innovations
Innovation is opening new avenues
forgrowth beyond our core. In 2025,
weintroduced two new composite tape
solutions under our Xtru™ brand for
specialist undersea pipeline applications,
securing first commercial orders late
intheyear.
We also continue to expand our presence
inhigh-performance materials and safety
fabrics. The acquisition of Viz Reflectives
enhances our leadership in high visibility
applications with our Signal Lucence™
brandand complements our investments
infire-science innovation.
Creating Value for Customers
Our platforms allow us to work closely
withbrands and manufacturers to co-create
solutions tailored to their needs –
strengthening long term relationships,
improving operational performance and
unlocking new opportunities for growth.
Innovation is a competitive differentiator for Coats. Our innovation engine is built on science-led
research, commercial focus, and platform-based technologies with the potential to scale across
multiple markets and categories.
Comprehensive basis of reporting documents
are published and available from the
downloads section of coats.com
Details of our external auditors assurance
statement can be found after the TCFD
section, on page 196 of this report
THE FUTURE OF HIGH-
VISIBILITY SAFETY FABRICS
The global safety fabrics market –
whichincludes flame-resistant, cut-resistant,
chemical-resistant, and high-visibility materials
and trims – is expanding rapidly as workplace
safety regulations tighten, PPE requirements
evolve, and high-visibility elements become
more commonin athletic apparel.
Innovation in the industry is accelerating
asaresult, shifting from performance-only
solutionstomaterials that combine protection
with comfort, durability, and sustainability.
Drawing on ourexpertise in textile
engineering, fire science and surface science,
we have developed patented technologies
that integrate fire-resistant threads and fibres
into new high performance materials, as well
as patented phosphorescent technologies –
like those usedinourSignal Lucence™
brand – that elevate the performance and
durability of high-visibilitysafety materials.
We have also built a highly efficient global
supply chain, and we collaborate closely with
customers already using our fire-resistant
threads to co-create fabrics, materials and
trims thatextend protection across entire
garment systems. In 2025, Coats
strengthened its Safety Fabrics category,
firmly establishing it as a scalable and
strategically important adjacency within our
wider growth agenda.
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THE FUTURE OF HIGH-VISIBILITY SAFETY FABRICS
In late 2025, Coats acquired VizLite™, apatented phosphorescent glow-in-the-dark
technology that significantly enhances visibility in dark and low-light conditions without external
power. This breakthrough technology now anchors our Signal Lucence™ brand and
strengthens our capability in advanced safety solutions.
Signal Lucence Pro™, built on VizLite™ technology, is a market-leading high visibility tape
that combines retro-reflective, fluorescent, and phosphorescent performance in one easy-to-
apply material. It charges rapidly under UV or fluorescent light – without batteries – and delivers
an afterglow of more than eight hours, meeting all major high visibility and firefighter
standards. In 2025, the technology was added to the list of specified materials for UK firefighter
garments. We are now accelerating expansion into apparel and footwear, where leading brands
are adopting next-generation high-visibility solutions to enhance performance products.
BREAKTHROUGH FIRE-SCIENCE INNOVATION WITH FLAMEPRO™
In 2025, Coats launched FlamePro™ Arc, a next-generation protective fabric engineered for
industries exposed to arc flash, heat, and flame hazards. By combining multiple inherently
fire-resistant fibres into a single material, we created one of the lightest fire safety solutions
onthe market, delivering long-lasting protection without compromising comfort. Because
flameresistance is engineered into the fibre structure, performance remains consistent over
agarment’s lifetime – unlike treated fabrics that degrade with wear and washing.
We also introduced FlamePro™ FreshTech, a flame-resistant fabric with integrated anti-odour
technology. By keeping garments fresher for longer, it reduces laundering frequency,
supportingboth cost savings and lower environmental impact for end users.
DEVELOPING INNOVATIVE
SOLUTIONS
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Our Strategic Enablers
DIGITAL: BUILDING A CONNECTED, DATA-DRIVEN COATS
Enhancing the Customer
Experiencewith ShopCoats
In 2025, we continued to invest in our
proprietary ShopCoats platform to streamline
the customer journey. Updates included
enhanced sampling functionality, enabling
customers to seamlessly move from one-off
samples to bulk orders in a single workflow
– as well as real-time order delivery
trackingtools.
We also introduced AI-enabled order
processing, with early results showing strong
potential to reduce processing time and
minimise human error.
We are evolving ShopCoats to fit seamlessly
into our customers’ busy lives and to support
faster fashion cycles: in India, 32% of
revenue now comes through the ShopCoats
mobile app, representing more than
sixmillion order lines annually. More than
80% of our orders continue to come
throughShopCoats.
Sharper Colour Decisions, Faster
Product Development
We strengthened our digital colour
capabilities through a new partnership
withDMIx – a digital platform developed
byColorDigital GmbH – integrating spectral-
based colour workflows, 3D asset libraries
and digital twin technology into a single
digital environment.
Customers can now design, visualise
andsample colour selections accurately –
andinreal time – without producing
anyphysical samples.
This complements our proprietary
ColourStitch digital system which can
identify, test, measure and mix colours. In
2025, we dyed more than 200,000 colours
using one million different ‘recipes’ for Coats
customers, ensuring quality, global
consistency and faster decision making in
every product, from anywhere in the world.
Connecting the Value Chain
fortheFuture
Across all our platforms, our focus
isonbuilding a seamless, scalable
digitalecosystem that connects design,
development, production and delivery.
Thiswork supports better collaboration
withcustomers and suppliers, improves
speed to market and enhances visibility
across the entire value chain.
Our goal is to build a connected ecosystem of digital platforms that make it faster, easier and more efficient for customers to work
with us – from design and sampling through to ordering, tracking and payment.
By simplifying processes and improving data transparency, we strengthen customer relationships while improving our operational
performance.
Comprehensive basis of reporting documents
are published and available from the
downloads section of coats.com
Coats Group plc Annual Report and Accounts 202520
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
ENGINEERING DIGITAL SOLUTIONS
FORCUSTOMERS
As the apparel industry faces rising cost pressures, shorter lead times and increasingly fragmented orders, digital tools that improve
planningaccuracy and operational efficiency are becoming essential.
Coats Digital – a strategic adjacency within Coats – provides software solutions that help apparel manufacturers optimise capacity,
improveproductivity and strengthen cost competitiveness.
More than 1,250 factories around the world use Coats Digital solutions in their end-to-end operations. Currently, Coats Digital serves
over350 Tier 1 apparel manufacturers, representing approximately only 10% of existing Coats Tier 1 customers – leaving a significant
opportunity for growth.
COATS DIGITAL: SOFTWARE AS A SERVICE
62%
subscription
customers
>$10M
in revenue
20%
improvement in
customer OTDP
(On
Time, Delivery
Performance)
10%
increase in
customer
productivity
10%
reduction in customer
lead time
2025 by the Numbers
FAST REACT PLAN: TRANSFORMING
PRODUCTION PLANNING
A typical apparel factory operates multiple sewing lines at once
and must plan production across them with precision to avoid
idle time, bottlenecks and missed delivery dates.
FastReactPlan creates a single, integrated, real-time digital
production schedule that helps factories plan their production
lines more efficiently. It replaces manual spreadsheets with
anintuitive drag-and-drop tool that shows what needs to be
made, when, and what materials are required – significantly
reducing delays, waste and lead times.
In 2025, Coats Digital updated FastReactPlan with
cloud-based functionality, improved usability and seamless
ERPintegration, resulting in measurable performance
improvements for customers.
GSDQUEST: ACCELERATING ACCURATE
COSTINGTHROUGH AI
GSDCost is a long-established industry tool used to calculate the standard
minute value (SMV) required to produce a garment. This supports accurate
capacity planning and cost estimation, as well as labour cost transparency
and fair wage practices.
Traditionally, calculating SMVs requires manual work that can take hours.
Launched in 2025, GSDQuest uses generative AI and a proprietary
datalibrary, built with 20+ years of data, to automate this process.
Afteruploading a garment photo, users receive an SMV estimate within
seconds – reducing workthat once took hours to just two minutes.
The tool improves accuracy, increases costing speed and enables better
informed commercial decisions.
More than 20 global apparel brands, including H&M, M&S, Lululemon are
using GSDCost in their supply chain to drive cost improvements and early
adopters are preparing to integrate GSDQuest as the solution matures.
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Operating Review
APPAREL
Adjusted EBIT increased by 4% on a CER
basis to $156m (2024: $151m). EBIT margin
was 20.2%, up 60bps (2024: 19.6%). The
margin expansion reflects excellent pricing
discipline, despite downward pressures from
customers and favourable product mix,
alongside prudent cost control and an
ongoing focus on productivity gains. H2
2025 EBIT margin was 20.0%, in line with
our expectations.
An attractive target growth adjacency for the
division is the Coats Digital business, our
software as a service business which helps
customers optimise their production planning
and costs. Despite the challenging market
Revenue of $769m (2024: $770m) was flat
on a reported basis and up 1% on a CER
basis. This was a strong result in a year that
started with market growth momentum but
softened towards the end of April, following
the US tariff changes, with market conditions
remaining challenging through the rest of
the year.
Coats is the global market leader in supplying premium
sewing thread to the Apparel industry. We are the
trusted value-adding partner, providing critical supply
chain components, services and software. Our portfolio
of world-class products and services provide
exceptional value creation for our customers, brands
and retailers.
Against this market backdrop, the division
outperformed the core thread markets which
we estimate were down c.3% in the year as
we continued to win market share,
increasing to c.27% vs. c.26% in 2024.
This was achieved through a strong focus on
delivery and service in response to customer
needs and was underpinned by our global
manufacturing capabilities. The division also
benefited from a favourable product mix in
the year with growth in premium thread
sales including continued strong growth in
100% recycled thread products. In addition,
the division has been successful in driving
strong growth in the China domestic market,
requiring high levels of operational agility
to meet demanding customer lead times.
Our Apparel customers continue to value
our focus on sustainability-led innovation and
operational excellence supported by our
proprietary technology platforms.
2025 2024 Reported CER
2
Revenue $769m $770m 0% 1%
Adjusted
1
EBIT $156m $151m 3% 4%
EBIT Margin 20.2% 19.6%
1. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest
corresponding statutory measure in note 14.
2. Constant Exchange Rate (CER) metrics are 2024 results restated at 2025 exchangerates.
conditions, the business delivered good
revenue growth in 2025 and continued to
innovate, bringing to market new product
features, including GSDQuest. This
automates production costing by the upload
of a garment image, increasing process
accuracy and reducing the time needed for
costing by c.90%.
With effect from H1 2026, the Personal
Protection and Industrials businesses (c.80%
of Performance Materials) will become part
of the Apparel division, reducing internal
operational complexity.
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Operating Review
FOOTWEAR
Footwear revenue increased to $440m (2024:
$403m), primarily reflecting the acquisition of
OrthoLite, with revenue 2% lower on an
organic CER basis. The organic revenue
performance reflects a period of good trading
until the end of April with increased US tariffs
resulting in customers taking a cautious
approach to ordering and inventory
management through the autumn. Towards
the end of the year, we saw brands managing
down inventory further in response to the
uncertain 2026 outlook, consistent with trends
We are the trusted partner to the footwear industry,
shaping the future of footwear for better performance
through sustainable and innovative solutions. We are a
global leader with a portfolio of highly engineered
products including structural components, threads and
insoles with strong brand component specification,
primarily targeted at the attractive athleisure,
performance, fashion and sports markets.
Footwear has continued its focus on
innovation and bringing to market new,
highly engineered products. This includes
the ProWeave™ shoe upper, one of our
target organic adjacencies, which offers light
and strong materials for performance,
including for sports and athleisure, as well as
for luxury applications.
The acquisition of OrthoLite was completed
at the end of October 2025, expanding
Footwear into the attractive and
complementary, premium insole segment.
OrthoLite brings significant overlap in
customer base, route-to-market and
operational footprint, providing opportunities
to accelerate growth through innovation and
cross-selling. The 2025 performance was in
line with our expectations, with above market
2025 2024 Reported CER
2
Organic CER
3
Revenue $440m $403m 9% 8% (2)%
Adjusted
1
EBIT $105m $95m 11% 11% 0%
EBIT Margin 23.9% 23.5%
1. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest
corresponding statutory measure in note 14.
2. Constant Exchange Rate (CER) metrics are 2024 results restated at 2025 exchange rates.
3. Organic figures are results on a CER basis and exclude contributions from the OrthoLite acquisition.
in the wider market. As such we estimate our
core footwear end markets were down
c.4-5% vs 2024 for the full year.
Despite this challenging backdrop, the division
modestly outperformed with estimated market
share growing to c.30%
*
(2024: 29%), driven
by a focus on building market-leading
positions in athleisure and casual footwear
markets where customers value differentiated,
engineered products. The division also
successfully maintained pricing despite
downward pressures.
Adjusted EBIT was $105m (2024: $95m),
including two months contribution from
OrthoLite, and was flat on an organic CER
basis compared to the prior year. The adjusted
EBIT margin was 23.9% (2024: 23.5%). The
margin increase of 40bps reflected the benefits
of an effective pricing strategy and prudent
cost control measures alongside operational
actions taken in the past year including
footprint consolidation in Europe and a
rebalancing of the division’s manufacturing
towards Indonesia.
revenue growth and high levels of cash
generation. In 2026, we will commence the
footprint optimisation project, with Indonesia
the first location, and have identified other
cost synergy opportunities, including strategic
procurement. Based on these initiatives, we
expect to achieve annualised cost synergies
of $5m in 2026, in line with our plan to
deliver $20m of annualised cost synergies
by 2028. We are committed to ensuring
these initiatives don’t affect the top-line
growth capability of the business. Alongside
this, we are also focused on the acceleration
of joint innovation initiatives.
As previously announced, the Telecom &
Energy business (c.20% of Performance
Materials) has become part of the Footwear
division. With effect from H1 2026, Footwear’s
external reporting will align to this structure.
* Footwear market share data excludes OrthoLite.
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
PERFORMANCE MATERIALS
Operating Review
our existing retro-reflectivity and fluorescent
colour capabilities, to offer a third layer of
visibility for environments with reduced or no
light. This combination has life-saving
attributes for fire-fighting and other
applications. We see VizLite™ as accelerating
our safety fabrics strategy.
From H1 2026, Performance Materials results
will be integrated into Apparel (c.80%) and
Footwear (c.20%), enabling the adoption of
a two-division Group structure. This change
better aligns the Group’s structure with its
underlying technologies and reduces internal
operating complexity.
Revenue in the year was $256m (2024:
$260m), flat on an organic CER basis and
1% down on a reported basis, reflecting a
return to growth in the second half of the
year of 2%. Industrial revenue was 1% lower
than prior year, with share gains in
automotive thread, partly offsetting softness
in other industrial end markets. The division
saw a strong demand for safety fabrics, a
strategic adjacency, which delivered 40%
revenue growth in the year. Telecom revenue
was down 17%, reflecting a weakness in
EMEA Telecoms markets, which was partially
offset by energy market tapes which grew
We develop highly engineered solutions for industrial
customers, including performance thread for different
applications, safety materials and fabrics, and
composite products for Telecom & Energy applications.
where electrical safety is critical, including
protection against heat, flame and flash risks,
while also offering good durability. Following
development and qualification, we also
brought to market two new composite tapes
for specialist and demanding undersea
pipeline applications, with first orders
received towards the end of the year.
In addition, the small acquisition of Viz
Reflectives (VizLite™) was completed in
October 2025 for an initial cash
consideration of £3m ($4m), with contingent
consideration of up to £6m ($8m),
dependent upon performance. The unique
VizLite phosphorescent (glow-in-the-dark)
technology can be used in combination with
Continuing operations 2025 2024
2
Reported CER
3
Organic CER
4
Revenue $256m $260m (1)% 0% 0%
Adjusted
1
EBIT $29m $26m 10% 10% 10%
EBIT Margin 11.3% 10.2%
1. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest
corresponding statutory measure in note 14.
2. Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
3. Constant Exchange Rate (CER) metrics are 2024 results restated at 2025 exchange rates.
4. Organic figures are results on a CER basis and exclude contributions from the Viz Reflectives acquisition.
21% in the full year, after a particularly
strong performance in the second half.
Adjusted EBIT was $29m (2024: $26m), an
increase of 10% on an organic basis, with a
margin increase to 11.3% (2024: 10.2%).
The organic margin improvement reflects the
benefits of operational actions and the
stronger second half trading, with Q4 run
rate margins at 11.8%, approaching the
bottom end of the medium-term targets set
out in March 2025. During the year, the
portfolio quality was improved with the exit
from the non-core US Yarns business in Q2,
following the closure of the Toluca, Mexico
facility in December 2024. Divisional margins
improved by 390 basis points including
Americas results in the prior year comparator.
Investment in innovation has continued, with
a particular focus on two of our target
organic adjacencies where we expect strong
growth: safety fabrics and composite tapes
for Energy markets. Within safety fabrics, we
brought to market the FlamePro™ ARC in
the second half of the year. This is a lighter
and more comfortable material, offering
exceptional personal protection in markets
Coats Group plc Annual Report and Accounts 202524 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Financial Review
STRONG PERFORMANCE
“Amidst a challenging macro-
economic backdrop, we
delivered a resilient
performance and
outperformed the market,
reflecting the robustness of
our strategy and the agility of
our teams.”
Hannah Nichols
Group CFO
Financial performance
Continuing operations FY 2025 FY 2024
1
FY 2025 vs FY 2024
Reported CER Organic CER
Revenue $1,465m $1,433m 2% 3% 0%
Adjusted
2
EBIT
4
$290m $272m 7% 7% 3%
EBIT Margin 19.8% 19.0%
Basic earnings per share 9.3c 9.7c (5)%
Reported
3
EBIT
4
$241m $224m
Basic earnings per share 6.8c 6.7c
Final dividend per share (cents) 2.28c 2.19c
Net debt (excl. lease liabilities) $815m $449m
1. Represented to reflect the results of the Americas Yarns business as a discontinued operation see note 1.
2. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest corresponding statutory measure in note 14. Constant Exchange Rate (CER)
metrics are 2024 results restated at 2025 exchange rates. Organic figures are results on a CER basis and excluding contributions from the OrthoLite acquisition.
3. Reported metrics refer to values contained in the IFRS column of the primary financial statements in either the current or comparative period.
4. EBIT (Earnings before interest and tax) relates to Operating Profit as shown on the face of the P/L. Reconciliation between the Adjusted EBIT and Reported EBIT is disclosed in the Financial
Review section.
Operating Results
The Group has delivered a resilient
performance in 2025 against a challenging
market backdrop. Revenue from continuing
operations was $1,465m (2024: $1,433m)
up 2% on a reported basis and flat on an
organic CER basis.
Adjusted EBIT from continuing operations
was $290m (2024: $272m), an increase of
3% on an organic CER basis. EBIT margin
improved by 80bps to 19.8% (2024: 19.0%),
the improvement reflecting pricing discipline
and mix coupled with cost control and
operational improvement actions which more
than offset the impact of inflation. Margins
also benefited from strategic projects savings
including the Footwear footprint
consolidation and a re-balancing of
manufacturing towards Indonesia. OrthoLite
contributed to $11m of operating profit in
the last two months of the year including
$1m of losses associated with Cirql
*
.
* Cirql is a newly-developed proprietary foam technology at
an early stage of commercial development.
“2025 demonstrated the
strength of our model —
disciplined pricing, mix
improvements and
operational enhancements
drove higher margins while
the Group delivered
exceptional cash performance
and continued to invest for
long-term value creation.”
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Exceptional and Acquisition
Related Items
In 2025 net exceptional items were $2m
(2024: $26m). The level of exceptional items
significantly reduced from the prior year with
previous strategic projects now complete.
2025 exceptional items comprised:
– Strategic project costs: $1.6m
– Costs to deliver Footwear acquisition
integration synergies: $0.2m
Acquisition related items were $50m in 2025
($2024: $21m), including:
– Amortisation of acquired intangible assets:
$27m
– Acquisition transaction costs, primarily
relating to the OrthoLite acquisition:
$20m
– Acquisition transaction costs, relating to
loan financing: $3m
Further details of exceptional and acquisition
related items are set out in note 3 to the
Financial Statements. The non-cash elements
of these charges were $28m.
Non-Operating Results
As expected, the 2025 adjusted EPS was 9.3
cents (2024: 9.7 cents). Increased EBIT was
offset by higher pension related interest
charges following the 2024 pension buy-in,
and the increased number of shares in
issuance following the successful capital raise
that took place in July 2025 to part fund the
OrthoLite acquisition. Reported 2025 EPS
was 6.8c (2024: 6.7 cents).
The strategic review concluded that the
Americas Yarns business did not fit with
Coats’ future strategy and the exit allowed
management to focus on driving forward
and growing other parts of the Group’s
attractive portfolio.
Amounts for year ended 31 December 2024
in the consolidated income statement have
been represented accordingly to reclassify the
results of the Americas Yarns business from
continuing operations to discontinued
operations. Note 13 provides further details
of the sale. This has resulted in a reduction in
previously reported 2024 revenues of $68m
and $1m adjusted EBIT. Exceptional and
acquisition related items for the year ended
31 December 2025 charged to operating loss
from discontinued operations was $17m
(2024: $22m).
Cash Generation
The Group delivered a strong cash
performance in 2025 with an overall free
cash inflow prior to shareholder distributions
and M&A of $160m (2024:$2m), reflecting
the low capital intensity, lower level of
exceptional cash flows including no further
contributions to the UK pension scheme and
the cash generation capability of the
enlarged Group, including a positive
contribution from OrthoLite.
The working capital inflow in the year was
$13m, including a timing benefit from the
OrthoLite acquisition. We have continued to
manage net working capital closely, with a
focus on inventory management without
compromising service levels.
At $38m (2024: $28m) net interest costs,
excluding the impact of exceptional and
acquisition-related items were higher mainly
due to the impact of the 2024 pension
buy-in. Incremental interest costs associated
with the purchase of OrthoLite were largely
offset by investment income on the capital
raise in the period prior to completion. On a
reported basis interest costs were $41m
(2024: $28m).
The adjusted taxation charge for the year
was $73m (2024: $70m). Excluding the
impact of exceptional and acquisition-related
items, the effective tax rate on pre-tax profit
remained at 29% (2024: 29%), in line with
our guidance. The reported tax rate for the
year was 32% (2024: 36%), after
exceptional and acquisition related items.
Discontinued Operations
In December 2024 the Group closed its
Performance Materials Division facility in
Toluca, Mexico and in April 2025, announced
the full exit from the non-core US Yarns
business based in Kings Mountain,
North Carolina.
The sale of the Kings Mountain plant was
completed in June 2025 for cash proceeds,
net of transaction costs, of around $13m.
This followed the strategic review of the
Americas Yarns business, which started
in Q4 2024.
FINANCIAL REVIEW CONTINUED
The table below provides further detail
behind the EBIT movement in the year.
Continuing Operations $m Margin %
2024 adjusted
EBIT
1
272 19.0%
Volumes impact
(direct and indirect) (17)
Price/mix 12
Net inflation
(including raw
materials, wages,
energy, freight) (21)
Productivity
benefits
(manufacturing and
sourcing) 24
Strategic projects
savings 7
Other SD&A
decreases 2
2025 adjusted
EBIT
1
pre
OrthoLite 279
OrthoLite
contribution 11
2025 adjusted
EBIT
1
290 19.8%
Exceptional items (2)
Acquisition related
items (47)
2025 reported
EBIT
1
241
2025 reported EBIT, including exceptional
and acquisition related items, increased to
$241m (2024: $224m).
1. Adjusted measures are non-statutory measures (Alternative
Performance Measures). These are reconciled to the
nearest corresponding statutory measure in note 14.
Coats Group plc Annual Report and Accounts 202526
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Balance Sheet and Liquidity
Group net debt (excluding lease liabilities) at
31 December 2025 was $815m (2024:
$449m). Outflows in the year included $54m
for the 2024 final and 2025 interim dividends
and $471m on M&A activity, principally the
OrthoLite acquisition (net of the inflow from
the associated equity raise). Net debt at the
year end includes lease liabilities under IFRS
16 of $93m (31 December 2024: $83m).
Our Balance Sheet remains in a strong
position with total committed debt facilities
of $1,470m with a well-diversified source
and tenor. The facilities comprise: $420m
revolving credit facility, $600m USPP notes
and a $450m loan to support the OrthoLite
acquisition, provided by existing banks
through a $300m bridge facility and a
$150m term loan. The committed headroom
on our banking facilities was $420m at
31 December 2025.
At 30 December 2025, our leverage ratio
(net debt to EBITDA; both excluding lease
liabilities) remains well within our 3x
covenant limit at 2.2x. Given the strong cash
generation capabilities of the combined
Group, we expect leverage to fall below 2x
by the end of 2026.
There was also significant headroom on our
interest cover covenant at 31 December
2025 which was 11.2x, with a covenant limit
of greater than 4x. The covenants are tested
twice annually in June and December and
monitored throughout the year.
Subject to customary post-transaction data
reconciliations and the scheme liquidating
certain assets to meet a deferred element of
the PIC premium, it will also give Coats the
option to remove the scheme fully from the
Group balance sheet in the future at very
limited further administrative cost. This
process remained on track during 2025.
The agreement with PIC is anticipated to
require up to c.£100m (c.$128m) of
additional funding from the Group, with
Coats making a £70m (c.$90m) upfront cash
contribution to the scheme and a further
£30m ($38m) provided initially as a loan to
the scheme. The £100m cash contribution
was made in H2 2024.
As previously reported, deficit repair
contributions to the scheme, of around $30m
per annum, were temporarily switched off in
January 2024 and have now permanently
ceased as a result of this agreement.
Going Concern
On the basis of current financial projections
and the facilities available, the Directors are
satisfied that the Group and the Company
has sufficient resources to continue in
operation for the period from the date of this
report to 30 June 2027, and, accordingly,
consider it appropriate to adopt the going
concern basis in preparing the financial
statements. Further details of our going
concern assessment, financial scenarios and
conclusions are set out in note 1.
We also continued our disciplined approach
to payables and receivables management as
an input to working capital efficiency.
Working capital as a % of annualised sales
was 11.0% in 2025 (2024: 12.4%). In 2026
we expect this ratio to return to a more
typical level of c12%.
Capital expenditure was $32m (2024:
$26m) as we continued investing in growth
and efficiency projects which drive long-
term returns.
We anticipate 2026 capital expenditure to
increase to c. $40-50m range reflecting the
expansion of the Group following the
OrthoLite acquisition.
Cash conversion
1
for 2025 was 114%
(2024:101%), with the high conversion
rate reflecting the working capital inflow
in theyear.
Exceptional cash flows were $24m (2024:
$156m) including residual cash flow related
to strategic projects, which are now
complete. The 2024 exceptional cash flows
included $128m of cash outflows associated
with the UK pension scheme.
Minority dividends of $15m (2024: $18m)
were paid, as cash was repatriated from
relevant overseas entities to the Group. Tax
paid was $71m (2024: $69m). Interest paid
was $31m (2024: $30m).
Foreign Exchange
The Group reports in US Dollars and
translational currency impacts can arise,
as its global footprint generates significant
revenue and expenses in a number of
other currencies.
During the year, this was a headwind of 1%
on revenue and adjusted EBIT. At latest
exchange rates, we expect a minimal impact
on revenue and adjusted EBIT for full year
2026 (excluding any future hyperinflation
impact in Turkey, which cannot be forecast
with accuracy).
UK Pension Update
In 2024 it was announced that the trustee of
the Coats UK Pension Scheme (the
“scheme”) purchased a c.£1.3 billion
($1.7 billion) bulk annuity policy (“buy-in”)
from Pension Insurance Corporation plc
(“PIC”) which insures benefits payable under
the scheme in respect of the remaining 80%
of the scheme’s liabilities.
This is further to the purchase of a bulk
annuity policy for 20% of the scheme
liabilities in December 2022.
As a result of the buy-in, all the financial and
demographic risks relating to the scheme’s
liabilities are now fully hedged, with the two
policies paying the scheme a regular stream
of income that matches its pension payments
to all members. This buy-in is the final and
most significant step in Coats fully insuring
its UK pension obligations.
FINANCIAL REVIEW CONTINUED
1. Defined as adjusted free cash flow as a percentage of
profit attributable to equity shareholders of the company
from continuing operations, before exceptional and
acquisition related items.
Coats Group plc Annual Report and Accounts 202527 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
THE FOUNDATION OF OUR SUCCESS
Our long-term strategy is underpinned
bytwo essential strengths: our people
andour culture.
Together, they power our performance,
support our growth agenda, and create
aresilient, future-ready organisation.
We are committed to being a responsible
employer – one that provides a safe, healthy
and inclusive environment where employees
can thrive. At the same time, our culture is a
competitive differentiator, enabling us to
innovate, adapt and deliver at scale for our
customers across the world.
Developing the Leaders
ofTomorrow
In 2025, we continued to strengthen our
global Grow talent strategy, identifying and
developing potential at every level of the
business. We expanded Grow through a new
virtual learning platform, using AI to deliver
personalised, bite-sized content directly into
employees’ daily workflows.
We also launched the Commercial Academy,
a flagship programme focussed on building
critical commercial capabilities across Coats.
Delivered through four expert-led modules
and supported by 60 trained facilitators, the
Academy is strengthening skills in areas such
as strategic selling, commercial mindset and
negotiation excellence.
We will build on this foundation through the
roll-out of our updated leadership capabilities
framework in 2026.
Creating a Culture of Excellence
Our annual Your Voice Matters survey
isacornerstone of our people strategy.
Withaction plans owned at business,
function and team level, the survey ensures
employee feedback directly informs
future improvements.
It is complemented by listening sessions
ledby our Non-Executive Director responsible
for workforce engagement.
– 96% participation rate
– 86% engagement score
– 7% increase in engagement since 2023
In 2025, we were certified as a Great Place
toWork
®
in 23 countries, representing 99%
of our global workforce – exceeding our
2026 goal of 88% coverage.
We also achieved an 89% score on the
GPTW Trust Index, demonstrating the
strength of our employee experience.
Building an Inclusive Culture
Our global People Principles set clear
expectations for an environment free from
harassment, bullying or unfair treatment
of any kind.
We continue to voluntarily collect employee
diversity data (including race, ethnicity,
gender, sexual orientation and military status)
to strengthen our engagement strategy and
ensure employees feel a sense of belonging.
Through our global Coats for All platform,
we embed diversity, equity and inclusion
(DEI) in our culture and behaviours.
A key part of this is Coats for Her,
whichfocuses on ensuring gender-balanced
recruitment and increasing the visibility of
women across the organisation.
These initiatives have helped increase
womenin leadership roles from 23%
in2023to 33% in 2025, with an ambition
toreach 40% by 2030.
At the end of 2025, 38% of our total
workforce was female (vs 62% male), 33%
were in senior leadership roles (vs 67% male)
and 40% were Board Directors (vs 60% male).
Employee Well-Being
Our global Energy4Performance (E4P)
programme promotes physical, mental,
emotional and social well-being, with 591
local initiatives delivered worldwide in 2025.
This year also saw the introduction of
LyraWell-Being, an online hub providing
employees with fast access to qualified
therapists, coaches and mental health
professionals on an as-needed basis.
Coats Cares
Now in its third year, Coats Cares celebrates
employee-led community initiatives through
a global competition, with winning teams
receiving funding to expand their impact. In
2025, Coats Cares delivered over 4,141
volunteer hours, engaged 8,154 participants,
and contributed more than $438,000 in
donations globally.
People and Culture
Coats Group plc Annual Report and Accounts 202528 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
PEOPLE AND CULTURE CONTINUED
OUR VALUES
Our values shape how we
work,andguide our decisions,
ourbehaviours and our culture
ofperformance.
WE ARE COLLABORATIVE
We work across geographies
todeliver innovative solutions
andexceptional service.
WE ARE AGILE
We adapt quickly to change,
thriving in a fastmoving global
supply chain.
WE HAVE A CAN-DO
ATTITUDE
We bring confidence, energy and
determination to every challenge.
WE ARE PASSIONATE
We are committed to excellence, our
customers and our communities.
WE ARE DIVERSE
With c. 19,000 employees across
50 countries, we know diversity
drives innovation.
Our Commitment to Protecting
Human Rights
Coats is committed to protecting the
Human Rights of our employees and
those working in our supply chain.
We fully support the United Nations (UN)
Guiding Principles on Business and
Human Rights in our operations, and we
uphold: the UN Declaration of Human
Rights; the UN Convention on the Rights
of the Child; the core International
Labour Organisation (ILO) Conventions;
and the Organisation for Economic
Co-operation and Development (OECD)
Guidelines for Multinational Enterprises
and the related Due Diligence Guidelines
for the Garment and Footwear sector.
We conducted our latest biennial human
rights risk assessment in 2025, and also
assessed risks for our own workforce
and upstream value chain as part of
preparatory work for the Corporate
Sustainability Reporting Directive.
Our Group Internal Audit (GIA)
team includes aspects of Human
Rights assessment in their regular
audit programmes.
Details on the outcomes of our GIA
audits in this area are included in our
Sustainability Report on page 56.
Coats Group plc Annual Report and Accounts 202529 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
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Stakeholder Engagement
MAINTAINING HIGH PERFORMANCE RELATIONSHIPS
Engaging effectively with our stakeholders and listening to their
feedback is part of our culture.
Our stakeholders
Read our S172 statement,
including how insights from
stakeholders informed key
decisions on pages 34-36
How the Board Engaged/Received
Feedback in 2025
– Regular reporting by the Group CEO,
covering performance (tracked by product
line), key sales insights, and relevant
customer feedback.
– Reviews of the innovation pipeline
andinorganic opportunities.
– Detailed review of key customers on a
divisional/regional basis as part of regular
strategic updates.
– Deep dives into Customer Excellence
andOperational Excellence workstreams,
including consideration of how customer
insights drove priorities.
– Direct engagement during the Directors’
market visit toIndia in Q3.
– Detailed consideration of opportunities
forcustomers and review of customer
insights provided as part of OrthoLite
andViz Reflectives acquisition processes.
What we Believe Matters
toCustomers
– Commitment to quality,
innovationanddifferentiation.
– Truly sustainable solutions.
– Maintaining effective relationships
withexceptional service from our
customer-facing teams.
– Agile supply chain with consistent,
reliable,on-time delivery.
– Ensuring competitive value and
exceptional service and support levels,
anda continued drive to achieve greater
efficiency through technology and
automation where appropriate.
“Understanding our customers’
needs allows us to provide
innovative solutions to deliver
additional value.”
Outcomes
– Expansion of product portfolio to meet
changing customer needs in apparel,
footwear and safety markets.
– Strategic acquisitions in footwear and
safety to provide stronger customer value.
– Customer segmentation and operational
innovation in key markets, driving even
higher levels of customer satisfaction
andshare.
– Step up in customer-facing associate
training, underpinning our relationships
and customer satisfaction.
– Launch of SaaS FastReactPlan and
GSDQuest in Coats Digital.
– Global customer survey in Footwear,
underlining our key strengths and areas
for further improvement.
Customers
Maintaining open and constructive dialogue
builds trust, strengthens relationships, and
enables us to respond to evolving priorities.
Their perspectives help shape our strategy,
guide our actions, andensure that we operate
responsibly as we seek to fulfil our purpose
and deliver long-term sustainable value.
The Board’s engagement with stakeholders is
both direct and via management reporting to
the Board on stakeholder engagement,
theimportance of which is embedded
throughout our business.
On the following pages, we summarise our
approach to stakeholder engagement during
the year, highlighting: our key stakeholders
and why they are important to us; what we
understand to be their key interests; and how
we have engaged with them in 2025.
Coats Group plc Annual Report and Accounts 202530
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
How the Board Engaged/Received
Feedback in 2025
– Investor relations updates provided
atevery scheduled Board meeting.
– Regular engagement between key
shareholders and our Group CEO and
Group CFO through a programme of
meetings and presentations, both in the
UK and abroad.
– Group CEO and Group CFO presented
tokey (both new and existing)
shareholders as part of the capital raise.
– The Board received timely updates
onshareholder sentiment during the
acquisition progress and detailed updates
thereafter on the evolution of the
Company’s share register.
– The Company’s brokers/advisors provided
an update on shareholder perceptions
ofthe Group and presented the detailed
results of the H2 investor feedback survey.
– Remuneration Committee Chair was
available to shareholders to discuss
theproposed Remuneration Policy.
– The Senior Independent Director
consulted with key shareholders regarding
the extension of the Chair’s tenure.
– Attendance at the 2025 AGM,
includingresponding to questions
fromshareholders.
What we Believe Matters
toShareholders
– Clear strategy and focus on optimisation
of portfolio.
– Operational and financial performance.
– Total shareholder returns.
– Effective leadership.
– Strong corporate governance,
reputationand ethical standards.
– Sustainability.
– Value-adding communications.
“Regular and value-adding
dialogue provides investors
with a greater understanding
of our business to ensure that
they can more accurately
assess its value.”
Outcomes
– Continuation of progressive dividends.
– Discussion on best use of capital.
– Reporting enhancements to aid better
understanding of our business model
andstrategy.
– Successful completion of capital raise and
retail offer to partially fund the acquisition
of OrthoLite.
– Maintenance of high ESG ratings.
– Regular and effective engagement with
Executive Directors and senior management.
STAKEHOLDER ENGAGEMENT CONTINUED
Shareholders
Employees
How the Board Engaged/Received
Feedback in 2025
– Direct engagement between Directors and
local employees through Board meetings,
site visits and events, including in the UK,
Vietnam, India andThailand.
– Insights from the Designated Non-
Executive for Workforce Engagement
gained from listening sessions, DEI calls
and well-being-related townhalls.
– Regular review of culture-related reporting
relating to employees, including: health
and safety, succession planning, gender
diversity, and Great Place to Work®
(GPTW) certification.
– Review of talent development
opportunities and programmes resulting
from acquisitions and changes to the
organisational structure.
– Regular review of employee-related items
as part of strategic updates provided
during the year by leadership teams.
– Annual review of remuneration levels of all
employees by Remuneration Committee.
– Review of DEI matters by Nomination
Committee.
“Attracting and retaining talent
and effectively engaging with
our people is essential to our
continued success.”
What we Believe Matters
toEmployees
– Strong culture, with particular focus on:
health and safety; DEI; sustainability;
andwell-being.
– Doing The Right Thing and high
ethicalstandards.
– Recognition and reward.
– Training and development opportunities,
with particular focus on Group
programmes (Growat Coats and
CoatsforAll).
– Coats Cares programme providing
opportunities to give back.
– Regular and effective communication,
particularly relating to the changes in
organisational structure.
Outcomes
– New Chief People Officer appointed
in2025.
– New opportunities in the two division-
structure and in the recent acquisitions,
combined with refreshed approach
totalent and succession planning.
– 99% GPTW coverage (23/23countries
certified).
– 86% employee engagement score
inannual Your Voice Matters survey.
– Simplification and standardisation
ofwaysof working arising from
Operational Excellence workstream.
Coats Group plc Annual Report and Accounts 202531
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
STAKEHOLDER ENGAGEMENT CONTINUED
How the Board Engaged/Received
Feedback in 2025
– Environmental metrics presented at every
scheduled Board meeting and progress
tracked across KPIs.
– External assurance processes of core
ESG-related data undertaken and overseen
by the Audit and Risk Committee.
– Strategic updates on divisions and
business operations presented at the
Board considered environmental and
sustainability performance, and
sustainability-related innovation.
– Detailed review of progress against 2030
and 2026 targets, and the considerations
for both our energy and materials transition
journeys (read more in our Sustainability
Report online at coats.com/sustainability).
– Sustainability Committee composition
reviewed and updated to include
theGroup CFO.
– Reporting line for Group Sustainability
Director changed to report into Group CFO.
– Sustainability Committee met twice (read
more about the topics it considered on
page 72).
What we Believe Matters to the
Environment
– Reducing our environmental
impact remains a priority for all of
our stakeholders.
– Increasing demand for truly
sustainable products.
– Strong ESG ratings continue to
be important to our shareholders
and employees.
– Meeting our 2026 and 2030 goals.
– Keeping pace with regulatory and
compliance requirements as
complexity increases.
“Coats is working proactively
to minimise the environmental
impact of our industry.”
Outcomes
– Progress made to our 2026 and 2030
sustainability targets (read more on
page 15).
– Launch of Coats Textile-to-Textile
Epic™ and Gramax, and expansion of
Gotex Xtru™.
– External assurance obtained on certain
ESG-related data.
– Launch of supplier decarbonisation
programme with emphasis on
emissions reduction.
– A- CDP rating for climate achieved
in 2025.
How the Board Engaged/Received
Feedback in 2025
– Regular reporting on health and safety,
gender diversity and GPTW KPIs.
– Review of DEI-related data and
forward-looking trends in this area
by Nomination Committee.
– Strategic updates on acquisitions,
divestments and divisional updates
included sustainability and people-related
topics, as well as consideration of the
impact of our operations.
– Regular reporting on macroeconomic and
sociopolitical events.
– Direct engagement between Directors and
local communities during the year
included: attendance at ‘Investing in
Bright Futures’ award ceremony; ‘Women
Skills Development’ workshop; and visit to
a local hospital to see the impact of the
support provided by the local operating
team in India.
What we Believe Matters
toCommunities
– Positive impact of operations on the
local economy.
– High reputational and ethical standards.
– Sustainability and the environment.
– Focus on health and safety, and wellbeing.
– Access to skills development and
employment, in an organisation that
promotes DEI and is committed to doing
business in the right way.
“By empowering people and
championing DEI, we
contribute to local
communities and strengthen
our business.”
Outcomes
– Group-wide focus on health and safety,
supported by mandatory training.
– Entry into new communities with the Viz
Reflectives and OrthoLite acquisitions.
– Continuation of Coats Cares to deliver
benefits tailored to local communities.
– Significant progress towards our 2026
and 2030 sustainability goals.
– Restricted Substances List (RSL)
programme updated annually ensuring
that our products do not present any risk
to our customers and consumers.
Application of our RSL is a requirement of
our Group Supplier Code as all inputs into
our processes have to be certified as
compliant to our RSL, apart from a small
number of industrial products with
performance-driven exceptions that are
approved at senior management level.
Environment
Communities
Coats Group plc Annual Report and Accounts 202532
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
STAKEHOLDER ENGAGEMENT CONTINUED
Suppliers
How the Board Engaged/Received
Feedback in 2025
– Regular reporting on key supply chain KPIs
at every scheduled Board meeting.
– Group CEO updates on relevant supplier-
related matters that should be brought
tothe attention of the Board.
– Insights from suppliers provided as part
ofdivisional and regional strategic
updates, which included consideration
ofsupply chain issues and trends.
– Direct engagement with several
keylocalsuppliers during site visit
toIndianoperations.
– Review of Supplier payment terms
andSupplier Code program (including
consideration of the supplier audit process
and training practices) undertaken by the
Audit and Risk Committee.
– Review of Supplier decarbonisation
programme undertaken by the
Sustainability Committee.
What we Believe Matters
toSuppliers
– Strategic alignment and growth
opportunities.
– Quality and innovation.
– Fair contract and financial terms.
– Long-term relationships.
– Sustainability and the environment.
– Reputation for Doing The Right Thing.
“We continue to work to
ensure reliable supply chains
that meet our standards for
compliance, innovation,
quality and sustainability”
Outcomes
– 216 independent audits conducted
byBureau Veritas on Coats’ behalf.
– Rollout of digital platform to enhance
supplier ESG-compliance tracking.
– Review of contracts of significant
valueinline with Group Delegated
Authorities Policy.
– Continuation of Doing The Right Thing
campaign, supported by mandatory
training, to enforce our zero-tolerance
approach to any form of bribery,
corruption or unethical behaviour in our
operations and wider supply chains.
– Proactive management of risk of
non-compliance with our Anti-Bribery
and Anti-Corruption Policies by our
upstream supply chain through our
Group Supplier Code and associated
Supplier audit programme.
– Regular review of key policies (i.e.
Anti-Bribery & Anti-Corruption Policy,
Competition Law Policy, Ethics code,
Gifts & Entertainment Policy, Speak Up
– Whistleblowing Policy and Undue
Influence Policy).
Coats Group plc Annual Report and Accounts 202533
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Section 172 of the Companies
Act 2006 requires the
directors to promote the
success of the Company for
the benefit of its members as a
whole, while having regard to
the interests of its
stakeholders in their decision-
making (S172 Factors). When
making decisions, the Board
recognises the importance of
considering the needs and
priorities of our stakeholders
to help determine what is most
likely to drive sustainable,
long-term value.
The ways in which the Board has engaged
with our six principal stakeholder groups are
outlined on pages 30 to 33, including what
was learned from these engagements. The
Board recognises the value of taking into
account stakeholder views and the impact of
the Company’s activities on local
communities, the environment and the
Group’s reputation.
Specific examples of Board decision-making, including how stakeholders were considered and how their input influenced outcomes, are shown
on pages 35 to 36. Other information considered by the Board during 2025 relating to the S172 Factors is set out below:
S172 Factor Relevant disclosures
a The likely consequences of any decision in
the long term.
Group CEO’s review (pages 6 to 11)
Strategic enablers (pages 16 to 21)
Principal risks and uncertainties (pages 38 to 46)
Long-term viability statement (page 47)
TCFD disclosures (pages 178 to 199)
b The interests of the Company’s employees. Business model (page 13)
Sustainability KPIs (page 15)
People and Culture (pages 28 to 29)
Stakeholder engagement (page 31)
The Board and culture (page 61)
c The need to foster the Company’s business
relationships with suppliers, customers and others.
Business model (page 13)
Stakeholder engagement (pages 30 to 33)
Operating Review (pages 22 to 24)
Principal risks and uncertainties (pages 38 to 46)
d The impact of the Company’s operations on the
community and the environment.
Stakeholder engagement (page 32)
Sustainability KPIs (page 15)
Principal risks and uncertainties (pages 38 to 46)
Directors’ Report (SECR disclosures, pages 101 to 103)
TCFD disclosures (pages 178 to 199)
e The desirability of the Company maintaining a
reputation for high standards of business conduct.
People and Culture (pages 28 to 29)
Non-Financial Information Statement (page 37)
Principal risks and uncertainties (pages 38 to 46)
Audit and Risk Committee Report (pages 66 to 71)
Whistleblowing (page 100)
f The need to act fairly as between members
of the Company.
Stakeholder engagement (page 31)
S172 STATEMENT
Coats Group plc Annual Report and Accounts 202534 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Examples of Board decision-making
during the year and S172 Factors considered Stakeholders Key stakeholder considerations
Acquisition of OrthoLite
The Company has a well-established acquisition strategy which includes
pursuing expansion into adjacent attractive markets to unlock long-term organic
growth. As part of this strategy, the Group CEO provides regular updates on the
M&A pipeline and activities at Board meetings.
OrthoLite is the global market leader in premium insoles. Following the
acquisitions of Rhenoflex and Texon in 2022, the opportunity to purchase
OrthoLite and accelerate Coats’ strategy to create a Tier 2 supplier for footwear
components was evaluated against clear acquisition criteria. The Board
considered the need to act fairly as between members of the Company
inrelation to the funding of the acquisition.
Communities
Customers
Employees
Environment
Shareholders
Suppliers
– Price and funding mechanisms.
– Short- and medium-term growth case, including expected annualised cost synergies
andenhanced Group EBIT margins, with EPS accretion expected from 2026.
– Long-term strategic rationale, particularly expansion into the high-growth premium
insole segment and OrthoLite’s strong sustainability credentials.
– Product fit and the opportunity to leverage the Company’s experience
insuccessfullydelivering synergies from previous footwear acquisitions.
– Cultural fit, people and leadership skills, and long-term capability building.
– Significant customer, operational and route-to-market overlap, offering
opportunitiesforaccelerated growth through innovation and cross-selling.
– In assessing the overall deal, the Board considered the risks and opportunities
offeredbytheacquisition and concluded that the acquisition would be beneficial
fortheGroup andits stakeholders.
Outcome:
On 16 July 2025, the definitive agreement to acquire OrthoLite was announced. On 29 October 2025, the acquisition was completed following receipt of all required regulatory clearances.
Post-completion, the Directors received regular updates on integration from a strategic, financial, operational and cultural perspective in order to evaluate the ongoing impact on
stakeholderspost-acquisition.
Capital Raise
Evaluation of the potential funding mechanisms available to the Company
topurchase OrthoLite required assessment of both equity and debt options
todetermine the appropriate mix.
The Board noted that it had the authority granted by shareholders at the 2025
AGM to issue up to 19.99% of issued share capital on a non-pre-emptive basis.
The Board carefully considered the need to act fairly as between members of the
Company in relation to the funding of the acquisition, and analysed the benefits of
launching a retail offer.
The Board considered the available debt financing options from existing lenders.
The Directors also considered the implications of proceeding with the capital
raise if the acquisition did not complete.
Shareholders
– The capital raise was not conditional upon any further approval by shareholders.
– Where possible, the Company’s major institutional shareholders were consulted on both
the acquisition and the share capital increase, to minimise execution and market risk,
cost, time to completion and use of management time.
– The consultation process confirmed the Board’s view that the share capital raise and the
acquisition were in the best interests of shareholders, as well as wider stakeholders in
the Company.
– Directors listened to the views of shareholders on the acquisition price, potential funding
methods and their impact on leverage and potential dilution impacts. Directors carefully
considered these balances through the decision process.
– A retail offer provided retail investors with the opportunity to participate.
– The Directors and management were able to participate in the share capital raise.
Outcome:
The Directors confirmed that, if the acquisition did not proceed, it was their intention that the net proceeds of the share capital raise would be invested on a short-term basis while they evaluated
other uses of the proceeds (which may have included other acquisition opportunities) or a return of capital.
Concurrent with the announcement of the acquisition of OrthoLite, on 16 July 2025 the Company announced a proposed capital raise and retail offer. The capital raise resulted in gross proceeds
of approximately £246 million, with strong support from existing shareholders and participation by the Directors and management.
S172 STATEMENT CONTINUED
Coats Group plc Annual Report and Accounts 202535 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Examples of Board decision-making
during the year and S172 Factors considered Stakeholders Key stakeholder considerations
Change of organisational structure
Following the exit from the non-core US Yarns business and the acquisition
of OrthoLite, the Board considered the appropriate organisational structure
to reflect the new profile and scale of the Group’s core businesses and the
impact of these in the long-term to meet the Company’s ambitions for
sustainable growth.
The Board emphasised the need for the structure to enable the business to
focus on key priorities, while concurrently effectively integrating OrthoLite
without disrupting day-to-day delivery and execution.
Communities
Customers
Employees
Environment
Shareholders
Suppliers
– The structural and operational improvements in Performance Materials which had
delivered substantial margin progression and a return to organic growth.
– Cost synergies.
– Operational matters, including changing footprint of operations and the associated
impact on local communities and environmental performance.
– Synergies from aligning underlying technologies.
– The benefits of reducing internal operating complexity for both internal and external
stakeholders.
– Potential for further deepening relationships with customers and suppliers, accelerating
innovation and delivering greater value.
Outcome:
The new two-division organisation structure was announced on 30 October 2025. Adrian Elliott would continue to lead the Apparel Division, which now included Personal Protection and
Performance Threads businesses (c.80% of Performance Materials). Pasquale Abruzzese would lead the enlarged Footwear Division, which included Telecom & Energy business (c.20% of
Performance Materials) as well as OrthoLite.
It was also confirmed that the Company’s external reporting would align to this new structure with effect from the financial year ending December 2026.
S172 STATEMENT CONTINUED
Coats Group plc Annual Report and Accounts 202536 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
NON-FINANCIAL & SUSTAINABILITY INFORMATION STATEMENT
The below table outlines how Coats meets the Non-financial Information and Sustainability reporting requirements contained within the Companies Act 2006.
Further disclosures can also be found in Coats 2025 Sustainability Report.
Reporting Requirement Annual Report Section Page(s) Related policies and standards
Environmental matters, including the impact
of the business on the environment and
climate-related disclosures
– Stakeholder Engagement 32 – Environmental Policy
– Section 172 statement 34 - 36 – Climate Change Policy
– Principal risks and uncertainties 38 - 46 – Supplier Code
– Directors’ report 99 - 104 – Restricted Substances List
– TCFD statement 178 - 199
– Also see 2025 Sustainability Report Available from Coats.com
Employees
– People and Culture 28 - 29 – Key People Principles
– Section 172 section 34 - 36 – Health and Safety Policy
– Principal Risks and Uncertainties 38 - 46 – Global Employment Standards
– Directors’ Report 100 – Speak Up – Whistleblowing Policy
– Gifts and Entertainment Policy
– Ethics Code
Social and community matters
– People and Culture 28 - 29 – Charitable Donations Policy
– Section 172 section 34 - 36
– Also see 2025 Sustainability Report Available from Coats.com
Respect for human rights
– Principal Risks and Uncertainties 40 – Ethics Code
– Also see 2025 Sustainability Report Available from Coats.com – Living Wage Policy
– Modern Slavery Statement
– Supplier Code
– Conflict Minerals Code
Anti-bribery and corruption
– Stakeholder Engagement 33 – Competition Law Policy
– Principal risks and uncertainties 46 – Ethics Code
– Audit and Risk Committee Report 66 - 71 – Key People Principles
– Also see 2025 Sustainability Report Available from Coats.com
Business model
– Group CEO’s review 6 - 11
– Business model 13
– Financial review 25 - 27
Principal risks and uncertainties
– Principal risks and uncertainties 38 - 46
Non-financial key performance indicators
– Strategic report – Sustainability key performance indicators 15
Coats Group plc Annual Report and Accounts 202537 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Principal Risks and Uncertainties
MANAGING RISKS FOR SUSTAINED PERFORMANCE
Effective risk management is
integral to better decision-making;
it protects our business and
supports our sustainable,
long-term growth.
Risk management
Our risk framework is built on a holistic approach to
risk management, ensuring that risks are identified,
evaluated, managed, and monitored in a consistent
and proportionate manner across operations. This
framework also facilitates the effective identification
and leverage of opportunities. It is integrated with
the Group’s internal control and compliance policies
and is supported by both internal and external
auditprogrammes. Risk monitoring is informed
bya combination of internal insights and external
data sources.
The framework is structured around five
categories of principal risks – strategic, external,
climate, operational and legacy – as well as key
and emerging risks.
We believe that the strategic and operational
benefits of proactive risk management are best
realised when risk processes are closely aligned
with the organisation’s strategic objectives and
day-to-day operations. To support this, our
risk-related ways of working are reviewed
regularly to ensure they remain robust, relevant
and fit for purpose within an increasingly dynamic
macro-environment.
The Board retains overall responsibility for the
stewardship of the Group’s system of risk
management and internal control.
Climate-related risks, impacts and mitigating
actions assessments form part of our Task Force
on Climate-related Financial Disclosures (TCFD)
(see page 178).
Top-down
Define risk tolerance
Monitor exposure
Oversight of risk
management
Bottom-up
Identify
Monitor
Report
The Board*
– Sets strategy
– Identifies which risks are most important for the Group
– Considers the effectiveness of risk management and reviews the Group’s risk profile
– Determines overall risk tolerance
* The Board has appropriate regard for all the factors set out in
S172 of the Companies Act 2006 in its consideration of risk and
other matters. You can read about this on pages 34 to 36 in the
S172 Statement.
Key
Report for evaluation
Direct and monitor
Group Executive Team (GET)
– Responsible for day-to-day monitoring,
management and, where appropriate,
mitigation of key risks that impact the
business as well as appropriately
leveraging opportunities
– Receives regular updates on key risks from
the divisions, Risk Champions and Group
Internal Audit (GIA)
Divisions/Enabling Functions/Senior
Management/Risk Champions
– Responsible for identifying, managing and
mitigating appropriate sets of risks,
including emerging risks
– Regularly review a broad range of
individual current strategic and operational
risks and opportunities
– Monitor key risk indicators
– Report and provide feedback to GRMC,
GET, Audit and Risk Committee and
the Board
Audit and Risk Committee (ARC)
– Supports the Board in monitoring the
effectiveness of the systems of risk
management and internal control
– Reviews reports from the Group Executive
Team (GET), Group Risk Management
Committee (GRMC), Group Internal Audit
(GIA) and the external auditor relating to
effectiveness
Group Risk Management Committee
(GRMC)
– Responsible for formulating risk
management strategies and policies, and
monitoring risk management throughout
the Group
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
First Line
Divisions
Enabling functions
Senior management
Third Line
Group Internal Audit (GIA)
Second Line
Risk management
Internal controls
Compliance functions
We use a ‘three lines of defence’ framework
to strengthen our risk and internal control
practices by ensuring that roles are clearly
defined and supported through transparent
reporting structures and delegated
authorities. Aligned with this framework,
theGroup applies both a top-down and
bottom-up approach to managing risk.
Divisions/Enabling functions
– Apparel and Footwear Leadership Teams
are responsible for monitoring division-level
risk, and implementing and maintaining an
effective risk and control environment as
part of day-to-day operations
– Enabling functions support and advise the
divisional teams as appropriate
Group Internal Audit (GIA)
– embeds the relevant Group risks in their
audit process by aligning review criteria
with the Group Risk Register as well as the
Key Control Framework (including areas
such as anti-bribery and corruption,
sustainability, health and safety and
IT/cyber security)
– reviews units and functions on a risk
prioritised basis, with appropriate focus
onkey markets
– reports findings to management and
theARC
– presents the results of the semi-annual
risk questionnaire to allow the ARC to
consider any exceptions or risks arising
from operations
Group Head of Ethics & Risk
– reviews the Group Risk Register and unit
and divisional risk registers regularly
– assesses the risk management practices
indivisions, including: the frequency
andadequacy of local risk management
committee discussions; the risks identified
and discussed; and the completion of the
actions contained in the risk registers.
Responsibilities Within the Risk
Framework
A summary of risk management
responsibilities is set out in the diagram on
page 38 with further details set out below.
The Board:
– retains overall ownership and
accountability for risk management
– determines the nature and scope
oftheprincipal, key and emerging risks
– sets risk tolerance
– directs the external reporting of risk
andviability
– ensures the Directors have the appropriate
skills, knowledge and experience to carry
out their risk-related duties effectively
Audit and Risk Committee (ARC)
– monitors, oversees and reviews the
effectiveness of the risk management and
internal control systems and processes
implemented across the Group, and has
confirmed to the Board that these all
operated effectively during 2025
Read more about the ARC’s activities relating to risk
management and internal controls on page 69.
Group Executive Team (GET) / Group Risk
Management Committee (GRMC) #
– responsible for operational delivery of the
Group’s strategy, including day-to-day
management of operations and detailed
monitoring of performance of all aspects
of the Group's business
– considers risk reports from divisions/Risk
Champions/GIA and undertakes timely
and responsive risk assessment, resulting
in agile action-taking, and reports to the
Board as appropriate
# The GRMC comprises all members of the GET and meets
regularly.
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Governance
Culture and strategy
Risk appetite
Reporting and assurance
Core risk management process
Identify
Assess and quantify
Manage
Monitor
Infrastructure
Tools, systems & data
Policies
Procedures & responsibilities
Risk Tolerance
Taking risk is an inherent and unavoidable
aspect of conducting business. Accordingly,
Coats’ risk management strategy does not
seek to eliminate all risk, but rather to ensure
that robust and effective mechanisms are in
place to identify, assess and manage the risks
to which the Group is exposed and
appropriately leverage any related
opportunities. It is imperative that our risk
tolerance is clearly considered across each
risk category, enabling a clear understanding
of the level of risk the Group is prepared to
assume in pursuit of its strategic objectives
and the associated potential returns.
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
The Board assesses the emerging, key and principal risks facing the Group, along with the risk
trends and levels of risk tolerance for each of those risks using the four categories set out
below on at least an annual basis.
Very risk averse Where we are very cautious and seek to minimise the financial and
reputational risk as far as possible. Mitigation costs are accepted
albeit that they might exceed the potential loss.
Risk averse Where we are cautious and seek to reduce the financial and
reputational risk. Mitigation actions are proportional and based
oncost-effectiveness.
Somewhat risk
tolerant
Where we are willing to take some financial and reputational risk
toachieve our objectives. Mitigation actions are again proportional
and based on cost-effectiveness.
High degree of risk
tolerance
Where we are willing to take significant financial risk to achieve
our objectives. Mitigation involves an active management of risk-
return trade-offs.
The Board appropriately considers the views of a range of stakeholders, including management
and shareholders, when it considers the appropriate level of tolerance.
Changes in Risk Trend
The Board recently reviewed the risk trends for all current principal and key risks. Any changes
to risk trends for principal risks are set out on pages 41 to 46. Risk trends for certain key risks
were adjusted to reflect the current assessment of the risk environment within which each of
those risks sits.
The Directors considered risk trends in light of the OrthoLite acquisition, and concluded that
nofurther changes were required at this time but that this would remain under review.
Emerging Risks
We define emerging risks as risks that are considered potentially significant but are still in the
relatively early stages of their evolution. We conduct horizon-scanning activities to identify
developing trends and external events that could materially impact our industry or our business,
from both a risk and opportunity perspective. This enables the GET to anticipate changes in the
operating environment and take appropriate action.
Our bottom-up reviews incorporate emerging risk factors identified at unit and divisional level
and are further informed through consultation with internal and external subject-matter
experts. The emerging risks identified through these processes are subsequently reviewed by
the GRMC, the GET and the Board.
During 2025, emerging risks – particularly
those relating to Technology-related risks and
opportunities – were closely monitored and
assessed as part of these review cycles.
The Board continues to monitor the evolution
of emerging risks and reassesses the
landscape at least twice a year, taking into
account the processes described above.
Modern Slavery
The Board approves the Group’s Modern
Slavery Statement on an annual basis.
Weremain committed to: addressing the
potential risks of modern slavery and human
rights abuses; acting in an ethical manner
with integrity and transparency in all business
dealings; and investing in the creation of
effective systems and controls across the
Group to safeguard against adverse human
rights impacts. Our Modern Slavery
Statement is available from coats.com.
Examples of Key Risk Management
Developments in 2025
– Review of principal, key and emerging
risks, risk trends and risk tolerances in
context of OrthoLite and change to
organisational structure.
– Initiated refresh of risk definitions used
within unit and divisional risk registers
todetermine categories of risk and the
associated parameters of those risks.
Thisrefreshed lens will continue to
beused during 2026.
– Refresh of key risk indicators matrices
fora range of risks including Operational
and Infrastructure-related risks, Bribery
and Anti Competitive-related risks, and
Product Liability-related risks.
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
– Group-wide focus on reviewing and
enhancing material controls environment
in preparation for Provision 29 of the UK
Corporate Governance Code 2024,
becoming effective as of 1 January 2026.
In partnership with PwC, the
Controllership function has evaluated the
evolving control environment and the
adequacy of assurance activities. There
has been regular reporting to the ARC.
– Cyber Security and Digital & Technology
risk management reviews to assess the
status of current risks and mitigation plans
undertaken by GIA, supported by experts
from BDO, with regular reporting
totheARC.
All such discussions: considered risks in
isolation; considered the correlation between
risks, and likelihood of one risk occurring at
the same time as another or even triggering
it; and considered the potential combined
impact should that occur, along with
anyfurther mitigating actions that could
betaken.
Coats Group plc Annual Report and Accounts 202540 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Our 11 principal risks, along with a summary of any changes to
risk descriptions and/or risk trends, the measures we have put in
place to manage and mitigate or leverage these risks and any
related opportunities, are set out in the table below.
As stated above, the Board will continue to keep the management and mitigation of these
principal risks, as well as the appropriateness of this list and the constantly changing broader
risk environment, under ongoing review.
Principal risk Action/mitigation
1. STRATEGIC
M&A programme
ambition risk in light
of Group’s increasing
ambition in scale of its
acquisition programme
and its ability to
source, satisfactorily
acquire and integrate
suitable targets
– Texon and Rhenoflex form Structural Components subdivision
within Footwear Division and are fully integrated.
– OrthoLite forms its own insoles subdivision within Footwear
Division. Integration is progressing with strategic initiatives being
appropriately prioritised.
– Group strategic M&A agenda is overseen by experienced
in-house specialists, ensuring activity remains aligned with
bothGroup and divisional priorities.
– A disciplined, prioritised opportunity pipeline is maintained,
supported by internal expertise and external advisers, using clear
evaluation criteria linked to Group strategic focus areas.
– Constructive engagement with potential targets is pursued
where appropriate, enabling early opportunity assessment
anddevelopment of long-term relationships.
– Proportionate, structured due diligence is carried out on
prospective acquisitions, supported by specialist external advisers
who provide comprehensive review functions and robust,
cross-functional integration planning.
– Clear accountability for initiation and approval of M&A activity is
set out within Group Delegated Authorities Policy and Group
M&A Process.
– An established integration framework, led by internal M&A
experts, supports consistent post-completion delivery, with
progress and expected synergies monitored closely.
– Board and GET receive regular updates covering opportunity
pipeline activity, transactional progress and integration
performance, ensuring effective oversight.
Risk trend:
Link to strategy
– Accelerate
profitable sales
growth
– Transform the
business
– Create value
Principal risk Action/mitigation
Risk of ever-increasing
customer product
and sustainability
expectations and
Group’s continuing
ability to meet and
exceed those
expectations as part
of its strategic growth
and sustainability
ambitions
– OrthoLite provides strong alignment across customers, channels
and operational footprint, and opportunities toaccelerate
growth through innovation and cross selling.
– Commercial Excellence workstream introduced new customer
segmentation modelling to enable more tailored value
propositions and deeper customer engagement.
– Launch of Commercial Academy embeds enhanced customer
service training and drives greater consistency and quality
acrossmarkets.
– $15m incremental revenue delivered from breakthrough
innovation in 2025, primarily in Safety Fabrics and Energy.
– Ongoing investment in core technology platforms – textile
engineering, surface science, polymer science, fire science and
colour science – strengthens capabilities across global Innovation
hubs and spokes, and supports entry into adjacent markets.
– Continued enhancement of customer-facing software and
proprietary applications to improve customer experience. ShopCoats
now includes enhanced sample functionality and GSDQuest,
launched in 2025, uses generative AI to automate processes.
– Regular engagement with customers across all organisational
levels is supported by well-established communication channels
and structured review forums.
– Continuous monitoring of trends with potential to influence
industry dynamics is undertaken at Group and divisional level,
with insights tracked, assessed and escalated through established
reporting processes.
– Strong focus on maintaining an agile, resilient supply chain
network ensures reliable service and swift responsiveness
toevolving customer needs.
– Ongoing emphasis on customer service and product quality
delivers globally consistent, safe and trusted products that
reinforce long term customer partnerships.
– Notable progress in development of sustainability-led innovations
supporting advancement towards 2030 sustainability goals,
withlaunch of Coats Textile-to-Textile Epic™ and Gramax,
and expansion of Gotex Xtru™.
Risk trend:
Link to strategy
– Accelerate
profitable sales
growth
– Create value
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
IncreasingStable
Key
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risk Action/mitigation
Risk of failure to
develop diverse and
inclusive set of talent
and capability to
ensure robust
succession planning
for critical roles in
organisation given
ever-evolving business
and external
environment
– Global talent strategy developed and implemented to strengthen
talent capabilities required to deliver 2030 strategy.
– Assertive external talent acquisition approach adopted to build
leadership pipeline bench strength and support long term
succession needs.
– Succession plans for senior and critical roles reviewed regularly
atGET and Board meetings, ensuring robust oversight of future
leadership planning.
– Organisational structure simplified from three business units to
two, creating broader development roles for internal talent and
supporting progression into management board level positions.
– Acquisition of OrthoLite adds further depth to talent pool
acrossCoats.
– Internal talent reviews conducted by GET identify high potential
individuals and establish tailored development actions. Reviews
discussed at least annually at Nomination Committee and Board.
Variable pay incentives maintained, benchmarked and overseen
by Remuneration Committee, with alignment to both Group
andindividual performance, and appropriate calibration
ofindividual outcomes.
– Formal performance cycle in place with clear objectives and
individual development plans agreed between each employee
and leader, incorporating both structured learning and
experience-based development opportunities.
– Employee engagement remains central to HR strategy.
Partnership with Great Place To Work® (GPTW) and structured
review of internal employee feedback provide comprehensive
insights and inform action plans addressing priority themes.
Actions tracked, with updates provided to Board annually. In
2025, Coats achieved GPTW certification across 23 countries,
representing 99% of workforce.
– Regular cultural monitoring activity and people-focused initiatives
continued during 2025, with key focus areas including
recognition and appreciation, belonging and DEI, well-being,
philanthropy and role-appropriate flexibility.
Risk trend:
Link to strategy
– Accelerate
profitable sales
growth
– Transform the
business
– Create value
Principal risk Action/mitigation
2. EXTERNAL
Economic and
geopolitical risk
arising from significant
macro-economic and
demand uncertainty
– across both key
Asian and developed
markets – including
risk to free trade
conventions and risk
of tariffs and
retaliatory actions
leading to decrease in
consumer confidence
and spending – as well
as global inflationary
pressures and ongoing
geopolitical
developments
– Strength of Coats’ global footprint supports continuity of service,
with flexible production capability enabling customers to source
from preferred locations. Active global supply chain management
helps maintain operational resilience during volatile conditions.
– Strong, long-standing customer partnerships are supported by
local operational presence, technical expertise and consistent
product quality.
– Ongoing focus on differentiation through consistency, quality,
innovation and sustainability strengthens customer value and
competitive positioning.
– Regular monitoring of legal and regulatory developments at
Group and unit level, supported by external legal advisers
where required.
– Strategic analysis and scenario planning conducted at Group
anddivisional level use established modelling processes to assess
impacts of potential shifts in external environment, including
changes in global tariff regimes.
– External consultants, specialist data sources and analytical
systems are used (where appropriate) to supplement internal
assessments and provide robust stress testing.
– Regular and timely updates are provided to GET and Board to
support informed and responsive strategic decision making.
– Continuous review of potential strategic levers, including
efficiency opportunities within cost base.
– Central hedging activity and active currency-monitoring help
manage FX volatility.
– Bank financing remains accessible, supported by strong liquidity
and substantial covenant headroom.
– Appropriate insurance cover is maintained to mitigate financial
impact of specific risk exposures.
Risk trend:
Link to strategy
– Accelerate
profitable sales
growth
– Transform the
business
– Create value
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Principal risk Action/mitigation
Risk of cyber
incidents leading to
corruption of
applications, critical IT
infrastructure,
compromised
networks, operational
technology and/or loss
of data
– Cyber Security Team responsible for all aspects of security across
Coats’ global organisation and is appropriately resourced. New
Chief Information Officer and Chief Information Security Officer
appointed in 2025, with full review of cyber-related processes,
risks and mitigations underway, and identified enhancements
progressing at pace.
– Cyber Security and Digital & Technology risk-management
reviews assessed status of current risks and mitigation plans in
2025. These were undertaken by GIA, supported by experts from
BDO, with regular reporting to ARC.
– Cyber Security Steering Committee oversees strategy, investment
and delivery, with progress monitored throughout year. GRMC,
ARC and Board receive regular progress updates.
– Group-wide control areas, supported by maturing capabilities
across Endpoint Detection and Response, Internet and Email
Security Protection, Identity and Access Management, and
ongoing education and awareness programmes, strengthen our
ability to detect and mitigate threats in real time.
– Communications and training initiatives, including phishing
simulations and protection of key systems, further enhance
operational resilience, support business continuity, and reduce
potential impact of future cyber threats.
– New controls introduced during 2025 include strengthened cloud
security measures, network segmentation and regular phishing
simulations. These initiatives will continue to mature through 2026.
– Coats takes a proactive approach to managing risks associated
with emerging artificial intelligence technologies, ensuring
they are adopted responsibly to support safe, efficient and
sustainable operations.
– AI governance framework agreed with clear responsibilities
defined for Board, ARC, GET, GRMC, Cyber Security Steering
Committee and AI Governance Sub-Committee.
– Group AI policy developed with enhancements planned for 2026,
with tracking of generative AI and machine learning applications
across divisions.
– Board attended AI discussion hosted by external lawyers and attended
by experts to discuss evolution of AI and industry implications.
Risk trend:
*
Link to strategy
– Transform the
business
* Risk trend for Cyber risk
has increased from ‘stable’
to ‘increasing’ as a result of
external threat
environment.
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risk Action/mitigation
Risk of supplier
non-performance,
unavailability and/or
price increases of
raw materials,
labour and freight
and/or logistical
challenges causing
major disruption to
Coats’ supply chain
and/or reputational
damage as result of
non-compliance with
Group’s ethical
standards
– Group maintains policy of securing strategic supply arrangements
that balance cost efficiency with supply chains localised to
production teams.
– Contingency planning undertaken at Group and divisional level,
supported by scenario analysis and continuity planning, with
stocking policy adjustments implemented where required to
ensure robust and reliable supply chain performance.
– Supply chain strategy focuses on enhanced resilience,
withoptimised inventory management strengthening agility
andflexibility against unforeseen shortages or market shifts.
– 2025 focus on on-boarding new suppliers for recycled materials
in line with Group strategic priorities, and relationships developed
with Tier 1 and Tier 2 suppliers to enhance risk monitoring.
– Global geopolitical and macro-economic factors monitored
continuously to identify emerging risks and support timely
engagement with key suppliers, enabling stock security and
activation of alternate freight options where required.
– All suppliers required to commit to compliance with Group
Supplier Code as a condition of doing business with Coats,
withmandatory on-site audits for suppliers above defined
spendthreshold or within high-risk categories.
– In person and virtual workshops delivered to suppliers
tostrengthen understanding of, and compliance with,
GroupSupplier Code.
– Programme of targeted audits continued during 2025 for
high-risk suppliers. Bureau Veritas conducted 216 independent
audits during 2025 on Coats’ behalf.
Risk trend:
Link to strategy
– Accelerate
profitable sales
growth
– Transform the
business
– Create value
Coats Group plc Annual Report and Accounts 202543 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risk Action/mitigation
Environmental
non-performance
risk given changing
standards, increasing
scrutiny, customer and
investor demands and
expectations and scale
of Group’s own
self-imposed standards
and ambitions,
creating commercial,
financial and
reputational risks as
well as opportunities
– Continued delivery against 2026 sustainability targets, with 2025
performance across all metrics remaining fully on track.
– Leadership structure enhanced for environmental performance.
– Zero Waste to Landfill* achieved across all business units,
delivering 2026 commitment one year ahead of plan.
– Independent assessment of Coats’ environmental performance
conducted by external Environment, Health & Safety (EHS)
specialist, including visits to key manufacturing locations in
Mexico, Turkey and Honduras.
– Updated and expanded restricted substances list rolled out across
operations, ensuring only approved chemistry is supplied to and
used within any manufacturing facility globally.
– Robust chemical management procedures implemented and
maintained across all operational sites, complemented by drills
and simulations to prepare site teams for real life scenarios, such
as chemical spills and hazard identification.
– Regional Environmental and Compliance Management structure
tracks and implements new and revised legislative requirements
using subscription-based environmental management software.
– Permit management system maintained for permits and licences
held in each country where Coats operates.
– Annual sustainability assessment completed by all 31 apparel and
footwear manufacturing units using Higg FEM, with independent
verification completed for 30 units. Assessment covers
environmental management systems, energy, GHG emissions,
water, waste, wastewater, air emissions and chemical
management.
– Transparent reporting of root cause analysis, and corrective
andpreventative actions for environmental incidents via global
software platform.
– All facilities with direct effluent discharge into natural waterways
equipped with online monitoring of key water quality
parameters, ensuring compliance with local permit conditions
and more stringent Roadmap to Zero effluent standards.
Risk trend:
Link to strategy
– Transform the
business
Principal risk Action/mitigation
– Global Business Continuity Plans incorporate environmental
emergency preparedness and response. Environmental risks
tracked using environmental aspects and impacts management
system, with environmental management plans delivered
through DMAIC workstreams involving key stakeholders.
– Further information on sustainability strategy provided in
annualSustainability Report (coats.com/sustainability).
3. CLIMATE
Climate change risk
arising from either (i)
impact of failing to
sufficiently address
need to decarbonise
Company’s operations
and reduce emissions
(including potentially
as result of energy
security challenges
and inability to access
sufficient renewable
energy in relevant
locations), leading
principally to
commercial and
reputational risks and
financial risk of
emissions taxes or
other legislative
changes, or (ii) physical
impact of climate
change on Company’s
operations and
business model and
that of its customers in
textile supply chain
– GET, supported by Group Sustainability function, holds
responsibility for oversight of environmental data reporting
across business and for driving sustainability strategy and climate
risk management processes. Board and Sustainability Committee
provide strategic oversight and monitor execution of Company
sustainability initiatives. ARC reviews processes for external
reporting of environmental data.
– A- rating received from CDP for climate, reflecting strong focus
on, and leadership in, climate ambition and action.
– Climate-related risks and opportunities evaluated for materiality
and impact across short-, medium- and long-term horizons under
multiple climate scenario pathways.
– Climate-related training introduced for Sustainability Committee,
including a specialist session delivered by Sir David King, former
UK Government Chief Scientific Adviser and Head of Climate
Crisis Advisory Group.
– Assessment of physical climate risks completed using Munich Re
Location Risk Intelligence Tool, enabling evaluation of a wide
range of physical risk exposures for geo-tagged locations
globally. Assessment covered all manufacturing units, irrespective
of production volume, across risks including flood exposure,
drought stress, extreme heat and precipitation stress.
– 62% of electricity sourced from certified renewable suppliers in
2025, supporting delivery of a 30% reduction in Scope 1 and 2
emissions versus 2022 baseline. Coats continues to exceed
progress required for 2030 SBTi approved Scope 1 and 2
emissions targets.
* Excluding medical and asbestos waste.
Coats Group plc Annual Report and Accounts 202544 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risk Action/mitigation
Risk trend:
– Membership of Cascale (formerly Sustainable Apparel Coalition)
commenced in 2025, accompanied by launch of supplier
decarbonisation programme using Cascale’s Higg FEM tool to
evaluate strategic supplier environmental performance with
emphasis on emissions reduction.
– Net Zero transition plan developed, outlining key action areas
required to deliver Coats’ SBTi-approved 2050 Net Zero target.
– Further information on sustainability targets available in 2025
Sustainability Report (www.coats.com/sustainability).
– Quantification and mitigation of climate-related risks and
opportunities continue to follow TCFD Recommendations set out
in Recommendations of Task Force on Climate-related Financial
Disclosures (2017), supported by additional guidance from
Implementing Recommendations of Task Force on Climate-
related Financial Disclosures (2021).
– Full details of 2025 TCFD disclosures provided in TCFD section
ofthis Annual Report (pages 178 – 198), with disclosures
alsoconsistent with UK Companies Act requirements 414CA
and414CB.
Link to strategy
– Accelerate
profitable sales
growth
– Transform the
business
– Create value
Principal risk Action/mitigation
4. OPERATIONAL
Health & Safety risk
– risk of (i) safety
incident(s) leading to
injury or fatality
involving our
employees or other
interested parties such
as contractors, visitors,
on-site suppliers, etc.
along with potential
resulting prosecution,
financial costs,
business disruption
and/or reputational
damage; and/or (ii)
physical and mental
health issues
impacting well-being,
engagement,
productivity
– Group CEO holds responsibility for health and safety across
Group and provides reports at every Board meeting, supporting
Board oversight of positive and proactive safety culture with
strong focus on injury prevention.
– Health and Safety “red lines” established as Company-wide
non-negotiable rules, supported by comprehensive
communication plan and global launch campaign.
– Coats Health and Safety Peer Review Audit programme
strengthened, with Peer Review Audits completed at 15 Priority
sites and audit team capability enhanced targeted training.
– New Safety Walk programme developed and initiated to
increasespan of control and enhance leadership engagement
onshop floors.
– Standardised training uplift delivered, including NEBOSH
andIOSH programmes for key site and functional leaders.
– Behaviour-Based Safety programme launched globally to
buildstrong, consistent safety culture across all sites.
– Machinery safety capability increased through updated
assessments, strengthened guarding standards and specialised
training delivered by external experts.
– Digitalised Annual Fire Safety Building Inspection implemented
tosupport improved audit consistency and data capture.
– Intenseye AI platform integrated with Power BI to report
Compliance Score and Critical Alert Count. Alert management
functions enhanced and training delivered to more than
100platform users.
– Powered Industrial Truck procedure updated and supported
bynew training documentation and one page manager guide.
Targeted training delivered to ensure effective rollout.
– All Health and Safety procedures migrated into global document
inventory, with chatbot functionality introduced for HSE personnel
to support ease of access and improved document interaction.
– Incident learning archive created to convert historical accident
data into practical insights supporting safer operations.
– More than 580,000 hours of health and safety training
completed across global workforce.
Risk trend:
**
Link to strategy
– Transform the
business
** Risk trend has decreased
from “increasing” to
“stable” in light of actions
taken by management
and the pattern of the
various metrics presented
to the Board regularly
throughout 2025.
Coats Group plc Annual Report and Accounts 202545 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risk Action/mitigation
Legal and regulatory
compliance risk – risk
of breach of law in
relation to areas such
as anti-corruption,
competition,
sanctions, chemical
compliance and ESG
regulatory and
reporting
requirements,
resulting in material
fine(s) and/or
reputational damage*
* Risk description has been
refined in 2024 to include
reference to (i) chemical
compliance and (ii) ESG
regulatory and reporting
requirements, given
ever-increasing number and
scope of such requirements
During 2025, an in-depth review, supported by PwC, was
conducted of Group material controls as part of preparations for
implementation of Provision 29 of UK Corporate Governance Code
2024 with appropriate review of Key Control Framework. In
addition, Group’s control framework was reviewed against best
practice (identified through World’s Most Ethical Companies™
benchmarking process). Thisincluded legal and regulatory
compliance risk and informed enhancements to Group control
framework, including to comprehensive corporate governance and
compliance policies and procedures at both Group and unitlevel.
– Group Legal publishes a semi-annual Horizon Scanning
document, highlighting new or forthcoming relevant legal
andregulatory matters which may be relevant to business.
Inaddition, bespoke regulatory and governance updates are
shared with Board and its Committees.
– In compliance with Economic Crime and Corporate Transparency
Act 2023, comprehensive unit and function level risk assessment
completed to identify material risks linked to failure to prevent
fraud offence. Resulting actions included: creation of Fraud Risk
Register; strengthening of controls across finance, procurement
and agent engagement; update of policies; and targeted
fraud-prevention training.
– Workshops conducted to assess and document CSRD-related risks
and compliance requirements, supported by consultancy firm CEN
ESG and supplemented by training for Sustainability Committee.
– Group policies covering Ethics at Work, Anti Bribery, Competition
Law, Sanctions, Gifts & Entertainment, Cyber Security, Data
Protection and Anti Slavery updated to incorporate new
requirements and best practice, with translations rolled out
across 23 employee languages.
Risk trend:
Link to strategy
– Accelerate
profitable sales
growth
– Transform the
business
Principal risk Action/mitigation
– Mandatory compliance training suite refreshed for delivery via
bite-size Arist platform, ensuring annual completion by relevant
employees and all new starters. Targeted training delivered for
specialist areas including health and safety “red lines”, chemical
compliance, RSL, data protection, anti bribery and sanctions.
– Global Doing The Right Thing programme used to highlight
priority compliance risks, supported by local ethics champion
network. 2025 focus areas included Data Protection, Ethics
Code, Health and Safety, Sustainability and Fraud Prevention,
withGlobal Ethics Day activities centred on Anti bribery.
– Compliance verification maintained through sanctions checks
forall new customers and vendors, semi-annual unit level
compliance reviews and GIA regulatory compliance audits.
During 2025, GIA completed seven market audits.
– Whistleblowing arrangements maintained through dedicated
email address and confidential multilingual web-based reporting
platform, with reporting to GRMC and ARC.
5. LEGACY
Lower Passaic River
legacy environmental
matter
– Board continues to monitor developments very closely.
– Board approved strategy in relation to Lower Passaic
Riverproceedings.
Risk trend:
Link to strategy
– Transform the
business
Coats Group plc Annual Report and Accounts 202546 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
LONG-TERM VIABILITY STATEMENT
In accordance with Provision 31 of the
revision of the UK Corporate Governance
Code 2024, the Directors have assessed the
longer term viability of the Group over the
period to December 2028. The Directors’
assessment has been made with reference to
the Group’s current position and prospects,
as detailed in the Strategic Report. This takes
into account the Group’s business model,
strategy, approach to allocating capital and
the potential impact of the principal risks and
how these are managed. The Directors have
also considered committed finance facilities
which, following the refinancing exercises
concluded in August and December 2024
and the acquisition of OrthoLite, have
maturities which range from October 2026
through to 2034.
The Group’s strategic objectives and
associated principal risks are underpinned by
an annual budget and Medium Term Plan
process, which comprises financial
projections for the next three years (2026–
2028). The Medium Term Plan represents a
common process with standard outputs and
requirements at the Group level. The Board
reviews and challenges the Medium-Term
Plan annually. Although this period provides
less certainty of outcome, the underlying
methodology is considered to provide a
robust planning tool against which strategic
decisions can be made.
The Directors consider that the three year
period considered by the Medium Term Plan
reflects an appropriate period over which its
business and investment cycles, as well as its
prospects, can be considered. The Medium-
Term Plan and the severe but plausible
downside scenarios (as set out below) both
consider the implications of risks around
sustainability and climate change over the
three year assessment period. Longer term
implications and prospects, including both risks
and opportunities, of climate change have
been considered as part of the Task Force on
Climate-related Financial Disclosures report.
The Directors have taken into account the
Group’s current position and the potential
impact of the principal risks set out on pages
38 to 46 as well as other risks that could
crystallise during the medium term. The
Directors have considered a range of severe
but plausible scenarios that explore the
Group’s resilience to the potential impact
of the principal risks as set out on pages 38
to 46 as well as other risks that could
crystallise during the medium-term.
After assessing the potential impact of
the principal risks, the specific areas
considered as part of the severe but
plausible scenarios include:
– Sales growth is lower than expected
throughout the assessment period, with
reduced margins and cash generation.
Lower sales growth could result from a
prolonged industry de-stocking cycle,
lower demand because of macro-
economic uncertainties, escalation in
geopolitical tensions, resurgence of Covid
or similar pandemic with resulting
lockdowns and subsequent supply chain
challenges, as well as Coats being unable
to meet customer expectations (including
sustainability targets); and
– Supply chain challenges cause
unavailability and/ or price increases of
raw materials, labour, freight and/or
logistical challenges causing major
disruption to Coat’s supply chain.
The Directors have also taken into account a
number of assumptions that they consider
reasonable within these assessments including:
– The assumption that funding facilities will
continue to be available throughout the
period under review: the core US private
placement borrowings are due between
2027 and 2034, the revolving facility
matures in 2028, following the approval
of the first of two one-year extensions in
2025. During the assessment period it has
been assumed that the US private
placement borrowings maturing in
December 2027 and February 2028 are
successfully refinanced and the term of
the revolving facility, maturing in August
2028, is successfully extended for a
further year. The term loan and bridge
facility used to fund the acquisition of
OrthoLite mature in August 2028 and
October 2026 respectively. The term loan
can be extended for 1 year with bank
consent, the bridge facility can be
extended twice by 6 months, at Coats
Option. During the assessment period it
has been assumed that the term loan is
extended by 1 year and the bridge facility
is extended by 12 months, in the event
they are not refinanced before then, with
subsequent refinancing of the bridge
facility in October 2027;
– The assumption that following a material
risk event, the Group would adjust capital
management to preserve cash; and
– The assumption that the Group will be
able to mitigate risks effectively through
other available actions.
As part of the going concern assessment, the
Directors also considered a reverse stress test
flexing sales to determine what circumstance
would be required to either reduce
headroom to zero on committed borrowing
facilities or breach borrowing covenants,
whichever occurred first. As set out on page
124, the Directors consider the likelihood of
the condition in the reverse stress test
occurring to be remote.
Based on this assessment, the Directors have
a reasonable expectation that the Group will
be able to continue in operation and meet its
liabilities as they fall due over the period of
the assessment.
This Strategic Report was approved
byorder of the Board.
On behalf of the Board
David Paja
Group CEO
4 March 2026
Coats Group plc Annual Report and Accounts 202547 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
CORPORATE GOVERNANCE
Governance at a Glance 51
Board Biographies 52
Board & Committee Attendance 54
GET Biographies 55
Governance Structure 56
Board Committees 57
Conflicts of Interest 58
Board Effectiveness Review 59
Board Activities (How Governance Supports Strategy & Board Discussions) 60
Board & Culture 61
Nomination Committee Report 62
Audit and Risk Committee Report 66
Sustainability Committee Report 72
Remuneration Committee Report 73
Remuneration Policy Report 78
Directors’ Remuneration Report 86
Directors’ Report 99
Coats Group plc Annual Report and Accounts 202548
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Chair’s Introduction to Governance
EFFECTIVE GOVERNANCE TO ENABLE PERFORMANCE & DELIVERY
I am pleased to introduce the
Governance report for the
year ended 31 December 2025.
This report summarises how the Board has
continued to oversee the progress of the
Company’s strategy to deliver long-term
sustainable success for our stakeholders.
Effective and robust governance practices
underpin the Board’s activities, enabling the
effective stewardship of the business.
Year in Review
2025 was a pivotal year for Coats with
significant progress made towards realising our
strategic goals. During this transformational
period, the Board ensured that its critical
governance responsibilities were appropriately
focussed on the correct balancing of
stakeholders’ interests, as well as considering
the long-term impacts of decisions.
Leadership
The right leadership is key to ensuring both
performance and delivery. During 2025, the
Board carefully monitored the ongoing
transition of the Executive Directors, ever
mindful of the risks and opportunities
associated with these changes.
As announced in January 2025, Hannah
Nichols joined the Board on 24 April 2025 as
an Executive Director and Group CFO
designate and she then succeeded Jackie
Callaway as Group CFO at the 2025 AGM.
The Board continues to appropriately assess
the performance of the Executive Directors and
is pleased with the outcomes of the transitions.
Additionally, Wu Gang joined the Board as
an independent Non-Executive Director in
July 2025, further strengthening our diverse
set of skills and experiences.
As recently announced, Sarah Highfield will
succeed Fran Philip as the Designated
Non-Executive Director for Workforce
Engagement at the conclusion of the 2026
AGM. The Board and I appreciate Fran’s
significant contributions during her tenure,
and we look forward to working with Sarah
in this capacity in the future.
The Board also maintained its oversight of
changes to GET membership, responsibilities
and succession arrangements, particularly in
relation to changes to streamline the
organisational structure.
Oversight of Culture and ESG
Our unique culture is a critical enabler of our
success. In the context of the strategic
evolution of the Group in 2025, the Board’s
role in embedding, assessing and monitoring
culture, in a changing Group structure, has
remained of vital importance.
Directors play a central role in overseeing the
Group’s ambitious ESG agenda through
regular Board updates, Committee
membership and clearly defined responsibilities
at Board level. Overall responsibility for
sustainability, including climate-related
governance, rests with the Board and is
supported by the Sustainability Committee.
Board Evaluation
In 2025, the Board and its Committees
undertook an external effectiveness review,
facilitated by Board Intelligence. Further
details of the process and its outcomes,
including focus areas for implementation
during 2026, are set out on page 59.
I am delighted to report that the review
confirmed that the Board and each of its
Committees continued to perform to a high
standard. In particular, the recognition of the
positive Board culture and productive
engagement with the GET was pleasing.
David Gosnell,
Chair, 4 March 2026
Chair Succession
As previously communicated, the
Boardhas maintained a structured
andtransparent approach to Chair
succession in line with Provision 19
ofthe UK Corporate Governance
Code2024 (Code).
In 2024 and 2025, the Senior
Independent Director (SID) led the
process, from which the Chair was
recused throughout, which included
targeted shareholder consultation.
Atboth the 2024 and 2025 AGMs,
therelevant resolutions to extend
DavidGosnell’s term were approved
byshareholders (subject to his
annual re-election).
For the 2026 AGM, the Board is
proposing David’s re-election as Chair
for a final year. David has served on the
Board for ten years and has acted as
Chair since May 2021. The search for
hissuccessor commenced in H2 2025,
led by the SID with support from an
independent external search firm.
TheBoard will confirm an orderly
transition timetable once the right
candidate is identified.
The Board considers this approach to be
appropriate and Code-aligned, reflecting
the recent transformation of the Group
and the need for continuity through
integration and execution.
You can read more on page 65
andinthe Notice of AGM.
Coats Group plc Annual Report and Accounts 202549
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
A summary of how we have applied the principles of the UK Corporate
Governance Code is set out below.
The UK Corporate Governance Code
Compliance statement
Coats has applied all of the principles and complied with all the relevant provisions of
the UK Corporate Governance Code 2024 (Code) during the course of the year ended
31 December 2025.
Subject matter Page(s)
Composition, succession
and evaluation
Succession planning 63 to 65
Board diversity 64 to 65
Board evaluation 59
Audit, risk and internal
control
Independence and
effectiveness of internal and
external audit functions
69 to 71
Fair, balanced and
understandable reporting
67
Principal risks 38 to 46
Remuneration
Remuneration policies and
practices that support
strategy and promote
long-term sustainable success
73 to 98
A formal and transparent
procedure for developing
policy on executive
remuneration
73 to 98
Exercise independent
judgement and discretion
when authorising
remuneration outcomes
73 to 98
Subject matter Page(s)
Board leadership and
Company purpose
Promoting the long-term
sustainable success of
the Company
6 to 27
Generating value for
shareholders
12 to 27
Contributing to wider society 15 to 17 &
32
Purpose, values and strategy,
and how these and our
culture are aligned
12 to 21,
28 to 29 &
61
Resources available to allow
Coats to meet its objectives
and measure performance
against them
14 to 15
Control framework 69 to 70
Stakeholder engagement 30 to 33
Workforce policies
and practices
28, 29 &
37
Division of responsibilities
The Chair 56
Board roles 56
Non-Executive Directors 56
Information and support 56 to 57
CHAIR’S INTRODUCTION TO GOVERNANCE
Coats Group plc Annual Report and Accounts 202550 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
GOVERNANCE
AT A GLANCE
Board profiles:
Length of Service – Directors
Geographic Expertise
Length of Service –
Non-Executive Directors
Ethnic Diversity
Relevant Functional
Experience
Gender Diversity
CORPORATE GOVERNANCE REPORT CONTINUED
0-3 years 50%
3-6 years 20%
6-9 years 30%
Global Business Experience 26%
US Market Experience 22%
European Market Experience 26%
Asia Market Experience 26%
0-3 years 37.5%
3-6 years 25%
6-9 years 37.5%
Men 60%
Women 40%
Not specified/prefer not to say 0%
People 16%
Legal 14%
Risk 14%
Finance 15%
Technology 14%
Digital (and AI) 11%
Customer 16%
White British or other White
(including minority-white groups) 70%
Asian/Asian British 30%
Mixed/Multiple Ethnic Groups 0%
Black/African/Caribbean/Black British 0%
Other ethnic group, including Arab 0%
Not specified/prefer not to say 0%
Coats Group plc Annual Report and Accounts 202551 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Board of Directors as at 31 December 2025
BOARD BIOGRAPHIES
N
S
A
N
R
S
S
David Gosnell OBE
Chair of the Board
Appointed as a Non-Executive Director
on 2 March 2015, Chair of the Board
since 19 May 2021
Key skills and experience
– Strong and deep supply and
procurement background in global
multinational companies
– International and strategic mindset
Previous experience and external
appointments
Non-Executive Director and Deputy Chair
of Princes Group plc.
Was previously Chair of Old Bushmills
Distillery Company Ltd and a Non-
Executive Director of Brambles Ltd. David
retired from Diageo plc in 2014, where
he had most recently held the role of
President of Global Supply and
Procurement. Prior to joining Diageo,
David spent 25 years at HJ Heinz in
various operational roles.
Qualifications
David is a Fellow of the Institute of
Engineering and Technology and holds a
Bachelor of Science degree in Electrical
and Electronic Engineering from Middlesex
University. He has completed Supply Chain
Manufacturing – Drive Operational
Excellence at INSEAD (Singapore).
See the Nomination Committee report on
page 62 and the Sustainability Committee
report on page 72.
David Paja
Group CEO
Appointed as an Executive Director on
1 September 2024, Group CEO since
1 October 2024
Key skills and experience
– 30 years+ of leadership in automotive,
aerospace & defense, and fire &
security industries with expertise in
managing global operations
– Proven success in scaling technologies,
turning around businesses, and driving
substantial growth
Previous experience and external
appointments
David was CEO of GKN Aerospace, part
of Melrose Industries PLC, where he
played a major role in the successful
turnaround of the business and delivery
of profitable growth. Prior to this, David
held senior leadership positions at Aptiv,
Honeywell and Valeo.
Qualifications
David holds an Engineering degree from
the University of Valladolid, as well as an
MBA from INSEAD.
See the Group CEO’s statement on page 6.
Hannah Nichols
Group CFO
Appointed as an Executive Director on
24 April 2025, Group Chief Financial
Officer since 21 May 2025
Key skills and experience
– Extensive financial expertise
– Considerable international experience
and track record of driving
transformational change
Previous experience and external
appointments
Non-Executive Director of Oxford
Instruments plc.
Previously Chief Financial Officer of Hill &
Smith PLC (FTSE 250). Prior to that,
Hannah spent 15 years at BT Group plc,
most recently serving as Chief Financial
Officer, Asia, Middle East and Africa for
BT Global Services based in Singapore.
She also held a number of commercial
roles at Cable & Wireless plc, and
qualified as a chartered accountant at
Arthur Andersen.
Qualifications
Hannah is a member of the Institute of
Chartered Accountants England and
Wales (ICAEW). She has an MA in Classics
from the University of Cambridge.
Stephen (Steve) Murray
Senior Independent
Non-Executive Director
Appointed as a Non-Executive Director
on 1 September 2022, Senior
Independent Non-Executive Director
since 22 May 2024
Key skills and experience
– 30+ years of experience in the apparel
and footwear industry
– Strong background in general
management and track record of
delivering positive change globally and
regionally
Previous experience and external
appointments
Previously Global Brand President of The
North Face and a member of the group
executive leadership team at VF
Corporation, one of the largest apparel,
footwear and accessories companies and
the parent company of The North Face,
Timberland and Vans. Steve previously
served as CEO of Airwair International (Dr.
Martens, the iconic British footwear brand),
and as Global Brand President of Vans,
Global Brand President of Urban Outfitters
and EMEA President of Deckers Brands.
Qualifications
Steve holds a bachelor’s degree in
Business Studies from Middlesex
University, England.
A
N
S
Sarah Highfield
Independent Non-Executive
Director
Appointed 1 November 2023, Chair of
the Audit and Risk Committee since
22 May 2024*
Key skills and experience
– Strong finance track record
– Significant experience of driving
growth globally, including in the US
and China
Previous experience and external
appointments
Chief Financial Officer and Executive
Director of Auction Technology Group plc.
Previously Chief Financial Officer of Away
Resorts Ltd, and Chief Executive Officer
of Elvie, having also previously served as
Chief Financial Officer. Prior to joining
Elvie, Sarah was Group Chief Financial
Officer at Costa Coffee for over five
years, including during the c.£3.9bn sale
to The Coca-Cola Company. She was
also Chief Financial Officer of Tesco’s
Hungary and Slovakia businesses.
Qualifications
Sarah has a BSc in Mathematical Sciences
from the University of Birmingham and is
a qualified accountant, Chartered
Institute of Management Accountants.
See the Audit and Risk Committee report on
page 66.
Key to Committee memberships
A
Audit and Risk Committee
N
Nomination Committee
R
Remuneration Committee
S
Sustainability Committee
Committee chair
* Sarah will become Designated Director for
Workforce Engagement at the conclusion of
the 2026 AGM.
Coats Group plc Annual Report and Accounts 202552
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Changes to the Board during the year
– Hannah Nichols joined the Board as an Executive Director and Group CFO designate on
24 April 2025 before becoming Group CFO on 21 May 2025.
– Wu Gang was appointed as an Independent Non-Executive Director on 1 July 2025.
– Jackie Callaway stepped down as an Executive Director and Group CFO on 21 May
2025.
A
N
A
N
N
N
R
N
R
S
Hongyan Echo (Echo) Lu
Independent Non-Executive
Director
Appointed 1 December 2017, Chair of
the Remuneration Committee since
1 May 2021
Key skills and experience
– Global business experience gained in
different sectors in Europe, Asia and
the US
– Strong background in general
management and track record of
building strong teams and delivering
positive change
Previous experience and external
appointments
Managing Director, UK and ROI, of
Sonova Group AG, the global leader for
innovative hearing solutions.
Previously Chief Executive Officer of
Haulfryn Group Ltd, Managing Director,
International of Holland & Barrett
International and Managing Director of
Homebase Ltd as part of Home Retail
Group plc. Echo spent ten years at Tesco
plc in a variety of senior leadership roles.
Echo was a Non-Executive Director of
Dobbies Garden Centres and was a
member of the Advisory Board for
Diversity in Hospitality, Travel and Leisure.
Qualifications
Echo has a Bachelor of Arts in International
Economy and Finance from Fudan
University, Shanghai and a Master of
Science in Industrial Relations and Human
Resources from West Virginia University.
See the Remuneration Committee report on
page 73.
Srinivas (Srini) Phatak
Independent Non-Executive
Director
Appointed 1 September 2024
Key skills and experience
– Extensive technical and commercial
finance expertise
– Strong track record of driving
competitive and sustainable growth
across categories and markets, and
leading enterprise-wide transformation
programmes
Previous experience and external
appointments
Chief Financial Officer of Unilever Plc.
Srinivas has over 28 years of experience
in the consumer products industry,
working in the US, Europe, LATAM and
India. Between 2017 and 2021, Srinivas
was Chief Financial Officer and Executive
Director of Hindustan Unilever Limited, a
Unilever subsidiary listed in India with a
market capitalisation of over €60bn. His
other Unilever experiences include
heading financial shared services, leading
finance for supply chain in the Americas,
large-scale M&A (including integration)
and heading global treasury operations
for Asia.
Qualifications
Srinivas has a postgraduate qualification in
finance. He is a qualified accountant with
professional degrees from the Institute of
Chartered Accountants (ICAI) and the
Institute of Cost Accountants (ICMAI).
Frances (Fran) Philip
Independent Non-Executive
Director, Designated Director for
Workforce Engagement
Appointed 1 October 2016*
Key skills and experience
– Extensive speciality retailing business
experience
– Deep background in product
innovation, design and development
– Workforce dynamics experience
Previous experience and external
appointments
Non-Executive Director of Sea Bags.
Previously Fran worked for The Gap,
Williams Sonoma, The Nature Company,
and LL Bean, where she initially served as
Director of Product Development, Home
Furnishings, going on to hold a number
of roles including Vice President,
Affiliated Brands, before becoming Chief
Merchandising Officer until her
retirement. Fran was previously a
Non-Executive Director of Vera Bradley
Inc., Regent Holdings, Totes Isotoner and
Vista Outdoor Inc, and an industry
executive for Freeman Spogli.
Qualifications
Fran has a degree in English and Sociology
from Bowdoin College, Maine, and an
MBA from the Harvard Business School.
Read about the activities of the Designated
Director for Workforce Engagement on page 61.
* Fran will step down from the Board at the
conclusion of the 2026 AGM
Jakob Sigurdsson
Independent Non-Executive
Director
Appointed 1 October 2020
Key skills and experience
– International business experience
across a diverse range of sectors with
particular emphasis on growth in new
or developing markets
– Strong background in general
management and track record of
delivering positive change
Previous experience and external
appointments
Previously Chief Executive Officer of
Victrex plc, an innovative leader in
high-performance polymer solutions.
Jakob has over 25 years’ experience in
large listed and private multinational
companies including with Rohm & Haas
(now part of Dow Chemical) in the US.
He served as Chief Executive of Alfesca,
Chief Executive of Promens and Chief
Executive Officer of VÍS, the largest
Icelandic insurance and reinsurance
company. He has held various Non-
Executive roles and was a Member of the
University of Iceland Council and a
Non-Executive Director of the Icelandic
Technology and Development Board.
Qualifications
Jakob has a BSc in Chemistry from the
University of Iceland and an MBA from
the Northwestern University.
Wu Gang
Independent Non-Executive
Director
Appointed 1 July 2025
Key skills and experience
– Strong strategic and financial
advisory background
– Wealth of international experience,
including in Asia and Europe
Previous experience and external
appointments
Non-Executive Director of IG Group
Holdings plc, Tritax Big Box REIT plc and
Ashurst LLP, where he also chairs the
Risk Committee.
Previously Non-Executive Director of Laird
plc prior to its takeover by Advent and
served as a senior advisor at Rothschild &
Co. Wu Gang set up and ran European
Corporate Finance at CITIC CLSA, the
international investment banking
platform of CITIC Securities in 2014. He
has held senior level positions at ICBC
International, The Royal Bank of Scotland,
HSBC, Merrill Lynch and Goldman Sachs
in Hong Kong and London.
Qualifications
Wu Gang graduated from Fudan
University, Shanghai and received an MA
degree from SOAS, University of London.
He obtained an MBA degree from INSEAD.
Key to Committee memberships
A
Audit and Risk Committee
N
Nomination Committee
R
Remuneration Committee
S
Sustainability Committee
Committee chair
R
Coats Group plc Annual Report and Accounts 202553
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Board and Committee Attendance
The Directors’ attendance record at the last
AGM, scheduled Board meetings and Board
Committee meetings regularly attended by
Non-Executive Directors, for the year ended
31 December 2025, is set out in the table
to the right.
For Board and Committee meetings,
attendance is expressed as the number of
meetings attended out of the number that
each Director was eligible to attend.
During the year, the Board held 11 meetings.
The majority of meetings were held in person
but all meetings offered the facility for
remote attendance by Board members or
other attendees to ensure effectiveness and
efficiency. All Directors received appropriate
materials for meetings in advance. There
were also a number of Board briefings held
to deal with time-sensitive matters.
The Board held strategy sessions in February
and September 2025 and discussed a variety
of topics relating to current business priorities.
During October 2025, the Board visited
several of the Group’s operations in India as
part of the annual away week. In January
2026, a number of the Directors joined the
Global Leadership Conference held in
Thailand. During the course of the event, the
Directors engaged with colleagues during the
various sessions which covered strategic
matters. You can read more about the
Board’s engagement with stakeholders on
pages 30 to 33.
In addition to the scheduled meetings, the
Senior Independent Director and the
Non-Executive Directors meet once a year
without the Chair present in order to
appraise his performance. This process was
led by Steve Murray in 2025.
The Chair and the Non-Executive Directors
also periodically attend sessions without
management present to discuss, amongst
other things, the performance of key
members of management.
Board Audit and Risk Nomination
6
Remuneration Sustainability AGM
David Gosnell
11/11 2/2 2/2 1/1
David Paja
11/11 2/2 1/1
Jackie Callaway¹
4/4 1/1
Hannah Nichols
2
9/9 1/1 1/1
Sarah Highfield
11/11 6/6 2/2 2/2 1/1
Echo Lu
11/11 2/2 6/6 1/1
Steve Murray
11/11 6/6 2/2 6/6 1/1
Srinivas Phatak
10/11
4
5/6
4
2/2 1/1
Fran Philip
11/11 2/2 5/6
5
2/2 1/1
Jakob Sigurdsson
11/11 6/6 2/2 1/1
Wu Gang
3
6/7 2/2 1/2
3
1. Jackie Callaway stepped down from the Board on 21 May 2025.
2. Hannah Nichols joined the Board as an Executive Director and Group CFO designate on 24 April 2025. Hannah was appointed
to the Sustainability Committee on 16 September 2025.
3. Wu Gang joined the Board as an independent Non-Executive Director on 1 July 2025. Wu Gang was unable to attend the Board
meeting on 15 July 2025 due to a prior commitment and the relatively short notice with which the meeting had been scheduled
to deal with a time-sensitive matter. Wu Gang was unable to attend the Remuneration Committee meeting held on
16 September 2025 due to a longstanding commitment that pre-dated his appointment to the Board. In both instances, Wu
Gang discussed the business of the meeting with the Chair in advance and was also briefed on the outcomes of the meetings.
4. Srinivas Phatak was unable to join the Board and Audit and Risk calls on 5 March 2025 due to a longstanding commitment that
pre-dated his appointment to the Board in September 2024. Srinivas had been involved in all previous discussions regarding the
business of the meeting and was briefed by the Chair on the outcomes of the calls.
5. Fran Philip was unable to attend the Remuneration Committee call on 13 March 2025 due to a prior commitment and the
relatively short notice with which the meeting had been scheduled to deal with a time-sensitive matter. Fran had discussed the
business of the meeting in advance with the Chair and was briefed on the outcomes of the call.
6. Certain Nomination Committee discussions were conducted as part of scheduled Board meetings.
CORPORATE GOVERNANCE REPORT CONTINUED
Coats Group plc Annual Report and Accounts 202554 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
GROUP EXECUTIVE TEAM (GET)
David Paja: Group CEO
See biography on page 52
– Responsible for executive management of the
Group as a whole and is accountable for the overall
performance of the Group.
– Delivers strategic and commercial objectives within
the Board’s stated risk appetite (see page 38 for
more detail on key risks).
– Responsible for health and safety.
– Builds positive relationships with all the Group’s
stakeholders (see page 30).
Frederic Verague: Executive Lead, Group
Strategic Initiatives
– Responsible for leading priority Group Strategic
Initiatives.
– Oversees cross-functional strategic work on behalf
of the GET, partnering closely with the Apparel and
Footwear divisions to accelerate key initiatives and
ensure alignment with Group objectives.
Hannah Nichols: Group CFO
See biography on page 52
– Responsible for financial management and
implementing and monitoring effective
financial controls.
– Supports the Group CEO in developing and
implementing the Company’s strategy.
– Oversees relationships with the investment
andbanking community.
Megan Giannini: Chief People Officer
Read about People and Culture on page 28
– Responsible for shaping and executing the Group’s
global HR strategy to enable long-term growth.
– Focused on building a high-performing culture
through talent development.
– Drives initiatives that foster engagement, inclusion,
and the creation of next-generation leaders.
– Leads transformation across the people agenda by
embedding innovation in workforce practices,
strengthening capabilities, and aligning talent
strategies with the Group’s growth ambitions.
Adrian Elliott: Apparel CEO and Group Chief
Commercial Officer
Read about Apparel on page 22
– Responsible for the financial and operational
performance of the Apparel division, including
delivery of growth, competitive positioning,
productportfolio, and the people agenda.
– Drives enhanced customer experience, digital,
innovation and sustainability in alignment with
Group goals.
– Leads the growth agenda across the Apparel and
Footwear divisions by strengthening capability,
driving adjacencies, and leading transformative
technology initiatives for customer experience
andprofitable growth.
Stuart Morgan: Chief Legal & Risk Officer and
Group Company Secretary
Read about our principal risks and uncertainties on page 38
– Responsible for legal and compliance, governance,
risk management and company secretarial matters.
Pasquale Abruzzese: Footwear CEO and
Chief Operating Officer
Read about Footwear on page 23
– Responsible for the overall performance
oftheFootwear division, including delivery
ofitsstrategy and achievement of financial
andnon-financial KPIs.
– Oversees all commercial and operational activities
within the Footwear division while driving
innovation and advancing sustainability in
alignment with Group objectives.
– Defines standards of excellence in supply
chainandoperations across both the Apparel
andFootwear divisions.
The Group Executive Team, orGET, is
the body through which the Group CEO
exercises the authority delegated to him
by the Board. The Group CEO leads the
GET and has executive responsibility for
the management, development and
performance of the business. The Group
CEO, Group CFO and the GET alsotake
the lead in developing the strategy for
review, constructive challenge and
approval by the Board as part of the
annual strategy review process.
GET changes
Farnaz Ranjbar (formerly Chief HR Officer) left the Group
on 31 August 2025. Megan Giannini joined the GET
on1 November 2025 as Chief People Officer.
Pasquale Abruzzese (formerly Performance Materials, CEO)
became Footwear CEO and Frederic Verague became
Footwear CEO, Threads and Structural Components on
13 August 2025. Frederic subsequently became Executive
Lead, Strategic Initiatives on 1 January 2026.
as at 1 January 2026
Coats Group plc Annual Report and Accounts 202555
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
CORPORATE GOVERNANCE REPORT CONTINUED
GOVERNANCE STRUCTURE
Chair
– Primarily responsible for the overall effectiveness
of the operation, leadership and governance
ofthe Board.
– Leads the Board, sets the agenda and promotes
aculture of open debate between Executive
andNon-Executive Directors. Ensures that there
isa focus on Board succession plans to maintain
continuity of skilled resource. Responsible for
CEOsuccession.
– Provides advice and acts as a sounding board
tothe Board and management. Has open and
regular contact and interaction with the CEO.
– Ensures effective communication with our
shareholders.
Senior Independent Director
– Provides a sounding board to the Chair.
– Leads the appraisal of the Chair’s performance
with the other Directors annually and leads
process for Chair recruitment.
– Acts as an intermediary for other Directors,
ifneeded.
– Available to respond to shareholder concerns
ifcontact through the normal channels is
inappropriate.
Non-Executive Directors
– Contribute to developing our strategy.
– Scrutinise and constructively challenge the
performance of management in the execution
ofour strategy.
– Responsible for the governance of the Company.
– Bring their diverse expertise to the Board and the
Board Committees.
– Devote such time as is necessary to the proper
performance of their duties.
Company Secretary
– Provides support to the Board and ensures
information is made available to the Board
inatimely manner.
– Supports the Chair on meeting management
arrangements including setting the agenda
fortheBoard, administering effectiveness
reviews,ensuring appropriate Board training
andcoordinating Board inductions.
– Provides advice on corporate governance matters.
– All directors have access to the advice of the
Group Company Secretary.
Our governance framework enables effective decision making and ensures collaboration
between the Board, its Committees and the GET while also maintaining clear separation
of key Board roles to ensure the correct division of responsibilities.
The Board of Directors
The Board is collectively responsible for the long-term success of the Group and for ensuring leadership
within a framework of effective controls. The key roles of the Board are:
– setting the strategic direction of the Group, including consideration of strategic acquisitions and divestments;
– overseeing implementation of the strategy and monitoring performance by ensuring that the Group
issuitably resourced to achieve its aspirations;
– overseeing returns to shareholders and monitoring the share price;
– encouraging entrepreneurial leadership by providing a framework of prudent and effective controls which
enables risk, including risk tolerance, to be assessed and managed, supported by robust systems of
governance, ethics and compliance;
– engaging appropriately with stakeholders to understand their views; and
– setting and monitoring the Group’s culture, supported by its values, and ensuring alignment with the
Company’s purpose and strategy.
See page 60 for examples of discussions of key strategic topics at Board meetings in 2025.
Group CEO
See biography on page 52.
– Responsible for Executive Management of the Group as a whole.
– Leads the GET (see page 55).
– Delivers strategic and commercial objectives within the parameters agreed by the Board and within
theBoard’s stated risk appetite (see pages 38 to 46 for more details on key risks).
– Builds positive relationships with all the Group’s stakeholders (see pages 30 - 33).
Group CFO
See biography on page 52.
– Responsible for financial management and implementing and monitoring effective financial controls.
– Supports the Group CEO in developing and implementing the Company’s strategy.
– Oversees relationships with the investment and banking community.
See page 63 for more information on the succession process for the Group CFO.
Nomination
Committee
See page 62 for more
information.
Audit and Risk
Committee
See page 66 for more
information.
Sustainability
Committee
See page 72 for more
information.
Remuneration
Committee
See page 73 for more
information.
Coats Group plc Annual Report and Accounts 202556 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
CORPORATE GOVERNANCE REPORT CONTINUED
BOARD COMMITTEES
Nomination Committee
– Reviews the structure, size,
composition and mix of skills
and experience of the Board
and its Committees.
– Identifies and nominates suitable
executive and non-executive
candidates to be appointed to the
Board and reviews the talent pool.
– Considers wider elements of
succession planning below Board
level, including diversity and inclusion.
– Oversight of the diversity and
inclusion-related social element
ofESG.
See page 62 for more information.
Sustainability Committee
– Provides strategic oversight and
monitors the execution of the
Company’s sustainability strategy
andinitiatives.
– Oversees, reviews and provides input
as required to refine, enhance and
accelerate the progress of the
Company’s sustainability strategy,
projects and targets.
– Oversees the environmental and
employee engagement-related
socialelements of ESG.
See page 72 for more information.
See also the TCFD section (from page 178
ofthis Report, and the Sustainability Report
(available from coats.com/sustainability) for
more information about our sustainability
strategy and activities.
Remuneration Committee
– Reviews, recommends, and, where
appropriate, approves the framework
and policy for the remuneration of
the Chair, Executive Directors, the
Company Secretary, and senior
executives, ensuring alignment
withthe Group’s reward principles.
– Reviews workforce remuneration
andrelated policies, and alignment
ofincentives and rewards with
culture, to help inform the setting
ofthe Directors’ Remuneration Policy.
– Consults with shareholders on the
Remuneration Policy.
– Considers the business strategy
oftheGroup and how the
Remuneration Policy reflects
andsupports that strategy.
– Oversight of the remuneration-related
social element of ESG.
See page 73 for more information.
Other Committees
Disclosure Committee
The Disclosure Committee oversees the Company’s
compliance with its disclosure obligations. The Group CEO
chairs the Committee, and its other members are the Group
CFO and the Group Company Secretary.
Group Risk Management Committee (GRMC)
The GRMC is responsible for formulating risk management
strategies and policies, and monitoring risk management
throughout the Group. Its Chair is the Group CEO, and its
membership is aligned to the GET.
See page 55 for information on the GET.
Acquisition Committee
The Acquisition Committee is authorised to oversee specified
projects by the Board when appropriate. The Group CEO
chairs the Committee, and it includes the Group CFO and
the Group Company Secretary.
Audit and Risk Committee
– Oversees and monitors the integrity
of the Company’s financial
statements, accounting processes
andaudits (internal and external).
– Ensures that risks are carefully
identified and assessed, and that
effective systems of risk management
and internal control are in place and
appropriately monitored.
– Reviews matters relating to fraud.
– Oversight of the governance-related
element of ESG.
See page 66 for more information.
Coats Group plc Annual Report and Accounts 202557 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
CONFLICTS OF INTEREST, INDEPENDENCE, AND EXTERNAL APPOINTMENTS
The Company has procedures in place for
managing conflicts of interest, including
situational conflicts of interest. Potential
situational conflicts of interest are identified
prior to appointment, and the Board will
consider and authorise these if appropriate.
If a conflict of interest has been identified
and approved, the Group Company Secretary
ensures that the Director in question is
absented from relevant discussions and/or
decision making. Should an existing Director
become aware that they, or any of their
connected parties, have an interest in an
existing or proposed transaction with the
Company, they should notify the Board in
writing or at the next Board meeting. Internal
controls are in place to ensure that any
related party transactions involving Directors,
or their connected parties, are conducted
onan arm’s length basis. Directors have
acontinuing duty to update the Board
onany changes to these conflicts.
The Chair was considered to be independent
on appointment. As set out in the 2026
Notice of AGM, David Gosnell has been
proposed for re-election as a Director and
Chair, notwithstanding that he has been a
Director for ten years. You can read more
about this in the Nomination Committee
report on page 65. There are currently ten
Directors of the Company: the Chair, the
Senior Independent Director, six other
Independent Non-Executive Directors and
two Executive Directors. The Board considers
that all its Non-Executive Directors continue
to demonstrate independence and maintain
constructive and challenging debate
intheBoardroom.
During the course of the year, Board
members continued to inform the Chair
ofany proposed new external appointments
which were considered and approved bythe
Board, including consideration of
anypotential conflicts. The Group Company
Secretary maintains a register of Interests
andConflicts to track the commitments of
the Directors and ensure these are in line
with overboarding guidance. The Board is
satisfied that the external commitments of its
Chair and members do not conflict with their
duties as directors of the Company and that
any situational conflicts have been authorised
in line with the process set out in the
Company’s Articles of Association.
“The Board considers that all
its Non-Executive Directors
continue to demonstrate
independence and maintain
constructive and challenging
debate in the Boardroom.”
Articles of Association
The Articles of Association set out the rules
agreed between shareholders as to how the
Company is run, including the powers and
responsibilities of the Directors.
Coats’ Articles of Association were approved
for adoption at the 2021 AGM, and the
Company considers that these reflect
best practice and current legal and
governance standards.
Service Contracts
The Company maintains the terms of
appointment of the Chair and Non-Executive
Directors to ensure that they continue to
meet the requirements of the Code. Details
of the Executive Directors’ service contracts
and the Chair’s and the Non-Executive
Directors’ letters of appointment are set out
in the Directors’ Remuneration Report on
pages 82 and 91. These documents are
available forinspection at the registered
office of the Company during normal
business hours and at the AGM venue.
These documents will continue tobe
reviewed regularly.
Committee Terms of Reference
The Board is assisted by four Board
Committees to which it delegates matters
asappropriate.
CORPORATE GOVERNANCE REPORT CONTINUED
Each Committee has full terms of reference that are
reviewed annually and have been approved by the
Board and which can be found on our website at
coats.com/board-committees.
Directors’ Indemnities
The Company maintains Directors’ and
Officers’ liability insurance, which provides
appropriate cover for any legal actions
brought against its directors.
Each director has been granted indemnities
in respect of potential liabilities that may be
incurred as a result of their position as an
officer of the Company. A Director will not
be covered by the insurance or the indemnity
in the event that they have been proven to
have acted dishonestly or fraudulently.
Delegated Authorities
The Coats Delegated Authorities policy is
aninternal document that sets out the
delegations below Board level. It is reviewed
and approved regularly. It provides a
structured framework to ensure the correct
level of scrutiny of various decisions covering
matters including contracts, capital
expenditure, tax, treasury and human
resourcing decisions.
Coats Group plc Annual Report and Accounts 202558 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Board Effectiveness:
The 2025 Board effectiveness review was
externally facilitated. A comprehensive
selection process was undertaken. Initial
interviews with the longlisted firms informed
the shortlist. The Chair and Senior
Independent Director agreed on the
preferred firm, and the Chair conducted the
final interview. Board Intelligence, a CGI
accredited board performance reviewer, was
appointed to undertake its first review of
Coats. This adviser has no other connection
with either the Company or any Director.
The review was conducted between
September and November 2025
and comprised:
– Agreement of the review process, scope
and objectives with the Chair, Senior
Independent Director and Group
Company Secretary
– Confidential one-to-one interviews with
Board members and members of the
Group Executive Team (GET)
– Observation of a Board meeting
– A detailed review of Board and
Committee papers
– A structured online effectiveness survey
designed to encourage open and
constructive feedback
The survey assessed the Board’s performance
against a broad range of governance and
value creation criteria, while Committee
effectiveness was evaluated through tailored
survey inputs. The Chair acted as the
reviewers escalation point of contact.
The Board considered the findings at its
December 2025 meeting and agreed a
programme of actions to be progressed
during 2026.
CORPORATE GOVERNANCE REPORT CONTINUED
Key Outcomes:
Overall, the review concluded that the Board
and its Committees were operating effectively
and had performed well during the year. The
review highlighted that the Board remained
cohesive, committed and effective during a
period of continued Group transformation.
Key strengths identified included:
– A positive Board culture and strong
leadership underpinned by high levels of
trust
– High performance of the Chairs of the
Board and its Committees
– Effective governance frameworks and
constructive, along with value adding,
Committee oversight
– Clear mandates for all Committees and
strong delivery against those mandates
Building on these strengths, the Board
agreed a targeted set of enhancement
actions for 2026 to further support effective
governance and delivery of the Group’s
strategic ambitions:
– Continued strengthening of medium- to
long-term succession planning at both
Board and GET level to align with the
Group’s evolving strategic direction
– Continued enhancement of Board
information and meeting management to
support deeper strategic discussions on
key value creating topics
– Further exploring emerging technologies
and continuing oversight of culture
of innovation
Board Intelligence has reviewed the disclosures relating to the
Board effectiveness review as set out in this Annual Report.
Board Effectiveness Enhancements Implemented During 2025
The Board progressed the agreed action plan in relation to the feedback received as part of
the 2024 Board internal effectiveness review and a summary is set out below:
Further focus on long-term
strategy and strategy
articulation
– Dedicated long term strategy sessions incorporated into the
February and September Board meetings, with new medium-
term targets agreed and communicated.
– Completion of the OrthoLite acquisition and transition to a
two-division structure to support long-term strategic alignment
Continued focus on executive
succession planning and
talent development
– Appointment of a new Chief People Officer and subsequent
review of GET roles and responsibilities to align with the new
two divisional structure.
– Talent and succession focus in Board and GET discussions during
and following the OrthoLite acquisition and organisation
structure change to facilitate development opportunities,
including deep dive into talent pipeline and focus areas for 2026.
Ongoing focus on the detail
and length of papers
presented to the Board
– Notable enhancements in Board materials, including clearer and
more concise papers, increased use of key metrics and improved
focus – reflected in feedback from the 2025 effectiveness review.
– Continued area of focus for future years.
Coats Group plc Annual Report and Accounts 202559 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Board discussions during 2025
Strategy
– Approved acquisition of OrthoLite and Viz Reflectives, share capital issue to fund acquisition
and exit from the non-core US Yarns business.
– Approved change to organisational structure with two divisions: Apparel and Footwear.
– Received various strategic updates on key matters including Coats Digital, innovation,
digital strategy including AI, talent and sustainability.
– Regularly reviewed performance against strategy.
– Reviewed divisional updates, which considered strategy, market update and outlook, retail
segments/customer developments, performance against competitors, sustainability,
innovation and internal talent.
– Reviewed Group’s tax strategy and policy.
– Received reports on macro-economic environment and geopolitical developments.
– Reviewed analyst and broker presentations.
Operational
– Reviewed key metrics at every Board meeting including market trends and supply chain updates.
– Reviewed, approved and regularly monitored annual operating plan and Medium Term Plan.
– Received updates on Operational and Commercial excellence workstreams.
– Received deep dives into digital and technology including AI and cyber security.
– Reviewed the Company’s capital allocation and considered, and approved, interim
andfinaldividends.
– Considered going concern and long-term viability statement.
ESG
– Tracked ESG (including H&S, GPTW® and diversity) metrics at every Board meeting.
– Received reports on workforce engagement, culture and results of the Your Voice
Matters survey.
– Received external limited assurance on ESG-related data overseen by the Audit and
Risk Committee.
– Reviewed talent strategy, DEI statistics and updates and considered succession planning
atbothBoard and Nomination Committee meetings.
– Conducted extensive assessment of all employee reward and living wage commitment
attheRemuneration Committee.
– Considered results of GIA reviews presented at the Audit and Risk Committee.
Governance
– Approved appointment of Hannah Nichols as an Executive Director and Group CFO
andWuGang as a Non-Executive Director and approved changes to the GET.
– Approved share issuance and reviewed regular IR updates including share register evolution.
– Received quarterly whistleblowing and fraud report reviews and consideration of
remedial actions.
– Considered summary of findings of balance sheet review of operating units at the Audit
andRiskCommittee.
– Reviewed supplier audits and supplier payment terms at the Audit and Risk Committee.
– Preparation for the implementation of the remaining sections of the UK Corporate
GovernanceCode 2024.
– Reviewed insurance arrangements and risk register, including risk trends.
– Received reports in relation to material legal matters, including disputes and regulatory
andgovernance developments.
– Regular reports from the Chairs of the Audit and Risk Committee, Nomination Committee,
Remuneration Committee and Sustainability Committee.
– Reviewed and approved key Board and Group policies including Modern Slavery.
– Reviewed Board and Committee externally-facilitated performance review,
includingactiontracking.
How Governance Supports Group Strategy
Strategic goal Accelerate profitable sales growth Transform the business Create value
Key stakeholders
The Board’s governance role The Board approves the Group’s strategy
and annual operating plan, reviews
subsequent progress and makes decisions
related to matters reserved for the Board in
order to support the delivery of this strategy.
The Board reviews the strategy for
sustainable growth and leverages its
collective experience to advise on
related matters.
The Board reviews key proposals relating to
business capability.
Read more See page 12 See page 12 See page 12
Customers Environment Shareholders
Communities Employees Suppliers
CORPORATE GOVERNANCE REPORT CONTINUED
Coats Group plc Annual Report and Accounts 202560 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
BOARD AND CULTURE
Our people and our culture
are the foundation of our
strategy and our long-term
sustainable growth
We foster an inclusive and high performance
culture that empowers teams to innovate,
collaborate and deliver results. During this
period of transformation, the Board
continues to set the tone from the top,
ensuring our culture remains embedded
across the organisation and aligned with
ourpurpose, values and strategy.
CORPORATE GOVERNANCE REPORT CONTINUED
How the Board assesses and
monitors culture and how the
desired culture has been embedded:
The Board regularly reviews our business
model and receives strategic updates to
ensure these remain aligned with our
purpose. There are a number of ways in
which the Board monitors and assesses
culture during the year, including:
– Your Voice Matters and Great Place
toWork® (GPTW) are used to embed
ourvalues across the Group:
– The global annual Your Voice Matters
survey provides the Board with insights
on employee engagement across the
Group and business units, and themes
raised. The survey results also give
visibility of areas on which
management must continue to focus.
You can read more on page 28.
– The Board regularly reviews GPTW
coverage and progress, which provides
consistent third-party benchmarking
ofthe culture across the Group.
– Regular Board discussions of relevant
topics, such as OrthoLite integration
briefings covering cultural alignment,
Divisional updates from management that
include people-related matters and talent
planning, and the Group CEO’s focus on
people in regular Board reports (e.g. DEI
and H&S metrics), ensure that culture is
considered, whether implicitly or explicitly,
at each Board meeting.
– During 2025, directors visited sites and
had employee discussions in Vietnam and
India, alongside engagements at all Board
meetings and other events, providing
first-hand cultural insights across regions
and business areas.
– Regular Audit and Risk Committee and
Board reporting on a broad range of risk
and business activity matters including
fraud, compliance, corruption and modern
slavery, and Group Supplier Code
adherence (including Supplier audit
insights), enables assessment of practices
and behaviours, at a thematic and
individual level, and consideration of how
these align with our desired culture and
values. Group Internal Audit findings and
corrective action closure rates also support
cultural oversight.
– External auditors share cultural
observations from site visits.
– The Nomination Committee considered
DEI matters, including horizon scanning,
and conducted an interim assessment
ofdiversity levels in senior management.
– The Remuneration Committee continues to
consider the effectiveness of performance
measures linked to cultural drivers,
including in relation to our sustainability
targets, and monitors turnover rates.
– The Sustainability Committee reviews
progress against our 2026 goals
includingdiversity, ensuring progress
issufficiently paced, and GPTW coverage
at each meeting.
– Mandatory training and regular policy
reviews help ensure behaviours remain
aligned to our culture and our Doing The
Right Thing principles. The Board and its
Committees regularly review and approve
key policies to ensure these remain suitably
Key cultural outcomes in 2025
YVM survey highlights:
– 96% response rate
– employee engagement up
1%from2024 to 86%
– Safety climate is highest scoring KPI
GPTW highlights:
– 99% coverage
– 89% in Trust Index
– 23 out of 23 countries certified
Further focus on developing and
retaining talent, with our updated
leadership capabilities being
relaunched in 2026
Health and Safety “red lines”
campaign for all employees
In 2025, the Designated Non-Executive
Directorfor Workforce Engagement undertook
a comprehensive global listening programme,
including in-person sessions in Vietnam and
India and virtual sessions across Bangladesh,
China, Indonesia, Turkey and Mexico, supported
by broader initiatives such as DE&I Calls,
Well-being Town Halls and Divisional CEO
conversations with HR leaders.
Employees consistently highlighted trust, respect,
collaboration, health and safety and acaring,
inclusive culture as core strengths, while also
identifying opportunities to enhance on-boarding,
training, process standardisation and global
mobility.
Employees across regions expressed pride
intheCompany’s values, global teamwork
andcommitment to ’Doing the Right Thing’,
alongside optimism about the evolving divisional
structure and continued focus ontalent
development and operational excellence.
Fran Philip will step down from the Board atthe
2026 AGM and Sarah Highfield will succeed
her in the critical role as Designated NED. Fran
reflected on the role as an honour, noting that
each engagement had been energising and
underscored the authenticity, passion and deep
pride employees feel in the Company’s culture
and purpose.
relevant. All employees, including Directors,
have to complete mandatory online
trainings on key areas including (but not
limited to) H&S, Ethics, anti-bribery and
corruption. This ensures our knowledge is
up to date, helping to keep our people safe
and maintain our desired culture.
Coats Group plc Annual Report and Accounts 202561 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
NOMINATION COMMITTEE REPORT
David Gosnell
Nomination Committee Chair
Committee membership
Member
Meeting
attendance
David Gosnell, Chair
(Chair since November 2020)
Member since 2015 2/2
Sarah Highfield
Member since 2023 2/2
Echo Lu
Member since 2017 2/2
Steve Murray
Member since 2022 2/2
Srinivas Phatak
Member since 2024 2/2
Fran Philip
Member since 2016 2/2
Jakob Sigurdsson
Member since 2020 2/2
Wu Gang
Member since 1 July 2025 2/2
Dear Shareholder,
I am pleased to present the report of the
Nomination Committee for the year ended
31 December 2025.
This report outlines how the Committee has
discharged its responsibilities, particularly in
relation to Board and Committee succession
planning and supervising transitions for new
appointments. We aim to ensure that the
Board comprises independent individuals
from a broad range of backgrounds,
withappropriate skills, experiences
andcapabilities to contribute to
discussionsonmultiple complex topics.
Key areas of focus during the year included
the planning and implementation of
succession for key Board roles as our business
continues to evolve. The Senior Independent
Director has progressed our Chair succession
plan as set out in last year’s report and later
in this report. Hannah Nichols joined the
Board as an Executive Director and Group
CFO, and we appointed a new independent
Non-Executive Director, Wu Gang, to
enhance our mix of skills and experience.
Following the announcement of the
acquisition of OrthoLite, the Board also
considered atalentreview and the impact of
the new organisation structure on
opportunities fordevelopment for our senior
leaders andfuture GET succession planning.
TheCommittee also considered key
DEImatters for 2025 and beyond.
In February 2026, we announced that Sarah
Highfield would succeed Fran Philip as the
Designated Non-Executive Director for
Workforce Engagement. I would like to
thank Fran for her service and acknowledge
the valuable insights that she has brought to
the Board as a result of her activities. I am
delighted that Sarah has agreed to take on
this important role, and I look forward to
working with her.
An external Board and Committee
performance review was undertaken
duringthe year (see page 59).
Thisincludedrecommendations
forsomefurther enhancements but
concluded overall that the Committee
continued to perform effectively.
David Gosnell
Chair, Nomination Committee
4 March 2026
Principal objectives of the
Nomination Committee
– To make sure the Board comprises
individuals with the necessary skills,
knowledge and experience to ensure that it
is effective in discharging its responsibilities.
– Oversight of the diversity- and inclusion-
related elements of ESG.
Key responsibilities
– Ensuring the appropriate composition
ofthe Board and its Committees, and
overseeing a rigorous and transparent
procedure for appointments to the Board.
– Maintaining ongoing succession plans for
the Board and GET, and reviewing the
leadership needs of the organisation.
– Ensuring diversity in the pipeline for senior
management roles.
Nomination Committee report
“The Board considered the impact of the new organisation
structure on opportunities for development for our
senior leaders”
Coats Group plc Annual Report and Accounts 202562 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Membership andmeetings
The members of the Committee comprise
independent Non-Executive Directors only.
No Executive Directors are appointed to the
Committee; however, they may attend by
invitation if the matters to be discussed
require their participation. You can read
more about the skills, tenure and experience
of the members of the Committee on pages
52 to 53.
During the year, the Committee met twice
inseparately scheduled meetings, with
further discussions taking place as required
and as part of scheduled Board meetings.
AllCommittee members attended the
maximum number of regularly scheduled
meetings that they were eligible to attend.
Board and Committee Changes
andAppointment/Reappointment
Processes
The Committee, on behalf of the Board,
regularly assesses the composition of the
Board and its Committees in terms of skills,
experience, diversity and capacity. The Board
tenure tracker is regularly presented to ensure
that discussions are held well in advance of
planned departures, to allow appropriate
skills-gap identification and timely succession.
As set out in last year’s Report, Hannah Nichols
joined the Board as an Executive Director and
Group CFO designate on 24 April 2025.
Hannah succeeded Jackie Callaway on 21 May
2025 as Group CFO after Jackie stepped down
from the Board atthe conclusion of the 2025
AGM. Hannahsubsequently became a
member ofthe Sustainability Committee on
16 September 2025.
On 24 June 2025, we announced that Wu
Gang would join the Board as an independent
Non-Executive Director and would become a
member of the Nomination and Remuneration
Committees with effect from 1 July 2025. The
appointment process began with a review of
the skills matrix and various discussions as to
the criteria for the candidate profile. An
interview panel was identified to lead the
process. Heidrick & Struggles was engaged to
create a comprehensive and diverse longlist of
candidates for the role. The shortlisted
candidates were then interviewed, and the
appropriate due diligence was undertaken
toensure the appropriate fit with the
requirements, including consideration
oftheirskillset and experience, their ability
tocontribute across the requisite range of
Board topics, whether their appointment was
in line with the Board’s diversity aims and
whether they could meet the expected time
commitment. Recommendations were then
made to the Board.
Any new Directors are appointed by
theBoard and, in accordance with the
Company’s articles of association, must be
elected at the next AGM to continue in office.
All existing Directors stand for re-election
every year. This year, all Directors, with the
exception of Fran Philip, who is not standing
for re-election, will submit themselves for
re-election or election at the AGM.
In making recommendations for the annual
re-election of the Chair and Non-Executive
Directors, the Committee and the Board
considers the skills, knowledge, experience,
independence and the time commitments of
each Director toensure that they have
sufficient time tofulfil their responsibilities to
the business. In addition to the regular
consideration of Board members’
performances, a standalone extensive appraisal
is conducted for each Non-Executive Director
that has served for a further term of three
years from either election or from their last full
appraisal. The Non-Executive Directors are
considered independent. On appointment to
the Board, the Chair was considered
independent in accordance with the terms of
the UK Corporate Governance Code 2024.
Induction
Following appointment, each new director
receives an induction programme designed
to be relevant to their experience, skills and
Committee membership.
Typical induction programmes include:
– Briefings on the Company’s purpose,
strategy, values and culture
– Information on Board and Committee
processes, including current Board areas
of focus, and introductions to key
stakeholders
– Review of Group policies and any
mandatory training
– Sessions with Group Finance,
theGET,theHead of GIA, Innovation,
Sustainability, Coats Digital and
othermembers of management
– Site visits to operating businesses
– Meetings with the external advisors
(e.g. Remuneration consultants,
brokers,auditors etc)
NOMINATION COMMITTEE REPORT CONTINUED
2025 inductions
Following their appointments in 2025,
both Hannah Nichols and Wu Gang
undertook comprehensive induction
programmes tailored to their roles.
Hannah Nichols
Hannah Nichols met key stakeholders
internally and externally; this process
was accelerated as Hannah led the
interim results presentations and
investor meetings in relation to the
acquisition of OrthoLite and the
associated capital raise. The Committee
was pleased with the seamless
transition of the role of Group CFO.
Wu Gang
The timing of Wu Gang’s appointment
was such that he received briefings on
the divisions concurrent with the
changing structure of the business with
the acquisition of OrthoLite and move
to a two-division structure.
Coats Group plc Annual Report and Accounts 202563 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Talent and Skills Review and
Development
During 2025, the Committee reviewed the
Board skills matrix and agreed to update this
to address more specific cyber- and digital-
related experiences. The skills matrix also
supports the timely identification of any
training needs or skills/experience gaps on
the Board. The Board continues to undertake
such regular training as is required for Group
employees and also attended an AI-related
discussion facilitated by external advisors.
The Board continued its focus on cyber
security awareness. The Board Committees
undertook training relevant to their areas of
responsibility: the Audit and Risk Committee
received training on key regulatory changes;
the Remuneration Committee reviewed
recent trends and practices in remuneration
policies; and the Sustainability Committee
undertook externally-facilitated CDP training.
The Board held several detailed sessions
considering the succession plans for the GET
and the talent available below GET level, in
particular reviewing opportunities for
development offered by the new
organisational structure. Management
provided an overview of the talent
development plans for those talent pools.
This will continue to be a focus area in 2026.
When reviewing the wider composition
ofthe Board and GET, the Committee
considered the various aspects of DEI,
ensuring the desired culture of the Group
ismaintained, and also reviewing the
requiredskills profile for the Group.
Diversity and Inclusion
The Board and Committee are committed
toensuring that the Board, Executive
Committee and senior management
haveadiverse mix of skills, experience,
knowledge and background.
The Board’s approach to inclusion and
diversity, underpinned by our Board Diversity
Policy (available at coats.com), ensures that
candidates for Board and GET roles
areconsidered objectively from multiple
perspectives, including: skills; experience;
expertise; knowledge; gender; cultural and
geographical background; ethnicity; and age.
In line with this policy, we aim to maintain
atleast 40% female representation on
theBoard and to have at least one director
reflecting ethnic diversity, as defined by the
Parker Review. The Committee is pleased
toconfirm that the diversity targets set out
inthe Board Diversity Policy and required
bythe FCA under the UK Listing Rules have
been achieved: as at 31 December 2025,
40% of Board members were women, the
Group CFO position was held by a woman,
and the Board included at least one individual
from a minority ethnic background.
Our global ‘Coats for All’ platform focusses
on continually embedding DEI in our culture
and behaviours. ‘Coats for Her’ is a specific
initiative focussed on increasing gender
diversity, and which has helped increase
women in leadership roles from 23% in
2023 to 33% in 2025, with an ambition to
reach 40% by 2030. These, together with
our other employee-focussed campaigns,
Board and GET/Executive Management Gender Identity
orSexasat31 December 2025
*
Number of
Board
members
Percentage
of the
Board
Number of
senior positions on
the Board (CEO,
CFO, SID and Chair)
Number in
executive
management
(GET and direct
reports)
Percentage of
executive
management
(GET and direct
reports
Men 6 60% 3 33 63%
Women 4 40% 1 19 37%
Other categories
Not specified/prefer not to say
At Coats, we define our senior management team as employees that are band three or above
in the organisation (Senior Management). As at 31 December 2025, there were 63 women
(33%) and 128 men (67%) in Senior Management.
NOMINATION COMMITTEE REPORT CONTINUED
continued to progress during 2025 and
support the delivery of our strategic aims
(read more about these programmes on
page 28) and will continue to be a focus. The
Board and Committee regularly review DEI
data and monitor internal initiatives and
outcomes to ensure the Company is tracking
appropriately against our ambitious internal
targets (seepage 15).
In 2023, the Board set a target for 2027 that
the Group should maintain circa 50% ethnic
diversity in our senior leadership team (using
the definition recommended by the Parker
Review), while recognising that periods of
change in the composition of senior
leadership may result in temporary periods
when this balance is not achieved. The Board
considers this that target remains appropriate
and suitably challenging.
You can read more about our progress against
our other sustainability objectives andthe
diversity of our global workforce in the
Sustainability Report (coats.com/sustainability).
Coats Group plc Annual Report and Accounts 202564 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
NOMINATION COMMITTEE REPORT CONTINUED
Board and GET/Executive Management Ethnic Background
asat31 December2025*
Number of
Board
members
Percentage
of the
Board
Number of
senior positions on
the Board (CEO,
CFO, SID and Chair)
Number in
executive
management
(GET and direct
reports)
Percentage of
executive
management
(GET and direct
reports)
White British or other White
(including minority-white
groups)
7 70% 4 19 36.5%
Mixed/Multiple Ethnic Groups
Asian/Asian British 3 30% 13 25%
Black/African/Caribbean/
Black British
Other ethnic group,
includingArab
1 2%
Not specified/prefer not to say 19 36.5%
* The data in the tables above was collected directly from the Board and GET. Members of the Board and GET were asked
toindicate their gender identity, sex and ethnic background against the categories in the table above.
Signed on behalf of the Nomination Committee by:
David Gosnell
Chair, Nomination Committee
4 March 2026
As previously communicated, the Board has maintained a structured and transparent
approach to Chair succession, in line with Provision 19 of the UK Corporate Governance
Code 2024 (Code).
In 2024 and 2025, the Senior Independent Director (SID) led the process, from which
theChair was recused throughout, which included targeted shareholder consultation.
Throughout these processes, the majority of shareholders consulted indicated their support
for the extension of David Gosnell's appointment for an additional three-year term (subject
to annual re-election). At the 2024 and 2025 AGMs, shareholders approved the respective
resolutions to extend David Gosnell’s term of appointment, with in excess of 95% of votes
cast being voted in favour. For the 2026 AGM, the Board, acting with David having
recused himself, is proposing David’s re-election to the Board and the Committees on
which he sits for a final year. David has served on the Board for ten years and has acted as
Chair since May 2021. Thesearch for his successor commenced in H2 2025, led by the SID
with support from Lygon Group, an independent external search firm which has no other
connection totheCompany or to any Director. The Board will confirm an orderly transition
timetableonce the right candidate is identified.
The Board considers this approach to be appropriate, reflecting therecent transformation
of the Group and the need for continuity through integration and execution in respect of
both the Board and its Committees.
The Board and Nomination Committee are satisfied that David continues to demonstrate
independence and effective challenge in relation to both the Board and the Committees
on which he sits, and that he facilitates Board effectiveness.Further, the Board considers
that he continues to perform his duties effectively and devotes sufficient time and
attention to his roles.
The Board considers that David's re-election will facilitate a timely andsmooth transition
process.
Coats Group plc Annual Report and Accounts 202565 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Audit and Risk Committee report
AUDIT AND RISK COMMITTEE REPORT
Sarah Highfield
Audit Committee Chair
Committee membership
Member
Meeting
attendance
Sarah Highfield, Chair
(Chair since May 2024)
Member since 2023 6/6
Steve Murray
Member since 2022 6/6
Srinivas Phatak
Member since 2024 5/6*
Jakob Sigurdsson
Member since 2020 6/6
*See page 54 for further details on attendance.
Principal objectives of the Audit
and Risk Committee
– To monitor the integrity of the Group’s
financial reporting processes.
– To ensure the independence and effectiveness
of internal and external audit functions.
– To ensure that risks are carefully identified
andassessed, and that sound systems of risk
management and internal control are in place.
Dear Shareholder,
I am pleased to present the Audit and Risk
Committee report for the year ended
31 December 2025.
This report outlines how the Committee has
discharged its responsibilities, including
monitoring and reviewing the integrity of the
Group’s financial information and external
reporting, and providing assurance to the
Board that the Group’s internal controls and
risk management processes were appropriate
and subject to regular review.
During the year, the Committee continued to
consider the effectiveness of the Group
Internal Audit function (GIA), undertaking
reviews of its work plan (to ensure this
remained effectively aligned to the changing
needs of the business) and its findings. It also
continued to oversee the independence and
work of the external auditor.
The Committee considers that the Group has
complied with the provisions of the FRC’s
‘Audit Committee and the External Audit:
Minimum Standard’ (Minimum Standard).
Key areas of focus throughout the year
included: the ongoing preparations for
regulatory change, notably in relation to the
UK Corporate Governance Code 2024
(Code) and the Economic Crime and
Corporate Transparency Act; the plans for
the integration of Group controls into
OrthoLite; enhanced bi-annual balance sheet
review processes for all business units; and
the succession of the Group CFO. The
Group’s cyber security risk management
processes were also kept under review
by the Committee.
An external Board and Committee
performance review was undertaken during
the year (see page 59) which included
recommendations for some further
enhancements but concluded overall that the
Committee continued to perform effectively.
Sarah Highfield,
Chair, Audit and Risk Committee
4 March 2026
Key responsibilities
– Oversee the accounting principles,
policiesand practices adopted in the
Group’s accounts.
– Oversee the Group’s external financial
reporting and associated announcements.
– Provide advice to the Board on whether
theAnnual Report and Accounts are fair,
balanced and understandable and provide
the necessary information to assess the
Company’s performance, business model
and strategy.
– Ensure the adequacy and effectiveness
ofthe internal control environment.
– Monitor the Group’s risk management
processes and performance.
– Review the resourcing, plans, reports
andeffectiveness of GIA.
– Oversee the appointment of, and
monitor the performance of, the internal
audit partner.
– Conduct a competitive tender process for
external audit when required and oversee
the appointment, independence,
effectiveness and remuneration of the
Group’s external auditor, including the
policy on the supply of non-audit services.
– Ensure the establishment and oversight
offraud prevention arrangements and
consider reports under the whistleblowing
policy in conjunction with the Board.
– Review the Group’s compliance with
theCode.
– Monitor forthcoming regulatory changes.
“GIA reviews at unit level were prioritised on a risk basis,
focussed on key markets, and were appropriately tailored
to the particular circumstances, and the Committee continued
its oversight of preparations for Provision 29 of the 2024 UK
Corporate Governance Code.”
Coats Group plc Annual Report and Accounts 202566
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
AUDIT AND RISK COMMITTEE REPORT CONTINUED
Membership and Meetings
The members of the Committee are
allindependent non-executive directors.
TheBoard has confirmed that it is satisfied
that the members of the Committee
collectively have a broad range of financial
and sector expertise that enables them to
provide oversight of both financial and risk
matters, and to advise the Board accordingly.
For the purposes of the Code, in respect of the
financial year ended 31 December 2025, Sarah
Highfield and Srinivas Phatak were
themembers of the Committee determined by
the Board as having recent and relevant
financial experience. You can read more about
the skills and experience of the members of
the Committee on pages 52 to53.
The Committee met privately with the
external auditor and with GIA. To enable
robust and timely discussion, the Group CFO,
the Chief Legal & Risk Officer and Group
Company Secretary, the Group Financial
Controller, the Senior Financial Reporting
Manager, the Head of GIA, and the external
auditor attended parts of Committee
meetings by invitation. The Group Chair
andGroup CEO also attended meetings
when appropriate. The Deputy Company
Secretary acts as Secretary to the Committee.
TheChair of the Committee holds regular
meetings with both internal and external
auditors, and each has an opportunity to
discuss matters with theCommittee without
management beingpresent.
The Committee’s structure and operations
are governed by its terms of reference,
which are reviewed and approved annually
bytheBoard. These were last approved
inFebruary 2026.
Financial Reporting, Going Concern
and Viability Statement
During the year, the Committee reviewed
theinterim results announcement, including
the interim financial statements, the Annual
Report and the associated preliminary results
announcement, focussing on key areas of
financial judgement and estimates made
bymanagement to ensure it was satisfied
with the outcome. The Committee also
reviewed critical accounting policies,
disclosures (including those relating to
contingent liabilities, climate change
andprincipal and emerging risks) and
provisioning, reviewing any changes to
policies required in these areas.
Focus areas during the year were: the
acquisition accounting and integration plans
for OrthoLite; reviews of the Group’s cyber
security risk management processes, and
enhanced bi-annual balance sheet review
processes for all business units.
The Committee considered the Group’s
longer-term viability statement, set out on
page 47. The Committee reviewed the
process undertaken to ensure that the model
used was consistent with the approved
business plan and that the relevant scenario
and sensitivity testing aligned clearly with the
principal and emerging risks of the Group.
The Committee challenged the underlying
assumptions used and reviewed the results of
the detailed work performed. The Committee
was satisfied that the analysis supporting the
longer-term viability statement had been
prepared on an appropriate basis. The
Committee also reviewed the going concern
statement, set out on page 101, and
reviewed management forecasts for the
Group’s future cash flow performance,
challenging the assumptions on which those
forecasts are based. Following a robust
assessment of the methodology, the
Committee concluded that adoption of the
going concern principle was appropriate for
both the half year and full year results. The
Committee also reviewed and approved the
going concern disclosures that are included
in the financial statements. The Committee
made the relevant recommendations in
relation to these statements to the Board.
The Committee continues to focus on both
the basis of preparation of the going concern
and longer-term viability analysis as well as
the external disclosures, to ensure they are
prepared in line with current FRC guidance.
Fair, Balanced and Understandable
As part of its review of the Company’s
Annual Report and associated disclosures,
the Committee has considered whether the
Annual Report report is ‘fair, balanced and
understandable’ as required by the Code.
The Committee received assurance from
the verification processes carried out on
the content of the Annual Report that the
reporting therein was consistent and that there
were appropriate links between key messages
and relevant sections of the Annual Report.
Taking the above into account, together with
the views expressed by EY, the Committee
recommended, and in turn the Board
confirmed, that the 2025 Annual Report,
taken as a whole, is fair, balanced and
understandable and provides the necessary
information for shareholders to assess the
Company’s position, performance, business
model and strategy.
On this basis, the Committee recommended
to the Board that it could make the required
statement that the Annual Report is ‘fair,
balanced and understandable’.
“Focus areas during the
year were: the acquisition
accounting and integration
plans for OrthoLite, reviews of
the Group’s cyber security risk
management processes, and
enhanced bi-annual balance
sheet review processes for all
business units”
Coats Group plc Annual Report and Accounts 202567
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
AUDIT AND RISK COMMITTEE REPORT CONTINUED
Significant Issues Relating to the Financial Statements
The Committee considered the following issues relating to the financial statements during the year. These include the matters relating to risks disclosed in the external auditor’s report:
Issue Review and conclusion
Exceptional and
acquisition-related
items
Exceptional and acquisition-related items of $51.6m in 2025 have been recorded in profit before taxation; the disclosures in note 4 to the financial statements provide
further details. The Committee assessed management’s judgements, took into account the views of the external auditor and concluded that the accounting treatment
wasappropriate given the one-off nature of the events.
Acquisition
accounting –
purchase price
allocation
Following the acquisition of OrthoLite, the Group carried out an exercise to allocate the purchase price to the identifiable assets acquired and liabilities assumed at
fairvalue. The exercise resulted in the identification of provisional goodwill and intangible assets of $811.3m; the disclosure in note 31 provides further details.
TheCommittee assessed the approach and judgements taken by management, whilst also taking into account the views of the external auditor, and concluded the
provisional fair values included in the financial statements were appropriate.
Exit of Americas
Yarns business
The full exit of the Americas Yarns business was announced in April 2025. The Committee reviewed management’s judgements on the accounting and reporting
implications on the 2025 results, including the loss from discontinued operations of $15.5m, and the presentation of results as discontinued operations. The Committee
concluded thatitwas satisfied with the accounting treatment and disclosures made in the Annual Report.
US legacy
environment
provision
The Group has recognised a provision of $10.1m in respect of remediation and legal/professional costs for the Lower Passaic River. The Committee considered
management’s position on the accounting and disclosure implications surrounding this environmental case, taking into account advice received from external counsel Sive
Paget & Riesel P.C. Following the delivery of the US Environmental Protection Agency’s Record of Decision in March 2016, the Committee has continued to review whether
subsequent events, including those impacting other parties considered to be responsible for the most significant contamination in the river, have triggered the requirement
to remeasure the level of remediation provisioning previously established. The Committee is satisfied that there is no requirement to remeasure the remediation provision as
at31 December 2025 and that the disclosures provided in note 28 to the financial statements are appropriate.
Taxation The Group operates in numerous jurisdictions around the world, with different regulations applying in different territories. This complexity, together with intra-Group
cross-border transactions, gives rise to inherent risks, including the risk of challenge by national tax authorities. In addition to reviewing the Group’s adjusted effective tax
rate, which remained at 29% in the current year, the Committee also considered the Group’s uncertain tax provisions and deferred tax assets, which amount in total to
$58.3m (2024: $26.0m) and $17.9m (2024: $13.6m) respectively. The increase in uncertain tax provisions in the year is primarily due to $24.9m provisional assessment of
uncertain tax liabilities acquired with OrthoLite. The Committee is satisfied with the approach and disclosures adopted by management as reflected in note 9 to the
financial statements.
Carrying value of
goodwill, acquired
intangible assets
and tangible fixed
assets
The Committee reviewed and challenged management’s impairment testing of goodwill, acquired intangible assets and tangible fixed assets for the Group’s cash
generating units. The recoverable amount has been determined based on value in use and fair value less costs of disposal calculations which rely on a number of key
assumptions as described in notes 13 and 14. The Committee considered the key assumptions and methodologies used in the calculations, as well as the disclosures
including the sensitivity to key assumptions. The Committee concluded that it was satisfied with the results of the impairment reviews and the disclosures made in the
Annual Report.
The Committee also received regular updates on provisions made for litigation and tax matters and the Committee considered the appropriateness of the methodology applied.
Coats Group plc Annual Report and Accounts 202568 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
AUDIT AND RISK COMMITTEE REPORT CONTINUED
Internal Audit
The Committee annually reviews and
approves the GIA Audit Charter, which
defines GIA’s independence, objectivity and
scope of internal activities, the latter of which
is determined by an annual risk-based plan.
In line with the GIA Charter, the Committee
and management ensure that GIA has
unrestricted access to the Group’s records,
physical properties, and personnel to the
extent necessary to carry out its activities,
and that it remains free from inappropriate
management influence or any other restrictions
that could compromise itsabilityto perform
its work objectively andeffectively.
The proposed GIA audit plan is presented
forapproval annually and is then reviewed
ateach Committee meeting. Updates are
provided on audit coverage as well as any
recommended changes to the schedule
ofwork.
Further to the work undertaken in 2024,
theCommittee has continued to ensure that
GIA’s resourcing and remit is appropriately
aligned with the current and evolving needs of
the Group during 2025 and that GIA remains
an effective business partner. GIAreviews at
unit level were prioritised onarisk basis,
focussed on key markets, andwere
appropriately tailored to the particular
circumstances with supervisory reviews being
issued at times to provide timely guidance.
The majority of GIA reviews were conducted
on-site, and all were aligned to the ‘Key
Control Framework’ controls and test
activities. The ‘guest auditor’ from the
business resourcing model was continued
in2025, providing independent peer
reviewand development opportunities.
The Committee reviewed the key findings
and ratings from the 24 GIA reviews
undertaken during 2025. It received detailed
responses from management where
appropriate and monitored the rate at which
actions agreed with management were
implemented. Enhanced processes for
management monitoring of the execution of
remediation plans were implemented during
2025. GIA presented itsannual audit opinion
at the February meeting of the Committee.
The Head of GIA presented a semi-annual
review of in-country operational risks to the
Committee, which considered matters relating
to the Group’s principal risks and any new
risks that arose in the period, with agreement
on appropriate actions and interventions.
BDO acts as a co-source partner to GIA,
providing additional skills and expertise to
supplement reviews as required as well as
bringing its wider insights. BDO has joined
GIA at Committee meetings during 2025 to
present its findings.
The Committee reviewed the effectiveness of
GIA at its December meeting and concluded
that it was highly performing
andacknowledged the positive evolution of
the function in recent years. The Committee
wassatisfied that the quality, experience
andexpertise of GIA is appropriate for the
business. The enhancements made in
meeting materials had been welcomed
andfurther refinements would be
implemented in 2026.
Internal Control and Risk
Management
The Board retains overall responsibility for
overseeing risk and ensuring the effective
operation of a robust risk management and
internal control system. The Committee is
responsible for reviewing the effectiveness
ofrisk management and internal control
systems. The day-to-day operation of these
systems, encompassing financial, operational,
and compliance controls, has been delegated
to management and risk owners.
GIA grades the severity of all findings based
on the prioritisation of the necessary action
to manage the risk(s) arising in its reporting
to the Committee, with the most significant
finding being “catastrophic” risk to the
business meaning urgent action is required
to mitigate the significant or material risk.
No findings were rated catastrophic during
the period.
Provision 29 of the Code
During 2025, in preparation for the
implementation of Provision 29 of the Code,
there was a comprehensive review of the
Group’s material controls. This work involved
identification of the Group’s catastrophic and
material reporting risks, confirmation of the
controls that mitigate these risks and
assessment of how these controls operate
across the Group. It also included evaluation
of current and target assurance levels, the
development of action plans to address any
gaps identified, and the conducting of
effectiveness testing to validate control design
and to identify any required remediation.
The Committee has monitored the results
ofthe material controls processes, evaluated
the evolving control and risk management
environment, and considered the adequacy
of assurance activities and suggested
enhancements to these. Group Finance
haspartnered with PwC during this process,
allowing access to additional expertise
andinsights.
Cyber Security and Digital & Technology
risk management
The Committee received regular updates on
the enhancements being made in relation to
Cyber Security and Digital & Technology risk
management. GIA, supported by relevant
specialist experts from BDO, conducted
robust reviews with management, and
reported these to the Committee, to
comprehensively assess the current status of
the Group’s cyber risks and mitigation plans,
as well as agreeing enhancements. The
Committee met with the newly appointed
Chief Information Officer and agreed priority
areas for the recently appointed Chief
Information Security Officer. This will
continue to be a focus area in 2026.
Other areas of Committee focus
Reviews of back office transactional services,
indirect procurement processes, supplier
payment terms and an update on the
supplier audit programme were also
considered by the Committee.
The Committee undertook its annual review
of ESG reporting and disclosures, including
consideration of the TCFD disclosures, and
oversaw the external limited assurance
processes of ESG-related data in this
AnnualReport.
Coats Group plc Annual Report and Accounts 202569 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
a decentralised risk management framework, clear organisational responsibilities,
robust governance structures and comprehensive financial and compliance processes;
appropriately drafted and communicated policies, procedures, and guidance
to support business operations;
a thorough and coordinated annual planning process and strategy review,
combined with comprehensive financial forecasting, reporting, and budgeting;
embedded tools and technology such as SAP and Concur;
a well-established sign-off system in relation to financial reporting and other
business matters;
appropriate post-acquisition integration activities to ensure adherence to
Group standards;
GIA activities and investigations; and
an externally operated whistleblowing helpline and robust process to allow
anonymous reporting and suitable investigations.
Fundamental components of the Company’s internal control and risk
management framework include:
AUDIT AND RISK COMMITTEE REPORT CONTINUED
The Committee reviewed the minutes of all
Group Risk Management Committee
meetings and discussed any relevant matters
that have arisen with management.
Following these assurance processes, the
Committee was satisfied that the system of
risk management and internal controls
operate effectively in all material respects
with no significant weaknesses identified and
others remediated appropriately.
External Auditor
Ernst & Young LLP (EY) is the Group‘s
external auditor and is engaged to conduct a
statutory audit of, and express an opinion on,
the Company’s and the Group’s financial
statements. A competitive tender to select
the auditor was last carried out in 2022.
Shareholders confirmed the reappointment
of EY at the Company’s 2025 Annual
General Meeting.
EY presented its proposed audit plan, as
reviewed by management, to the Committee
for discussion. The audit scope and approach
were appropriate in light of the Group’s
structure and strategy. The audit was
accordingly conducted in line with this plan.
EY attends each Committee meeting to
present its findings and also meets with the
Committee and the Committee Chair
without management being present. EY can
raise any matter of concern to the
Committee Chair at any time without going
through management. These regular
discussions were useful to the Committee,
but no matters of concern emerged.
Independence
The Committee is responsible for reviewing
the independence and objectivity of EY and
agreeing their terms of engagement and the
scope of their audit.
EY has a policy of partner rotation, which
complies with regulatory standards, and, in
addition, has a structure of peer reviews for
its engagements, which are aimed at
ensuring that its independence is maintained.
Maintaining an independent relationship
with the Company’s external auditor is a
critical part of assessing the effectiveness of
the audit process.
The Committee annually reviews its policy on
non-audit fees to ensure it complies with
latest FRC Ethical Standards. The key
principles of the policy on
non-audit services are:
– The auditor is prohibited from providing
any services that are not included in the
list of permitted non-audit services.
Permitted services include audit-related
services such as reviews of interim
financial information or any other review
of accounts required by law to be
provided by the auditor.
– Any service that is included on the list of
permitted non-audit services, if in excess
of $150,000, requires the approval of
the Committee.
Coats Group plc Annual Report and Accounts 202570 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Corporate reporting
Key stakeholders:
– Half and full year external reporting
– Interim and preliminary results
announcements
– Annual Report and consolidated
financial statements
– Review of tax and statutory filing
status
– Reporting and external limited
assurance of ESG data
AUDIT AND RISK COMMITTEE REPORT CONTINUED
Key areas of focus in 2025
External audit
Key stakeholders:
– Report on external audit at full year
– Insights and observations on
reporting review
– Auditor independence and non-audit
work reviews
– Review of management
representation letters
– Review of fees of external auditor
– Review of the effectiveness of the
external auditor
Risk management
Key stakeholders:
– Litigation, cyber tools, suppliers and
tax risk reviews
– Bi-annual risk review including
environmental compliance
– Horizon scanning for changes to
regulatory environment for audit
– Review of Supplier payment terms
and supplier audit programmes
– Regular review of Digital and
Technology and Cyber Security risk
management
Internal controls
Key stakeholders:
– GIA updates
– Semi-annual review of internal
financial controls
– Monitoring agreed actions status
– Review and refinement of Key
Controls Framework and assurance
processes
– Review of updates to regulatory
reform to ensure appropriate
internal preparation
– During 2025, the external auditor provided
non-audit services primarily in relation to
the Group’s ESG assurance. The external
auditor has confirmed to the Committee
that they did not provide any prohibited
services and that they have not undertaken
any work that could lead to their objectivity
and independence being compromised.
The ESG assurance work constitutes
permissible non-audit service, authorised
by those charged with governance, relating
to sustainability reporting in accordance
with ISAE 3000 (Revised).
– The non-audit fees in relation to the
services supplied by the external auditor
can be found in note 5 to the financial
statements. Non-audit fees presented as a
percentage of total audit fees is 8%.
– The lead audit engagement partner is
rotated every five years. Anup Sodhi was
appointed as the lead audit engagement
partner in 2023.
The Committee also reviewed the level of
audit and non-audit fees paid to EY.
The Group is in compliance with the
requirements of the Statutory Audit Services
for Large Companies Market Investigation
(Mandatory Use of Competitive Tender
Processes and Audit Committee
Responsibilities) Order 2014.
Assessment of Audit Process
The Committee assesses the performance
and effectiveness of the external auditor on
an annual basis. In 2025, this assessment was
undertaken by way of a questionnaire-based
internal review which was completed by
regular attendees of Committee meetings
and those Coats colleagues globally who
interact most frequently with the external
auditor. Feedback was also provided by
Committee members.
The items pertaining to the review of the
external auditor, as listed in the Minimum
Standard and the Code, were included in the
review. The questionnaire covered topics such
as the robustness of the audit and the quality
of delivery, reporting and service as well as
covering areas such as consideration of the
auditor’s culture and mindset, including free
form questions to allow consideration of any
other points that respondents wished to raise.
The Committee appropriately assessed the
auditor’s view of the risks to audit quality and
performance against the audit plan, and also
considered the FRC’s annual report on the
auditor. The summary of the results of the
questionnaire was reviewed and discussed by
the Committee and appropriate feedback
was shared with the external auditor.
Areas for Focus in 2026
In 2026, in addition to the recurring items
within the Committee’s remit, the
Committee will continue to oversee
compliance with Provision 29 of the Code
and to maintain and further enhance its
focus on cyber risk and governance.
Signed on behalf of the Audit and Risk
Committee by:
Sarah Highfield,
Chair, Audit and Risk Committee
4 March 2026
Coats Group plc Annual Report and Accounts 202571 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Sustainability Committee report
SUSTAINABILITY COMMITTEE REPORT
Committee membership
Member
Meeting
attendance
David Gosnell, Chair
(Chair since December 2021)
Member since 2021 2/2
David Paja
Member since 2024 2/2
Hannah Nichols
Member since September 2025 2/2
Sarah Highfield
Member since 2024 2/2
Fran Philip
Member since 2021 2/2
Pasquale Abruzzese
Member since January 2025 1/2
Adrian Elliott
Member since 2024 1/2
Frederic Verague
Member since 2024 2/2
Christopher Dearing
Member since 2024 2/2
Principal objective of the
Sustainability Committee
– To provide strategic oversight and monitor
the execution of the Company’s
sustainability strategy and initiatives.
Key responsibilities
– To oversee, review and provide input as
required to refine, enhance and accelerate
the progress of the Company’s
sustainability strategy, projects and targets.
– To elicit and provide external experience and
insights from other companies and industries.
– To provide input as required and
appropriately monitor the environmental
and employee engagement-related social
elements of the Company’s ESG activities.
Dear Shareholder,
I am pleased to present the Sustainability
Committee report for the year ended
31 December 2025.
This report provides a high level summary of
how the Committee has discharged its
responsibilities during the year. Further
information on each of the areas covered in
this report is available in the Sustainability
Report (see coats.com) and the TCFD section
of this report (see page 178).
Membership
The Committee membership comprises the
Chair of the Board, the Group CEO, two
independent Non-Executive Directors, the
Apparel CEO, the Footwear CEO, the Executive
Lead of Group Strategic Initiatives and the
Group Sustainability Director. On 16 September
2025, it was announced that Hannah Nichols
(Group CFO) would join the Committee.
This composition provides an effective
balance of Board and senior management
oversight. The Board is satisfied that the
Committee collectively has the skills and
experience needed to advise it appropriately.
The Committee met twice during the year,
and a separate Board session was held as
part of the Strategy Day to review progress
to date and determine further actions
required to meet our 2030 targets.
Key Areas of Focus
In 2025, the Sustainability Committee focused
on overseeing strong progress against the
Group’s sustainability targets, including the
early achievement of key Energy, Waste and
People goals. It also refined the materials
transition strategy to better align with
long-term Scope 3 emissions reduction.
The Committee reviewed and approved a more
commercially-viable pathway to meet the 2030
SBTi Scope 3 target and to advance supplier
decarbonisation through expanded
engagement and adoption of standardised
measurement tools. It continued to monitor
development of the Group’s Net Zero transition
plan and reviewed enhancements to climate-
related disclosures in external publications.
The Committee also assessed evolving
regulatory requirements, including CSRD and
Digital Product Passports, to understand short-,
medium- and long-term implications and
evaluate preparedness. To ensure continued
strategic focus, the Committee considered
current ESG ratings performance, investor
expectations, and regional sustainability
outcomes. Targeted Committee training was
provided, particularly in relation to CDP.
Effectiveness
An external Board and Committee
performance review was undertaken during
the year (see page 59) which included
recommendations for some further
enhancements but concluded overall that the
Committee continued to perform effectively.
David Gosnell
Chair, Sustainability Committee
4 March 2026
Coats Group plc Annual Report and Accounts 202572 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Remuneration Committee report
REMUNERATION COMMITTEE REPORT
Echo Lu
Remuneration Committee Chair
Committee membership
Member
Meeting
attendance
Echo Lu, Chair
Member since 2017 6/6
Steve Murray
Member since 2022 6/6
Fran Philip
Member since 2016 5/6
Wu Gang
Member since 1 July 2025 1/2
Principal objectives of the
Remuneration Committee
– Our main objectives are to have fair,
equitable and competitive reward packages
that support our vision and strategy and
help ensure that rewards are performance-
based and encourage longer-term
shareholder value creation.
Key responsibilities
– Implementing the Directors’ Remuneration
Policy (the Policy).
– Ensuring the competitiveness of reward.
– Designing the incentive plans.
– Setting incentive targets and determining
award levels.
– Reviewing workforce remuneration and
related policies and the alignment of
incentives and rewards with business
strategy and culture.
– Engaging with shareholders on
remuneration matters, including the
Directors’ Remuneration Policy.
Dear Shareholder,
As Chair of the Remuneration Committee
(the Committee), I am pleased to introduce
the Directors’ Remuneration Report for the
year ended 31 December 2025.
This report consists of three parts: this letter
summarising the work of the Committee
during 2025 and the decisions made,
theAnnual Report on Remuneration
for2025 (the Report), and the Directors’
Remuneration Policy (the Policy). This letter
and the Report will be subject to an advisory
vote at our 2026 Annual General Meeting
(AGM) whilst the Policy will be subject
toabinding vote.
Highlights for 2025
– Enabled and supported smooth
ExecutiveDirector succession with
thenew Group Chief Financial Officer
(Group CFO) assuming the role following
the 2025 AGM.
– Continuing to balance market volatilityand
the wider macroeconomic environment
with shareholder interests through the
remuneration arrangements for our
Executive Directors and Group Executive
Team (GET) and the wider workforce.
– Undertook a review of the Policy
considering the extent to which it
continues to support the delivery
ofbusiness strategy, aligns to the interests
of stakeholders and reflects developments
in market best practice.
– Engaged with shareholders regarding
theproposed changes to the Policy.
– Considered wider developments in market
practice and their implications throughout
the Group.
– Determined the 2024 annual bonus
awards and the vesting of the 2022
LTIPaward.
– Conducted an in-depth review of
remuneration arrangements within the
wider workforce including the annual
review of our global Living Wage policy.
– Reviewed Executive Directors and Group
Executive Team salaries.
– Considered and agreed the
implementation of the Policy for 2026,
including performance measures, targets
and weightings.
– Supported the business and reviewed
remuneration arrangements as part of
theOrthoLite acquisition and divestitures
during the year.
Areas of Focus for 2026
– Overseeing the effective implementation
of the Policy for 2026.
– Continuing to monitor the impact of
geopolitical and macroeconomic effects
on the operation of the Policy.
– Setting incentive targets in a continuing
challenging macro-environment, ensuring
alignment with strategy and shareholder
interests, as well as ensuring fairness
andtransparency.
– Continuing to review workforce
remuneration policies to support our
environmental, social and governance
strategy as well as our Diversity, Equity
and Inclusion objectives.
Coats Group plc Annual Report and Accounts 202573 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
REMUNERATION COMMITTEE REPORT CONTINUED
Workforce Content
The 2025 salary increase for the Group CEO
was aligned with the salary increase budget
set for the UK as a whole at 2.5% of salary,
effective 1 July 2025. The same principle was
applied to the wider members of the GET
that were eligible for an increase
(i.e.increases, where made, were aligned
tothe salary budget appropriate for their
geographic location). As detailed in last
year’s Directors’ Remuneration Report
Hannah Nichols joined the Company as
Group CFO Designate in April 2025 and
became Group CFO in May 2025 (on a salary
of £465,000) and was therefore not eligible
for an increase during the year.
Fran Philip, our Designated Non-Executive
forWorkforce Engagement, continued her
programme of meetings with our employees
in all our local markets, feeding back relevant
comments to the Committee, such as
employee sentiment on cost of living
changes. Employees were encouraged to
discuss matters of remuneration across the
Group and raise any issues that they
considered appropriate. Further details of
feedback received is detailed on page 61.
Incentive structures remain aligned within
theCoats business, therefore, the key
metricsthat apply to senior management
compensation are applied consistently
throughout the organisation, with our main
bonus plan being subject to the same key
financial measures as our Executive Directors’.
Executive Director Changes
During 2025
As detailed in last year’s report, Jackie
Callaway the Group Chief Financial Officer
(Group CFO) mutually agreed to step down
from the Board following the 2025 AGM
on21 May 2025. As a result of leaving
employment though mutually agreed
succession planning, the Committee resolved
that Jackie would retain the right to her
in-flight incentives, subject to pro-rata
reductions and the application of performance
conditions on the original timeframes.
Her successor, Hannah Nichols, joined Coats
from 24 April 2025 as Group CFO designate
and assumed the role on 21 May 2025.
Details of the remuneration arrangements
forboth Jackie and Hannah are set out later
in this report.
Business Performance in 2025
In 2025, Coats delivered resilient
performance during challenging market
conditions, driven by continued caution in
customer ordering patterns as a result of
macroeconomic and tariff uncertainty.
Against this backdrop, performance has
generally been in line with the ambitious
business plan set at the start oftheyear.
Financial performance highlights include:
– Group revenue was $1,465m (2024:
$1,433m), primarily driven by continued
success in gaining market share,
outperforming core thread and
footwear markets.
– Sales growth in Apparel, and margin
improvement across all divisions.
– Group operating margins increased to
19.8%, which falls comfortably within our
medium-term margin target of 19-21%,
reflecting pricing discipline andflexing of
the cost base.
– Cash generation has remained strong.
Asanticipated, leverage increased to 2.2x
due to the completion of the OrthoLite
acquisition. However, it remains consistent
with our previous guidance, and we
expect leverage to fall below 2.0x by the
end of 2026, driven by sustained
improvement in cash generation.
In addition to the financial performance set
out above, the Group also made significant
strategic progress. We completed the
landmark acquisition of OrthoLite Holdings
LLC. This acquisition significantly
strengthened our existing business offering
by expanding into the high growth insole
segment. We also exited from the Americas
Yarns business, accelerating the Performance
Material margin recovery and enabling focus
on core parts of the Group’s portfolio. At the
same time as completing the OrthoLite
acquisition, we also successfully streamlined
our business structure into two divisions:
Apparel and Footwear, to reflect the
transformation of the Group’s profile. This
change reduces internal complexity and
aligns the divisions more closely with the
underlying textile engineering and polymer
science technologies. The strategic progress
delivered ensures that Coats is well set for
future growth.
Incentive outcomes
2025 Annual Bonus
The 2025 annual bonus was based
onascorecard of five measures, each
withchallenging performance targets.
Theassessment of performance against
thesetargets determined that bonuses were
payable of 75% of maximum for the Group
CEO and Group CFO. The Former Group CFO
earned a bonus of 65% of maximum.
The Committee reviewed the formulaic
outcome in light of the wider financial
andnon-financial performance of the Group
and considered the formulaic outcome to
beappropriate. As a result, no adjustments
were made. Further details of the assessment
of performance for the 2025 annual bonus
can be found on page 87.
Coats Group plc Annual Report and Accounts 202574 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
REMUNERATION COMMITTEE REPORT CONTINUED
2023 Long-Term Incentive Plan
With regards to long-term performance, we
achieved growth in Normalised EPS over the
three-year period ending 31 December 2025
to 9.65 cents, delivered a strong total
shareholder return of circa 38%. Consistently
strong performance can be seen against our
longer term sustainability goals. This resulted
in 67.8% of the total award vesting. Further
details of our approach to the pension buy-in
are detailed on page 88.
As with the annual bonus the Committee
reviewed this outcome in the context of
performance delivered over the performance
period, and the experience of our
stakeholders, and concluded that this
outcome was a fair reflection of
performance. As a result, no adjustments
tothe formulaic outcome were made.
Further details of the assessment of
performance for the long-term incentive
plancan be found on page 88.
Remuneration Policy Review and
Proposed Changes
During the year, the Committee undertook
adetailed review of the current Directors’
Remuneration Policy. Whilst the review
concluded that the overall Policy structure
was working effectively, it was agreed that
asmall number of targeted amendments
should be made. These changes are intended
to ensure that the Policy continues to support
the delivery of business strategy, aligns to the
interests of stakeholders, and reflects
developments in market best practice.
The principal changes are:
1 Simplifying the maximum LTIP grant
from 175% of salary in normal
circumstances, with 200% in
exceptional circumstances to 200% of
salary – under the existing Policy there is
a ‘normal’ maximum of 175% of salary
and an ‘exceptional’ maximum of 200%
of salary. The revised Policy will simplify
this into a single maximum of 200%
ofsalary. The resultant increase to the
normal maximum was deemed
appropriate in order to:
i better align with up-to-date market
levels of executive remuneration.
The normal limit of 175% of salary
has remained the same since 2021
and over that time we have seen
many comparable FTSE 250
companies making material
increases to incentive quantum –
especially long-term incentives (the
median FTSE 250 LTIP opportunity
is 200% of salary); and
ii give the Committee the flexibility
needed to operate the Policy
effectively over the three-year
Policyperiod.
As both Executive Directors have been
appointed within the past 18 months,
theCommittee does not consider it
appropriate to increase their award levels
for 2026. As a result, award levels will
remain at 175% and 150% of salary
forthe Group CEO and Group CFO
respectively in 2026. To the extent
thatthis headroom is used in future,
theCommittee would take the higher
quantum into account when determining
the appropriate degree of stretch in
performance targets.
2 Flexibility to reduce bonus deferral by
50% once share ownership guidelines
have been met – this reflects the
updated Investment Association Principles
of Remuneration and emerging market
practice. With our incentives purposefully
weighted towards long-term
performance, our robust malus and
clawback provisions and 200% of salary
share ownership guidelines, the
Committee is comfortable that this
approach balances alignment with
shareholders and flexibility for executives.
Other minor/administrative changes to the
Policy include broadening malus and
clawback provisions to allow the Committee
to lapse a “good leaver” share award if the
individual takes up comparable employment
with another company (for example,
following retirement), and clarifications
regarding the Policy language in respect of
target setting to permit the use of graduated
performance schedules.
As part of the development of the Policy,
theCommittee considered the Group’s wider
approach to workforce remuneration as well
as engaging with major shareholders and
leading advisory agencies.
The shareholder engagement process
included writing to all shareholders owning
2% or more of the issued share capital of the
Company. Feedback was received from 8
shareholders and some of the leading proxy
agencies who were generally supportive of
the changes proposed. The consultation
provided a valuable opportunity to present
the rationale for the proposed changes and
to better understand the views of our
shareholders, we are pleased to confirm as a
result of the positive feedback received, no
changes were made to our proposals.
AsaCommittee we would like to thank
allshareholders who participated in this
engagement process – your feedback
wasgratefully received.
Implementation of Policy for 2026
Salary
Executive Directors’ base salaries will be
eligible for review, in line with the wider
workforce salary review, with effect from
1 July 2026.
The Committee remains mindful of
institutional investor guidance in relation to
salary increases and the compounding impact
of Executive Director increases during periods
of higher inflation and will continue to
balance this with the need to recognise the
performance, experience and calibre of the
Executive Directors.
Coats Group plc Annual Report and Accounts 202575 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
REMUNERATION COMMITTEE REPORT CONTINUED
Annual Bonus
The 2026 annual bonus measures and
weightings are unchanged from those
operated in 2025 with only a minor change
to the definition of free cash flow – measures
and weightings are set out on page 97. The
targets will be disclosed retrospectively in
next year’s Remuneration Report. The
Committee is comfortable that the targets
reflect our business objectives and will be
appropriately stretching.
The maximum annual bonus opportunity will
remain at 150% of salary for the Group CEO
and 125% of salary for the Group CFO.
Long-Term Incentive Plan
To better align with our published medium
term financial framework, there will be a
modest re-weighting of measures. For the
awards in 2026, the measures and their
weightings will be 30% on EPS growth, 25%
on free cash flow (increased from a 20%
weighting on average cash conversion), 25%
on relative TSR and 20% on sustainability
measures (reduced from a 25% weighting in
recognition of the decrease in 2024 from five
to three sustainability metrics). Further details
regarding the measures, weightings and
targets are set out on page 97.
As set out above, the 2026 grant sizes will
remain unchanged at 175% and 150%
of salary for the Group CEO and Group
CFO respectively.
Conclusion
The Committee is satisfied that the decisions
made during 2025 reflect the financial and
non-financial performance of the Group
during the year and the Policy has operated
as intended.
I hope you find this report helpful and that
you will be supportive of the remuneration
resolutions on the Directors’ Remuneration
Policy and the Directors’ Remuneration
Report at our 2026 AGM.
Echo Lu
Chair, Remuneration Committee
4 March 2026
Coats Group plc Annual Report and Accounts 202576 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
REMUNERATION AT A GLANCE
Remuneration at a glance
2025 Policy Implementation and Outcomes
Executive Director Remuneration Elements 2025 Total Remuneration (£’000)
Group Chief Executive Officer Group Chief Financial Officer
Base
salary
Pension
Fixed Variable
Benefits
Bonus:
deferred
shares
LTIP
Total
Remuneration
Single figure total remuneration for the
Group CEO in 2025 vs 2024. Further details
of the implementation of policy are
provided below.
Single figure total remuneration for the
Group CFO since the commencement of
employment in 2025. Further details of the
implementation of policy are provided below.
Executive Director Remuneration Elements
Element Key features of current policy Implementation in 2025 Key proposed policy changes for 2026
Base salary
and benefits
– Base salary is benchmarked against the FTSE 250 and selected
comparator group of similar size and complexity
– Benefits are benchmarked to local market practice, taking account
ofthe nature of the executive directors’ role
– Pension benefits aligned to the workforce where the role is based
– Increase of 2.5% for David Paja effective from 1 July 2025
– Hannah Nichols joined the Group on 24 April 2025 on a salary
of£465,000
– Jackie Callaway did not receive an increase in 2025
– 12% of salary pension benefit for all Executive Directors
No change
Annual bonus
– Maximum award opportunity: 150% base salary
– A proportion of annual bonus is subject to mandatory deferral
– Deferredbonuses are converted to share awards and are released
aftera three-year retention period to align value of annual incentives
tolonger term performance of the company
– David Paja received a maximum bonus opportunity of 150%
ofbase salary for the year
– For Hannah Nichols and Jackie Callaway a maximum bonus
opportunity of 125% of base salary, pro-rated for time served
inthe year was provided
– 50% of the bonus for David Paja and 40% of the bonus for
Hannah Nichols is deferred into shares
– Performance targets and outcomes are shown on page 87
– No change to maximum bonus
opportunity
– Flexibility to reduce bonus deferral by
50% once share ownership guidelines
have been met
LTIP
– Maximum LTIP award opportunity: 175% of base salary (200%
exceptional circumstances)
– Awards are discretionary and may be made annually
– Vesting is conditional on three-year performance conditions,
afterwhicha two year holding period applies.
– Performance measures and targets are determined by the Committee,
taking into account the balance of strategic priorities for Coats for the
three-year performance period
– Grant of 175% of salary to David Paja and 150% to Hannah Nichols
– Three year performance period and two year holding period applies
– Performance targets are set out on page 88
– No grant was made to Jackie Callaway in 2025
– Maximum LTIP opportunity: 200%
ofbase salary
– Performance target ranges may
beseton a graduated basis
Shareholding
requirements
– 200% of salary within five years of appointment
– Applies for 2 years post termination of employment based
onthelowerof the shareholding requirement or the actual
sharesheldon termination
Jackie Callaway’s post employment shareholding requirement
wasfixed at 200% of her base salary on cessation
No change
Bonus:
Cash
2025
2024
£869k
£285k £360k £1,008k £1,652k
£830k £1,699k
Base salary, pension and benefits Annual bonus
LTIP Total
2025
£371k
£285k £360k £1,008k £1,652k
£301k
£672k
Base salary, pension and benefits Annual bonus
LTIP Total
Coats Group plc Annual Report and Accounts 202577 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
REMUNERATION POLICY REPORT
Remuneration Policy Report
The Remuneration Policy was last approved
by shareholders at the 2023 AGM. This
updated policy will be subject to a binding
shareholder vote at the 2026 AGM on
20 May 2026. If approved, the policy will
apply for a period of up to three years from
the date of approval.
As set out in the Remuneration Committee
Chair’s statement, the Committee concluded
that the existing Policy continues to work
effectively and that only minor changes
arerequired.
Directors’ Remuneration Policy
The Remuneration Committee has
responsibility for determining remuneration
for the Company’s directors including
theGroup Chair but excluding the
non-executive directors. The remuneration
for non-executive directors, excluding the
Group Chair, is determined by the Board,
albeit theNon-Executive Directors are not
presentwhen their fees are discussed.
TheCommittee takes into account the
needtorecruit and retain directors who
havethesuitable skills and experience
toperform in the interests of the Company
and its shareholders, while paying no more
than isnecessary.
Following an extensive review of the
Remuneration Policy, a number of changes
are proposed. The purpose of these changes
is to ensure that the Policy enables the
Committee to ensure that remuneration
arrangements can continue to support
business strategy and that it takes into
account developing market best practice.
The changes proposed are as follows:
1 An increase to the maximum award under
the Long-Term Incentive Plan to 200%
ofsalary.
2 Introducing flexibility to reduce bonus
deferral (by up to 50%) once the 200%
of salary share ownership guidelines
havebeen met.
3 A broadening of the current Malus &
Clawback provisions which apply
tovariable remuneration to better align
with market best practice.
4 Other minor administrative changes
including adding additional flexibility
inrelation to target setting.
The Remuneration Policy set out below applies to all directors who serve on the Board during
the life of this policy.
Executive Directors’ Remuneration Policy table
FIXED REMUNERATION
Purpose and link to strategy Operation and opportunity
Salary
To attract and retain
the key talent that
the Company needs
to achieve its
objectives.
Salaries for new executive directors will be set by the Board, taking into
accountsuch factors as it determines to be necessary, as discussed above.
Following recruitment, salaries will normally be reviewed annually with effect
from 1 July (or such other date so as to align with the appropriate workforce
review date). Salary reviews take account of factors including the market
competitive level of pay in other companies, average salary increases applied
elsewhere across the Group, the performance of the Company, the relative skills,
performance and talent of the individual and any increase in the scope and/or
responsibility of the individual’s role.
There is no set maximum salary but the Committee’s approach will consider
themedian level of salary of similar positions in the FTSE 250 (excluding financial
services), as well as companies in similar sectors and of a similar international
scope and size to Coats, for UK-based roles, to reflect the global scope and
dimensions of the Group’s operations and the sector in which it operates.
External benchmark data is considered only as a reference point and the
medianfigure will not be regarded as a target level of remuneration.
Pension
To provide a market
competitive level of
retirement provision.
Executive directors participate in a defined contribution scheme, on a non-
contributory basis, with an employer contribution of up to the typical UK
workforce (or other relevant local workforce where appropriate) rate which
iscurrently 12% of salary, or will be provided with a cash alternative in lieu ofany
pension benefits of up to an equivalent value.
Benefits
To provide a market
competitive level of
benefits.
Benefit provision to executive directors will be determined by the Committee,
taking into account such factors as it determines to be necessary, with the aim of
creating a competitive overall package. There are no set maximum levels.
Benefits may include, but are not limited to, the provision of private medical
insurance, ill-health protection and/or life insurance and a cash-for-car-allowance.
In addition, the Company may provide assistance in connection with the
relocation of an executive director and, in the event of an international transfer,
may provide tax equalisation arrangements.
Executive directors may also participate in any all-employee incentive plan
operated by the Company from time to time, up to the same limit for
participation as applies for other employees.
Coats Group plc Annual Report and Accounts 202578 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
REMUNERATION POLICY REPORT CONTINUED
VARIABLE REMUNERATION
Purpose and link to strategy Operation and opportunity Performance
Annual bonus, Cash bonus and deferral into shares under the rules of the Deferred Bonus Plan
Annual bonus
incentivises key
individuals to achieve
the objectives of the
annual business
plan.
The deferred
element ensures that
the final value of the
annual incentive is
linked to the
longer-term value of
the Group.
Annual bonuses will be determined by
reference to performance, measured
over one financial year.
The maximum annual bonus that may
be awarded to any Executive Director
will be 150% of salary.
Any bonuses awarded will be subject to
a mandatory deferral which is normally
50% of any bonus earned where the
maximum bonus opportunity is 150%
of salary, and 40% of any bonus
earned where the maximum bonus
opportunity is below 150% of salary.
Once the shareholding requirement has
been met, annual bonus deferral may
be reduced by up to 50%.
Deferred bonuses will be transferred
into shares, to be held for a three year
retention period, under the terms of
the Deferred Bonus Plan.
Deferral may operate so that shares will
be held beneficially by the Executive
Director during this period, in which
case dividends will be payable on
shares during such period. The deferral
may alternatively be achieved by the
grant of a share award or nil cost
option in lieu of the deferred portion of
the bonus, in which case an additional
payment in cash or shares may be
made to reflect dividends that may
have been earned during the period
from grant to vesting.
The annual bonus including cash paid
or deferred element of the bonus may
be subject to Malus or Clawback.
Details of Malus & Clawback terms are
set out below.
The performance measures,
weightingsand targets for the annual
bonus willbe set by the Committee
onan annualbasis.
Performance measures will normally
include tests of both business and
individual performance.
The weighting for each objective willbe
determined annually by the Committee
to reflect the strategic importance
ofeach objective for theyear ahead.
For financial measures, the Target level
of performance will result in a payment
of 50% of the maximum award. The
Committee will determine the Target
level of remuneration on the basis that it
feels isstretching and challenging. Below
Target, payment will increase between
Threshold performance andTarget
pay-out, on a straight- lineor graduated
basis. Above Target, payment will
increase on a straight-line or graduated
basis up to 100% for Maximum
performance. For non-financial
measures, as far as practicable similar
principles will apply to target setting.
The Committee will have the discretion
to override vesting levels if it determines
the result of the performance targets
does not accurately reflect the financial
health of the Company.
All annual bonus payments
andawardsare made at the discretion
of the Committee and the terms
oftheawards may be amended by
theCommittee at any time, provided
that they remain within the terms
ofthis policy.
VARIABLE REMUNERATION continued
Purpose and link to strategy Operation and opportunity Performance
Long Term Incentive Plan
To incentivise key
individuals to achieve
key long term
objectives, in line
with the Group’s
long-term strategy.
To create alignment
between executives
and shareholders.
To retain key
individuals.
Awards will be made annually,
conditional on the achievement of
three-year performance conditions.
Anyvested shares will be subject to
anadditional two-year holding period.
Award levels for any Executive
Directorwill be up to a maximum
of200% ofsalary.
Awards will normally be made in the
form of nil cost options, exercisable
between the third and such anniversary
of grant as determined at grant, up to
the tenth anniversary (subject to the
additional two-year holding period),
although awards may be made in other
forms. An additional payment in cash
or shares may be made to reflect
dividends that may have been earned
on the proportion of the award that
vests during the period from grant
tothe end of the holding period.
Awards will be subject to Malus &
Clawback provisions. The malus
provisions give the Committee
discretion to reduce the level of an
award prior to vesting in the event
ofpersonal misconduct or if events
have happened that caused the
Committee to determine the grant
levelwas notappropriate.
Details of Malus & Clawback termsare
set out overleaf.
The performance measures used,
theweighting on each measure, the
definition of the measures and the
performance targets will be determined
by the Committee, considering the
balance of strategic priorities for the
Company for the upcoming three-year
performance period.
In addition, the Committee may
consider setting an underpin condition
which must be satisfied prior to vesting
of an award.
No awards will vest for performance
below Threshold, 25% of each element
will vest for achieving Threshold
performance, increasing on a
straight-line or graduated basis to
100% for Maximum performance.
The Committee will be able to override
award vesting levels if it determines the
result of the performance targets does
not accurately reflect the financial
health ofthe Company.
Following grant of an award, the
Committee will have power to amend
performance measures and targets if
events happen that mean they are no
longer a fair test of performance, but
not so as to make the assessment of
performance materially less onerous.
Coats Group plc Annual Report and Accounts 202579 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Shareholding Requirements
Executive directors will be required to attain a
shareholding, over a five-year period,
equivalent to 200% of salary. This
requirement will apply for a two-year period
post termination of employment, based
onthe lower of the in-post requirement
andtheexecutive director’s actual
shareholding on termination of employment.
Any shares purchased by the executive
director may be excluded from the
calculation on cessation.
Malus & Clawback
The Committee may, at any time within three
years of a cash bonus payment, LTIP or
deferred bonus award vesting, determine
that malus and/or clawback shall apply ifthe
Committee determines that:
– there was a material misstatement of
thefinancial statements of the Company
upon which the performance targets were
assessed, or an erroneous calculation was
made in assessing the extent to which
performance targets were met;
– the award holder has contributed to
serious reputational damage to the
Company or one of its business units;
– the award holder’s conduct has amounted
to serious misconduct, gross negligence,
fraud, dishonesty, a breach of the Code of
Business Conduct or material wrongdoing;
– where corporate failure or failure in risk
management has occurred; or
– where an executive has been categorised
as a Good Leaver by the Committee by
way of retirement, but subsequently
takes up comparable employment with
another company.
The Committee considers the Malus &
Clawback provisions set out above to be
appropriate considering the nature of the
business and its business cycle. Provisions are
in place to ensure that Malus & Clawback
can be operated effectively if required.
Performance Measure Selection
andTarget-Setting
The measures used under the annual bonus
and LTIP are selected annually to reflect the
most important measures for the upcoming
year and include both business and individual
performance objectives. Performance targets
are set taking into account the objectives for
the business and the need to successfully
progress the execution of the Group’s long
term growth strategy. Targets are also
established on the basis that they should be
stretching within an acceptable degree of risk.
REMUNERATION POLICY REPORT CONTINUED
The above charts give an illustrative value of the remuneration package for each of the
Executive Directors in the upcoming year.
– Minimum is the base salary and pension contributions as of 1 January 2026, plus the value
of benefits as disclosed in theFY2025 single figure table
– On target is the aforementioned minimum plus an assumed 50% pay-out of the annual
bonus opportunity and 50% vesting of LTIP awards to be made inFY2026
– Maximum is the aforementioned minimum with an assumed 100% pay-out of the annual
bonus opportunity and fullvesting of LTIP awards to be made inFY2026
– Maximum + share price assumption shows maximum plus a 50% share price appreciation
on the shares subject to vested LTIP awards to be made in FY 2026.
Below
target
Target
Maximum
£879k
100%
42% 27% 31%
27% 34% 39%
Below
target
Target
Maximum
100%
46% 25% 30%
29% 32% 38%
£2,078k
£3,923k
£3,278k
£534k
£1,174k
£2,162k
£1,813k
Fixed Pay
Chief Executive Officer
Chief Financial Officer
Annual Bonus LTIP LTIP with 50% Share price growth
Illustrations of the application of remuneration policy (figures in £000)
Coats Group plc Annual Report and Accounts 202580 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
REMUNERATION POLICY REPORT CONTINUED
Legacy Matters in Respect of Future
Executive Directors
In the event that an executive of the Group is
promoted to the Board, the Company retains
the discretion to honour any existing
remuneration commitments. In particular,
any long term awards, both cash and share
awards, will continue to be capable of
vesting on their existing terms. This would
include awards previously granted under
legacy Group incentive plans. This would also
include any awards granted under the Long
Term Incentive Plan or Deferred Bonus Plan
prior to the individual being appointed as a
Director (although it would be intended that
any such awards would in any event comply
with the Policy as set out above).
Recruitment Policy
When appointing an executive director,
including a promotion to the Board of
anexecutive from within the Group,
theCommittee will offer the recruit a
remuneration package that it believes is
appropriate, taking into account the skills and
experience of the individual and the need to
attract, retain and motivate individuals of the
appropriate calibre. Indetermining the
remuneration package that may be offered to
a new executive director, the Committee may
also take into account external and internal
comparisons and relevant market factors, as
well as any otherfactors which the Board
determines tobe relevant.
In the event of an interim internal promotion,
additional remuneration may be provided by
way of a temporary allowance as opposed
toan increase in base salary.
External Appointment
In the cases of hiring or appointing a new executive director from outside the Company, the
Committee may make use of all the existing components of remuneration, as follows:
Component Approach Maximum annual grant value
Base salary Salaries for new appointees will be determined by reference to
the relative skills and experience of the individual, the market
competitive level of pay in other companies and any other
relevant external or internal comparisons.
N/A
Benefits New appointees will be eligible to receive benefits which may
include (but are not limited to) the provision of private medical
insurance, ill-health protection and/or life insurance and a
cash-for-car-allowance, and, where appropriate, relocation,
international transfer or tax equalisation arrangements.
N/A
Pension New appointees will receive pension contributions or cash
alternative in lieu of any pension benefit.
Currently 12% of
salary if UK based
Annual
bonus
The structure described in the policy table will apply to new
appointees with the relevant maximum being prorated to reflect the
proportion of employment over the year. Targets for the personal
element will be tailored to each executive director. The Committee
retains discretion to set different targets for a new executive
director in the year of appointment to the other executive
director(s)’ targets depending on the timing of their appointment.
150% of salary
LTIP New appointees will be granted awards under the LTIP on the same
terms as other executive directors, as described in the policy table.
200% of salary
For external appointments, the Committee may determine that there may be exceptional
circumstances where it would be appropriate, in order to secure the right candidate,
tocompensate for lost awards incurred by an individual as a result of leaving their former
employer. In the case of any long-term incentive awards, save where such awards are close
tovesting, any such award on appointment would normally be granted as a share-based
award, subject to such vesting and/or performance conditions as the Committee determines
tobe appropriate, either under a one-off arrangement or under the terms of the Long Term
Incentive Plan. In determining the terms of any such awards, the Committee would take
account of the vesting schedule and conditions attached to the forfeited awards, but also other
factors that it determines to be relevant, including the need to suitably incentivise and retain
the individual during the initial years of their applicable appointment.
Coats Group plc Annual Report and Accounts 202581 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Executive directors will be able to accept
non-executive appointments outside the
Company (as long as this does not lead to a
conflict of interest) with the consent of the
Board, as such appointments can enhance
their experience and add value to the
Company. Any fees received (excluding
positions where the executive director is
appointed as the Company’s representative)
may be retained by the executive director.
Policy on Payment for Loss of Office
of Executive Directors
In the case of an executive of the Group
whois promoted to the Board, the terms
oncessation of office or employment would
begoverned by the terms of the individual’s
existing employment agreement. In addition,
the terms of any incentive awards made
tothe individual prior to being appointed
asan executive director, and the terms of
any pre-existing participation in a pension
scheme, would govern the treatment of
such arrangements.
The policy that applies to the appointment
ofany executive director is shown below.
The remuneration package may include
thecomponents of remuneration
describedbelow in the Executive
Directors’Remuneration Policy table
subjectto the relevant limits as set out
inthefollowing tables.
Notice Periods, Salary and
ContractualRights
The notice periods and contractual rights
ontermination that would be included in
aservice contract offered to an external
recruit are set out above. In addition,
theexecutive director would be entitled
toaccrued but untaken holiday.
In respect of any awards made to an executive
director under any all-employee share plan, the
same leaver conditions willapply as apply in
respect of employees generally.
Discretion
In considering the exercise of its discretion
under the incentive arrangements, as
referred to above, or otherwise in connection
with the cessation of office or employment
of an executive director, the Committee will
take into account all relevant circumstances,
having regard to their duties as directors.
In doing so, factors that the Committee may
take into account shall include, but not be
limited to, considering the best interests of
the Company, whether the executive director
has presided over an orderly handover, the
contribution of the executive director to the
success of the Company during their tenure,
the need to ensure continuity, the need to
compromise any claims that the executive
director may have, whether the executive
director received a PILON and whether, had
the executive director served out their notice,
a greater proportion of the outstanding
award may have vested.
Internal Promotion
In cases of appointing a new executive director by way of internal promotion, the Committee
and Board will be consistent with the policy for external appointees detailed above.
Service Contracts for Executive Directors
The Committee’s policy is for service contracts for executive directors to reflect the Committee’s
understanding of best corporate practice for listed companies. However, in the event that an
executive of the Group is promoted to the Board, the Committee may include terms in any
new service contract which are consistent with that individual’s existing service contract and
legacy arrangements.
Subject to this, the key elements of a service contract offered to a UK-based executive director
appointment are:
Notice
period
Contracts are rolling with an indefinite term. The notice period is no more than 12 months
(in the case of notice being given by the Company or the Executive Director).
An executive director may be placed on garden leave during some or all of the notice period.
Payment
in lieu of
notice
(‘PILON’)
Save in circumstances justifying summary termination, employment may be terminated
without notice by paying a PILON comprising basic salary and contractual benefits. Subject
toany legacy terms, the Company will have discretion to pay on a phased basis, which will
normally be subject to mitigation.
Pension The service contract may include entitlement to pension benefits, subject to the provisions
and any limits set out in this Policy and the pension scheme rules or an annual allowance.
Theentitlement to pension benefits may continue during any notice period.
Benefits The service contract may include entitlement to other benefits, subject to the provisions
andlimits set out in this Policy. The entitlement to benefits may continue during any
notice period.
Incentive
plans
The executive director will be eligible to be considered (at the Committee’s discretion)
toparticipate in the annual bonus and long term incentive arrangements operated from time
to time, subject to the provisions and limits set out in this Policy. The terms of such
arrangements would apply in the event of a cessation of office or employment, as set out
inthe table below.
Service contracts offered to non-UK based, external appointments will generally be in line with
the provisions set out above, subject to any local law requirements. All Executive Director letters
of appointment are available for inspection at the Company’s registered office during normal
hours of business, and will also be available at the Company’s AGM.
REMUNERATION POLICY REPORT CONTINUED
Coats Group plc Annual Report and Accounts 202582 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Other
The Company may enter into new contractual and financial arrangements with a departing
executive director in connection with the cessation of office or employment, including (but not
limited to) in respect of settlement of claims, confidentiality, restrictive covenants and/or
consultancy arrangements, where the Committee determines it necessary orappropriate
todoso. Appropriate disclosure of any such arrangement would be made.
Corporate Actions
On a corporate action affecting the Company, the rules of the Long Term Incentive Plan and
Deferred Bonus Plan will apply. In summary, on a change of control, awards will vest, subject to
the performance conditions and, unless the Committee determines otherwise, time pro-rating.
Deferred shares awarded under the terms of the Deferred Bonus Plan, which represent
deferrals of previously earned bonuses, will vest in full. Under the Long Term Incentive Plan and
Deferred Bonus Plan, the Committee may determine that a demerger or similar event shall
constitute a corporate action.
On a variation of share capital or similar event, the Committee may make such adjustment
toawards under the Long Term Incentive Plan and the Deferred Bonus Plan as the Committee
considers appropriate.
Treatment of Variable Pay on Cessation
Incentive plans Good leavers Other leavers
Annual
bonus
The Company does not consider it appropriate to set
defined ‘good leaver’ and ‘bad leaver’ conditions in
respect of the annual bonus arrangements. Instead,
where an executive director has ceased to hold office
or employment with the Group, or is under notice,
other than due to personal misconduct, the
Committee will determine whether or not the
individual will be eligible to receive any annual bonus.
If the Committee determines that a departing
Executive Director is eligible to receive a bonus, the
amount of the bonus will be assessed by reference
to the performance targets set for that financial year.
The deferral requirement in respect of any bonus
awarded will continue to apply if the Committee
so determines.
The amount of any bonus will be pro-rated for time,
provided that the Committee has discretion to waive
time pro-rating.
Where the reason for cessation
ofoffice or employment is
personal misconduct, no bonus
willbe payable.
In other cases, unless the
Committee determines that the
departing Executive Director
iseligible to receive a bonus,
nobonus will be payable.
Incentive plans Good leavers Other leavers
Long
Term
Incentive
Plan
A departing executive director will be a ‘good leaver’
on ceasing employment due to retirement, injury,
disability, ill-health, death, redundancy or the sale of
a business or subsidiary out of the Group.
Awards held by ‘good leavers’ will normally vest on
the normal vesting date (i.e. the third anniversary of
grant) to the extent that the performance conditions
are met, and prorated for time.
Any awards that the Committee determines to have
vested will ordinarily be subject to the additional
two-year holding period, unless the Committee
determines in its discretion to accelerate vesting to
the date of cessation. The Committee also will have
discretion to waive the time pro-rating requirement.
Unvested awards will lapse in full
where the cessation of office or
employment is on grounds of
personal misconduct.
In other cases, the Committee will
have discretion to determine that
unvested awards will vest (in which
case the terms applicable to ‘good
leavers’ will apply). Unless this
discretion is exercised, unvested
awards will lapse.
Deferred
Bonus
Plan
Unvested deferred shares (which represent deferrals
of earned bonus) will vest in full on the normal
vesting date (i.e. the third anniversary of grant),
provided that the Committee will have discretion
toaccelerate vesting to the date of cessation.
Where the reason for cessation
ofoffice or employment is
personal misconduct, unvested
awards lapse in full.
Non-Executive Directors
The Chair and Non-Executive Directors receive an annual fee (normally paid in monthly
instalments). Non-Executive Directors (excluding the Chair) may also receive an additional
feeinrespect of travel if over five hours of one-way flight time is required to attend a Board
meeting, up to an annual cap. The fee for the Chair is set by the Remuneration Committee
andthe fees for the Non-Executive Directors are approved by the Board, on the
recommendation of the Chair. In determining the appropriate level of fees, the Committee
andthe Chair consider advice from external sources and data on the fee levels in other similar
companies. Noindividual is present when their own level of remuneration is discussed.
REMUNERATION POLICY REPORT CONTINUED
Coats Group plc Annual Report and Accounts 202583 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
For non-executive directors, the remuneration arrangements will be in line with those set out in
the relevant Section below.
Non-Executive Directors’ Remuneration Policy Table
Element Purpose and link to strategy Operation
Fees To attract and retain a high-calibre
chair and non-executive directors by
offering market competitive fee levels.
The Chair is paid an all-inclusive fee for
allBoard responsibilities. The other
Non-Executive Directors receive a basic
Board fee, with supplementary fees
payable for additional Board
responsibilities and travel (if appropriate).
The fee levels are reviewed on a periodic
basis and may be increased, taking into
account factors such as the time
commitment of the role and market
levelsin companies of comparable
sizeandcomplexity.
Additional payments may be made above
the basic Board fee if duties significantly
exceed expectations.
Supplementary
fees
Supplementary fees may be payable
totheSenior Independent Director, Chairof
the Audit and Risk Committee, Chair of the
Remuneration Committeeand the Director
responsible for employee engagement or
any other roles with similar additional
responsibility and/or time commitment.
Element Purpose and link to strategy Operation
Travel fees The Board benefits from the diverse
global business experience of its
Non-Executive Directors, some of
whom do not reside in the UK.
However, the increasingly global
nature of our business means that our
Non-Executive Directors are required
to travel, with recent meetings held in
Brazil, China, Mexico, Sri Lanka, the
USA and Vietnam. The Board wishes
to recognise the additional time
commitment required for Non-
Executive Directors (excluding Chair)
intravelling to Board meetings.
An additional fee may be payable to any
Non-Executive Director (excluding the
Chair) who is required to travel for more
than a specified length of time to attend
aBoard meeting. The maximum total fees
for travel will be subject to an annual cap.
For 2026, a travel fee will be payable for
any journey longer than 5 hours of
one-way flight time and the maximum fee
will be capped at the equivalent of 5 trips.
The length of journey and maximum cap
will be reviewed annually to ensure their
continued relevance and appropriateness.
No benefits or other remuneration will be provided to Non-Executive Directors. However in some cases reimbursement of business
travel, entertaining and accommodation expenses claimed in accordance with the UK expenses policy may be deemed taxable
benefits under UK tax rules. The Company pays the resulting tax liability. In addition, professional fees may be paid to assist a
non-UK tax resident Director submit appropriate UK income tax returns; the cost of these fees may be regarded as a taxable benefit,
in which case the Company may pay the resulting tax liability.
In determining the level of fees for a new non-executive director, the Committee will take into
account all factors it determines tobe relevant, including the skills and experience of the
individual and the need toattract non-executive directors of the appropriate calibre. The
Committee will alsotake into account the level of fees offered by equivalent companies.
Under their respective Non-Executive Director appointment letters, all of the Non-Executive
Directors are entitled to receive an annual fee. None of the appointment letters contains a set
term of office. None of the appointment letters contains a notice period. There are no
provisions in the Non-Executive Directors’ letters of appointment that would give rise to any
compensation payments forloss of office.
Removal of the Non-Executive Directors would be governed by the Articles of Association of
the Company. All Non-Executive Director letters of appointment areavailable for inspection at
the Company’s registered office during normal hours ofbusiness, and will also be available
attheCompany’s AGM.
REMUNERATION POLICY REPORT CONTINUED
Coats Group plc Annual Report and Accounts 202584 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Development of this Policy
Prior to setting the Remuneration Policy,
theCommittee considers the pay structures
elsewhere in the Group. The approach to
benchmarking identifies similar comparator
companies in each local market that the
Company wishes to recruit from; the same
underlying principles of fairness, transparency
and market competitiveness are applied to
executive appointments and to local
remuneration arrangements. Benefit
provision follows the same principles of being
in line with local market practice with an
objective of promoting mental and physical
well-being. There is agreater level of ‘at risk’
remuneration formore senior roles, reflecting
the extent towhich pay is conditional on
company performance.
The Committee annually reviews the details,
market competitiveness and quantum of
theremuneration policies in each of the
Company’s major markets and compares
that, where applicable, to senior
leadershiproles based in that location.
Thisconsideration is also extended to the
implementation of the Company’s Living
Wage policy, which is reviewed annually
toensure it is relevant to all our employees
and corrective actions are identified to
increase compensation where this is required.
Committee takes into account the impact
onand comparison with pay arrangements
throughout the Company. The Committee
does not directly consult with employees
when determining remuneration policy.
The structure of remuneration for Coats’
senior management team is consistent with
that for the Executive Directors. Senior
executives participate in annual bonus
andlong-term incentive arrangements
basedonperformance measures that
arealigned tothe measures applicable
toExecutive Directors.
Statement of Consideration
ofShareholder Views
The Committee remains committed to
shareholder dialogue and takes an active
interest in voting outcomes. The Committee
sought the views of our major shareholders
before submitting this Policy for shareholder
approval at the 2026 AGM.
The Committee may, without seeking
shareholder approval, make minor changes
to this Policy that do not have a material
advantage to Directors.
REMUNERATION POLICY REPORT CONTINUED
A copy of the Remuneration Policy will be made
available at coats.com/board-committees
Coats Group plc Annual Report and Accounts 202585 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Directors’ remuneration report
DIRECTORS’ REMUNERATION REPORT
This Annual Report on
Remuneration has been
prepared in accordance with
the relevant provisions of the
Companies Act 2006 and as
prescribed in The Large and
Medium-sized Companies and
Groups (Accounts and
Reports) Regulations 2008 as
amended (the Regulations).
Where indicated, information
has been audited by Ernst &
Young LLP.
The Annual Report on Remuneration will be
subject to an advisory vote at the AGM on
20 May 2026.
Executive Directors
David Paja was appointed to the Board on
1 September 2024 and took on the role of
Group CEO on 1 October 2024. Hannah
Nichols was appointed to the Board on
24 April 2025 and appointed as Group Chief
Financial Officer immediately following the
AGM on 21 May 2025. Jackie Callaway, our
former Group Chief Financial Officer,
stepped down from the Board on 21 May
2025, remaining with the Group until
31 May 2025. Jackie’s stepping down was
mutually agreed as part of leadership
succession planning at Coats.
Single Total Figure for Executive Directors’ Remuneration for 2025 (audited
information)
£000’s
David Paja Hannah Nichols Jackie Callaway
2025 2024 2025 2024 2025 2024
Base salary 729.0 240.0 318.9 – 197.8 453.1
Benefits 52.6 15.7 13.5 – 11.6 28.1
Other – – – – – –
Pension 87.5 28.8 38.3 – 23.7 54.4
Total Fixed 869.1 284.5 370.7 – 233.1 535.6
Annual bonus 830.3 360.0 301.0 – 159.6 593.4
LTIP – 1,007.7 – – 311.7 623.3
Total Variable 830.3 1,367.7 301.0 – 471.3 1,216.6
Total 1,699.3 1,652.2 671.7 – 704.4 1,752.2
The figures in the table above have been
calculated on the basis of the following:
– David Paja’s remuneration has been
disclosed from commencement of
employment on 1 September 2024,
resulting in the 2024 figures being
pro-rated for his part year service.
– Hannah Nichols’ remuneration has been
disclosed from commencement of
employment on 24 April 2025. She
received a base salary of £465,000
(pro-rated).
– Benefits: this is the value of all benefits,
including a car allowance, private medical
insurance, life insurance and income
replacement insurance, tax return support
where applicable and legal fees where
applicable. A car allowance of £20,000
per annum was paid to David Paja, with
an allowance of £15,000 (pro-rated) per
annum paid to Hannah Nichols and
Jackie Callaway.
– Pension: represents the value of all
employer contributions to any pension
plan or cash payments paid in lieu of a
pension benefit. No Executive Director
participates in any defined benefit pension
arrangement. All Executive Director
pension benefits are based on 12% of
base salary, being the rate received by the
majority of the UK workforce.
– Annual bonus: is the total value in cash
and shares of the annual bonus that is
attributable to each year. 50% of the
2025 bonus outcome for David Paja and
40% for Hannah Nichols will be awarded
in shares under the terms of the Deferred
Annual Bonus Plan. Jackie Callaway’s
bonus was pro-rated to 31 May 2025,
and in line with normal practice at Coats
for a mutually agreed leaver at this stage
in the year, payable in cash. Hannah
Nichols’ bonus was pro-rated from the
commencement of her employment on
24 April 2025.
– The value of the LTIP awards shown for
2024 have been restated to reflect the
value on the vesting date (06March 2025)
including dividend equivalents accrued to
this date, using the mid-market closing
share price on 6 March 2025 of £0.8595.
– Of the amount shown for 2024, £152,278
of this value represents the value attributable
to share price growth over the three-year
period (excluding dividend equivalents) to
Jackie Callaway. No discretion was exercised
in respect of these amounts.
– The value of the LTIP awards shown for
Jackie Callaway for 2025 reflect the
vesting of LTIP awards with a performance
period ending in 2025. Of the amount
shown, £9,837 of this value represents
the value attributable to share price
growth for Jackie Callaway, over the
three-year period, based on the average
share price for the last three months for
2025. No discretion was exercised in
respect of these amounts.
– Hannah Nichols’ buyout award has been
excluded from the table as its expected
vesting is unknown, further information
will be provided in next years report.
– The value of the LTIP award shown for
David Paja in 2024 reflects the buy-out
award granted on 6 September 2024
based on the share price immediately prior
to grant of £0.998. The award was
granted over 1,009,693 shares, in partial
compensation for awards forfeited from
his previous employer in connection with
joining Coats and reflects the structure of
the forfeit award. The award is not subject
to performance conditions, but remains
subject to continued employment. Further
details were set out in last year’s report.
Coats Group plc Annual Report and Accounts 202586 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Annual Bonus Outcome 2025 (audited information)
The annual bonus for 2025 was determined in accordance with the details provided in the
2024 Directors’ Remuneration Report. Details of the bonus measures and opportunities are
provided in the table below.
The measures were selected to incentivise a balance of outcomes that reflected the strategic
priorities of the Group.
Annual bonus 2025 Weighting Achievement
Performance
achieved in
2025
Performance Measure
Threshold
(10% of
max)
Target
(50% of
max)
Maximum
(100% of
max)
Outcome as
% of max
Group Sales $m 15% 1,459 1,483 1,516 1,405 0%
Earnings Before Interest and
Taxation (EBIT) $m
20% 262 277 292 277 10%
EBIT Margin (%) 20% 18.5% 18.7% 18.9% 19.7% 20%
Free Cash Flow (adjusted) (FCF) $m 25% 105 120 135
162 25%
Individual objectives
1
20% – – – See below 20%
Total 100% 75%
1. Individual performance relates to incumbent Executive Directors. Details of the former Group CFO’s bonus are included below.
Targets were set in relation to budget for the 2025 financial year. OrthoLite was excluded from
the bonus targets and actual performance against the targets, VizLite™ was treated in a similar
manner but was considered deminimis. The impact of Americas Yarns has been removed from
the 2025 bonus targets and outcome as a discontinued item, in line with the approach taken in
prior years. These decisions were taken to ensure that the targets were tested on a consistent
basis and were no more or less challenging than when originally set. All figures reflect the 2025
Plan exchange rates.
The performance reflected in the table above reflects the figures disclosed in this Annual Report
adjusted to exclude the impact of OrthoLite and the following exchange rate fluctuations
during the year of $17.6m for Sales, $2.3m for EBIT, and $0.9m for FCF respectively.
For the 2025 annual bonus, challenging individual objectives were established by the
Committee for each Executive Director that reflected activities and initiatives intended to
improve the performance of the Group. The objectives established and assessed for 2025 are
reflected in the section below.
Personal Objectives Linked to 2025 Bonus
At the beginning of the year, the Committee determined that the following personal objectives
would be linked to 20% of the maximum annual bonus outcome. All personal objectives were
equally weighted.
Objective Outcome
Group CEO –
David Paja
Deliver 9.4% PM EBIT (excluding
Yarns) and new PM strategy
Overall, PM EBIT margin finished the year over
11%, significantly exceeding the target set
Deliver 2025 sustainability
targets
Over delivery against all 2025 sustainability targets
has been delivered with key action plans to ensure
robust performance towards our 2030 goals. See
page 15 for sustainability performance in 2025.
The Committee determined the outcome of 20% out of a possible 20% of
maximum bonus as performance significantly exceeded target.
Group CFO –
Hannah Nichols
Develop tax optimisation
strategy and overdrive
vs 2025 plan
Delivered an ETR of 29% by the end of 2025 with
an actionable plan in place to deliver a materially
lower medium term target rate. Performance
exceeded the target given the above expected
progress made in 2025.
Table at least one actionable
acquisition project for approval
Completed successful acquisition of OrthoLite which
was achieved following the delivery of an accelerated
process covering both the final commercial terms of
the transaction and its financing.
The Committee determined the outcome of 20% out of a possible 20% of
maximum bonus as performance significantly exceeded target.
Former Group
CFO –
Jackie Callaway
Develop tax optimisation strategy
and overdrive
vs 2025 plan
Worked towards the delivery of an ETR of 29%
by the end of 2025. On track establishing a plan
to reduce the Group’s medium term ETR.
Table at least one actionable
acquisition project for approval
Successful progress in relation to headline terms
of the OrthoLite acquisition which remained
on-track at the time of cessation.
The Committee determined the outcome of 10% out of a possible 20% of
maximumbonus as the performance was in line with the Board’s plans but
did not exceed.
The above table includes the targets set and actual performance against them other than
where information is considered price sensitive by the Remuneration Committee.
In making its final determination of performance against the targets, the Committee had
regard to the exceptional financial performance and stakeholder experience during 2025,
including a substantial shareholder return, which resulted in the Committee being comfortable
that paying bonuses in line with the original formulas set was appropriate.
Coats Group plc Annual Report and Accounts 202587 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Summary 2025 Bonus Outcome
The Committee assessed the formulaic outcome and were comfortable that these outcomes
were reflective of a holistic assessment of performance delivered during the year, reflected
shareholder value, and the experience of employees during the year, who have generally
excelled against their bonus targets. As a result, no adjustments to the formulaic outcomes
were made.
Bonus opportunity
(% of salary)
2025 bonus outcome
(% of maximum) Bonus outcome (£)
Group CEO –
David Paja
150% 75% £830,273
Group CFO –
Hannah Nichols
125% 75% £300,984
1
Former Group CFO –
Jackie Callaway
125% 65% £159,568
2
1. The amount of bonus for Hannah Nichols reflects the time between commencement of employment on 24 April 2025 and the
end of the financial year.
2. The amount of bonus for Jackie Callaway was pro-rated to 31 May 2025.
Long Term Incentive Award Vesting (audited information)
On 17 March 2023, Jackie Callaway was granted an award over 786,352 shares under the
terms of the Long Term Incentive Plan in the form of a nil cost option. The awards vest
according to performance over the period from 1 January 2023 to 31 December 2025 (referred
to as 2023 LTIP). Due to Jackie stepping down from the Board, her outstanding awards were
pro-rated, resulting in 567,921 shares remaining under the 2023 LTIP after the cessation of
employment, with these shares subject to the performance targets applicable to the award
prior to vesting.
As set out in the table overleaf, 67.8% of the shares remaining outstanding will vest on
17 March 2026.
The performance measures were based upon Total Shareholder Return performance (TSR),
Earnings Per Share CAGR (EPS), average Cash Conversion and sustainability measures relating
to Coats Group plc. The achievement of the Long Term Incentive Plan performance measures
and the consequent vesting of the awards are shown in the table below.
2023 LTIP: Performance Period 1 January 2023 to 31 December 2025
Measure Weighting
Threshold
(25%
vesting)
Mid
(62.5%
vesting)
Maximum
(100%
vesting) Actual
Outcome as
% of max
LTIP
EPS CAGR 30% 5% CAGR
10%
CAGR
15%
CAGR
5.7%
CAGR 9.1%
Average Cash Conversion over
3 years 20% 70% 80% 90% 105% 20%
Total Shareholder Return
versus the FTSE 250 excluding
investment trusts 30% Median
62.5th
Percentile
Upper
Quartile
62
Percentile 18.7%
Sustainability (vs 2022
baseline) 20% 20%
Reduction in Scope 1 and 2
emissions 5% 15% 15.75% 16.5% 30% 5%
Growth in sustainable
(non-virgin oil-based) materials 5%
growth to
46%
growth to
48%
growth to
50% 52% 5%
Reduction in waste to landfill 5%
65%
reduction
70%
reduction
75%
reduction 100% 5%
Percentage representation of
women in leadership
population 5% 21% 23% 25% 33% 5%
Total 67.8%
The EPS targets were set in 2023, EPS was adjusted for the impact of IAS 19 and wider pension
finance charges and benefits of the pension buy-in which de-risked the pension scheme. These
adjustments were consistent with the original intent when the targets were set of incentivising
underlying performance. The Committee is comfortable this approach ensured the targets were
no more or less challenging than originally intended when the target was set. There was no
material impact on the Cumulative Free Cash Flow target over the performance period. As
intended at the time the targets were set, the Committee intends to treat in-flight LTIP awards
in a similar manner, with final determination being made prior to vest.
Coats Group plc Annual Report and Accounts 202588 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Share Awards Granted in 2025 (audited information)
The following share awards were granted to Executive Directors during the financial year ended
31 December 2025. The targets for achieving minimum performance for each measure, where
these apply, are shown in the table later on this page.
The share price shown was used to calculate the number of shares awarded under the terms of
the Coats Group plc Long Term Incentive Plan and is based on the average mid-market closing
price for the five dealing days immediately preceding the grant date.
Awards were granted as nil cost options under the terms of the Coats Group plc Long Term
Incentive Plan that was approved by shareholders on 22 May 2024. Awards were also granted
to over 100 senior managers on similar terms. The LTIP awards will vest, subject to the
achievement of performance measures, on the third anniversary of the date of grant (Hannah
Nichols’ award vests on the third anniversary of the main grant date, being 14 March). For
Executive Directors, an additional two-year holding period applies. Dividend equivalents,
delivered in shares, also apply on shares that vest.
Executive
Director
Date of
grant
Number of
options
awarded
Face value at
award date
Award
value as a
% of
salary
Share price
to calculate
no of
shares
% vesting for
minimum
performance
Performance
period Vesting date
David
Paja
14 Mar
25
1,541,472 £1,260,000 175% £0.8174 25% 1 Jan
2025 to
31 Dec
2027
14 Mar
2028
Hannah
Nichols
16 Dec
25
698,897 £558,000 120% £0.7984
No awards were granted to Jackie Callaway in 2025. Hannah Nichols’ award was granted at
120% of base salary which included a reduction to the normal award level of the Group CFO
role of 150% of salary as a result of Jackie joining employment during the financial year.
Long Term Incentive Plan Awards Performance Measures
The performance measures applicable to awards granted in respect of the three-year
performance period that commenced on 1 January 2025 (LTIP 2025) are shown below.
Measure Weighting
Threshold
(25% vesting)
Maximum
(100%
vesting)
EPS CAGR 30% 4% 12%
Total Shareholder Return versus the FTSE 250 excluding
investment trusts
25% Median Upper
quartile
Average Cash Conversion 20% 70% 90%
Sustainability (see details below) 25% See below See below
The EPS CAGR measure is based on normalised EPS, adjusted to exclude the impact of
exceptional costs such as property gains or losses and the impact of variation of the IAS 19
(pensions finance) charge.
Total Shareholder Return is the total return to shareholders, which includes share price growth
and ordinary dividends. The performance measure is assessed against a comparator group
consisting of the FTSE 250, excluding investment trusts.
Average Cash Conversion is defined as the average of the adjusted Free Cash Flow divided by
normalised Attributable Profit for each of the three years in the performance period. The
adjusted Free Cash Flow is after maintaining the company’s asset base, i.e. operating cash flow
minus capital expenditures, adjusted for exceptional items such as property gains or losses.
The Sustainability targets are as follows:
Sustainability Threshold (25% vesting) Maximum (100% vesting)
Absolute reduction in Scope 1 and 2 emissions in tonnes
from 2019 baseline
55% 65%
Absolute reduction in Scope 3 emissions in tonnes
from 2019 baseline
22% 26%
Percentage of females in senior leadership roles 33% 37%
The Committee will test the extent of achievement against each equally weighted target
shown above.
Coats Group plc Annual Report and Accounts 202589 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
The range of performance targets were set with reference to internal planning and external
market expectations for the Company’s future performance and are considered similarly
challenging to the targets set in prior years allowing for current market conditions.
TheCommittee would consider appropriate adjustments to the financial performance targets
to extent the Company undertook material acquisitions or divestments, or share buybacks,
during the period from 1 January 2025 to 31 December 2027.
The Committee may adjust the overall level of vesting if it considers that the vesting outcome
does not reflect the overall performance of the Company or stakeholder experience during the
performance period.
Hannah Nichols Buy-out Awards
To facilitate the recruitment of Hannah Nichols, it was necessary to agree to grant replacement
awards in lieu of those forfeited in connection with joining Coats. The terms of the awards
forfeited were replicated in the replacement awards which were converted into Coats shares.
The share price used to convert the value of Hill & Smith shares into Coats shares on joining
was the mid-market closing price for the trading day immediately preceding commencement
ofemployment of £0.73.
The replacement awards were granted as nil cost options and were intended to replace
the 2023 and 2024 long-term incentive plan that Hannah Nichols forfeited on cessation
ofemployment with her previous employer, Hill & Smith.
The structure of the awards mirror the structure of the awards forfeited on joining Coats.
Thesame performance conditions that applied at Hill & Smith continue to apply (50%
relatingto EPS and 50% relating to TSR as set out in the Hill & Smith 2023 and 2024
Directors’Remuneration Report).
The awards, subject to performance, remain eligible to vest in line with their original vesting
dates (or the date we become aware of the vesting outcome if later) and are subject to two
year holding periods. Any vested shares (net of tax) need to be retained during the holding
period and will count towards meeting the Company’s share ownership guidelines.
Executive Director
Date of
grant
Number of
shares
awarded
Face value at
award date
Share price
immediately
preceding
grant
% vesting
for minimum
performance
Performance
Period Vesting date
Hannah Nichols 16 Dec 25
862,643 £688,734
£0.7984
20%
1 Jan 23
- 31 Dec 25
16 Mar
2026
771,229 £615,749
1 Jan 24
- 31 Dec 26
19 Mar
2027
The above buyout awards were granted under a standalone award agreement as permitted by
the UK Listing Rules in connection with a recruitment. The terms of the awards are generally
aligned with those of the Company’s 2024 Long Term Incentive Plan (approved by shareholders
at the 2024 AGM) albeit the awards can only be satisfied by market purchase shares.
Non-Executive Directors
Fees were increased by 2.5% with effect from 1 July 2025. Therefore, the base fee increased
to£69,839; the supplementary Chair and Senior Independent Director fees increased to £13,857
and the fee for the Designated Non-Executive for Workforce Engagement increased to £8,314.
The fee for the Chair payable to David Gosnell following the extension of his term was
increased by 2.5% to £263,938, aligning to market rates.
Single Total Figure for Non-Executive Directors’ Remuneration for 2025
(audited information)
Non-Executive Directors, excluding the Chair, who are required to travel long haul (more than five
hours one-way) to meetings are entitled to an additional travel allowance of £1,500 for each round
trip subject to a maximum of five trips per annum. Additional fees may be paid foradditional duties
and time commitments that are undertaken outside the terms of appointment.
Base fee £000
Supplementary
fee £000 Benefits
1
£000 Other fee
2
£000 Total £000
2025
2024
2025
2024
2025
2024
2025
2024
2025
2024
David Gosnell 260.7 253.8 – – – 4.6 – – 260.7 258.3
Sarah Highfield
4
69.0 67.1 13.7 8.3 – 0.5 3.0 3.0 85.7 78.9
Echo Lu 69.0 67.1 13.7 13.3 – – 1.5 1.5 84.2 82.0
Stephen Murray 69.0 67.1 13.7 8.3 – – 3.0 3.0 85.7 78.4
Fran Philip 69.0 67.1 8.2 8.0 4.0 2.2 6.0 7.5 87.2 84.8
Jakob Sigurdsson 69.0 67.1 – – – – 3.0 3.0 72.0 70.1
Srinivas Phatak
5
69.0 22.7 – – – 1.5 – 70.5 22.7
Wu Gang 34.9 – – – – – – – 34.9 –
Total 709.6 612.2 49.3 37.8 4.0 7.2 18.0 18.0 780.8 675.2
1. The figure under benefits for Non-Executive Directors relates to support with tax returns and any taxable expenses reported to
the relevant tax authorities during the year.
2. Fees under Other fee represent the £1,500 per trip travel fee payable for Directors (excluding the Chair) who travel long haul to
attend Board meetings.
3. Steve Murray was appointed Senior Independent NED in May 2024.
4. Sarah Highfield was appointed Chair of the Audit and Risk Committee in May 2024.
5. Srinivas Phatak was appointed to the Board effective 1 September 2024.
6. Wu Gang was appointed to the Board effective 1 July 2025.
Coats Group plc Annual Report and Accounts 202590 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Payments for Loss of Office (audited information) & Payments to Former
Directors (audited information)
As referenced in the 2024 Annual Report & Accounts, as a result of leaving Coats as part
ofamutually agreed leadership transition process, the Committee approved the remuneration
payments set out below for Jackie Callaway which were consistent with the default treatment
and discretions afforded to the Committee under her contract and the relevant incentive plans:
– Salary and benefits: Jackie received her normal salary and benefits up to and including
31 May 2025. There were no payments made in connection with any unexpired notice,
i.e.there were no further payments relating to her salary or benefits made thereafter.
– Annual Bonus: Jackie remained eligible to participate in the Coats Group Annual Bonus Plan
pro-rata for her period of employment in the 2025 financial year. The bonus will be paid in
cash on the normal payment date, remaining subject to malus, clawback and all the rules of
the plan. This reflects standard practice at Coats. Further details are set out on page 87.
– Deferred Annual Bonus Plan Awards: outstanding awards (see page 93), will vest in full
on their normal vesting date, subject to the rules of the DABP. Any dividend equivalents
accrued in respect of these awards will be paid in the form of additional shares and capable
of exercise thereafter.
– Long Term Incentive Plan Awards: in line with the discretion afforded to the Committee
under the long-term incentive plan, as a result of leaving employment by mutual agreement,
the Committee resolved to pro-rate her outstanding awards for the period worked during
the vesting period, and will continue to vest on the normal vesting date, subject to the
achievement of the relevant performance targets. The awards will remain subject to the
two-year holding period and the LTIP rules. Jackie will remain eligible to exercise these up
toone month following the end of the relevant holding period. Any accrued dividend
equivalents will be paid in the form of additional shares.
– Post-cessation shareholding guidelines: Jackie is contractually bound to hold 200% of
her base salary for two years following the cessation of employment.
– Contribution to legal costs: Jackie received a contribution of £3,000 inrespect of the
legal costs incurred in connection with the cessation of employment.
No other payments were made in connection with loss of office or to former Directors in the
year that have not otherwise been disclosed.
Directors’ Service Agreements and Appointment Letters
All Executive Directors have service agreements which are rolling with an indefinite term and
provide for a notice period from either side of 12 months and all of this notice is unexpired.
No appointment letters for Non-Executive Directors, including the Chair, contain a notice
period. All service agreements and appointment letters for Directors are available for inspection
at the Company’s registered office during normal hours of business and will also be available
for inspection at the Company’s Annual General Meeting.
Non-Executive Director Latest Letter of Appointment
David Gosnell 26 February 2024
Sarah Highfield 16 October 2023
Echo Lu 28 February 2024
Stephen Murray 26 February 2024
Fran Philip 28 February 2024
Srinivas Phatak 09 August 2024
Jakob Sigurdsson 26 February 2024
Wu Gang 23 June 2025
Coats Group plc Annual Report and Accounts 202591 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Statement of Directors’ Shareholding and Share Interests (audited information)
The interests of the Directors who held office during the year, and their closely associated persons (if any), in the shares, options and listed securities of Coats Group plc and its subsidiaries, are
listed below. For David Paja and Hannah Nichols, the below represents interests as at 31 December 2025 and for Jackie Callaway the below represents interests as at 31 May 2025.
Shareholding requirement in 2025 Shares beneficially owned
Deferred bonus shares subject to vesting
period
LTIP share options (subject to performance
conditions) Share options (no performance conditions)
Number of shares
3
Equivalent % of salary Condition met? 1 Jan 2025
1
31 Dec 2025
2
1 Jan 2025
1
31 Dec 2025
2
1 Jan 2025
1
31 Dec 2025
2
1 Jan 2025
1
31 Dec 2025
2
Executive Director
David Paja 1,828,388 200% Yes 300,000 1,374,675 -– 220,210 – 1,541,472 1,009,693 1,009,693
Hannah Nichols 1,152,033 200% No – 155,962 – – – 2,332,769 – –
Jackie Callaway 1,204,072 200% Yes 333,489 861,777 673,892 705,558 2,511,987 887,385 907,006 983,842
Chair and Non-Executive Directors
David Gosnell N/A 1,717,470 1,995,940 – – – – – –
Sarah Highfield N/A – 72,214 – – – – – –
Echo Lu N/A 22,874 22,874 – – – – – –
Stephen Murray N/A 100,000 138,961 – – – – – –
Srinivas Phatak N/A – 22,727 – – – – – –
Fran Philip N/A 75,984 88,971 – – – – – –
Jakob Sigurdsson N/A 77,244 109,711 – – – – – –
Wu Gang N/A – 58,441 – – – – – –
1. Or date of appointment, if later.
2. Or date of cessation, if earlier.
3. The target number of shares is based on the average share price for 2025 which was 80.73p, Jackie Callaway’s requirement represents the number fixed on cessation.
4. Jackie Callaway’s beneficial holding at 31 May 2025 includes 528,288 shares held in the corporate nominee due to the unexpired holding period following the exercise of her 2021 LTIP.
The Executive Directors’ shareholding requirement must be met within five years of their appointment to the Board. There is no requirement for Non-Executive Directors. For the purposes of
achieving this target, the total number of shares beneficially owned by the Executive Director or a closely associated person is considered as well as the estimated post-tax number of vested but
unexercised share options or deferred bonuses that are not subject to a performance condition. All unexercised Long Term Incentive Plan awards granted to Executive Directors include a
requirement to retain any vested shares (save for any shares that may be sold to satisfy income tax liabilities) until a minimum of the fifth anniversary of the date of grant.
Coats Group plc Annual Report and Accounts 202592 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Details of scheme interests as at 31 December 2025 (audited information)
David Paja
Award Vesting date
Retention
period Expiry date Number Status
Performance
conditions?
Deferred bonus shares subject to vesting period
DABP25 14 Mar 28 N/A 14 Mar 31 220,210 Unvested No
LTIP share options (subject to performance conditions)
LTIP25 14 Mar 28 14 Mar 30 14 Mar 32 1,541,472 Unvested Yes
Share options (no performance conditions)
LTIP - Buyout Award 01 Sep 27 N/A 06 Sep 34 1,009,693 Unvested No
Hannah Nichols
Award Vesting date
Retention
period Expiry date Number Status
Performance
conditions?
LTIP share options (subject to performance conditions)
LTIP25 14 Mar 28 14 Mar 30 16 Dec 32 698,897 Unvested Yes
Buyout - 2023 16 Mar 26 16 Mar 28 16 Dec 35 862,643 Unvested Yes
Buyout - 2024 19 Mar 27 19 Mar 29 16 Dec 35 771,229 Unvested Yes
Sub-total 2,332,769
Jackie Callaway
1
Award Vesting date
Retention
period Expiry date Number
2
Status
Performance
conditions?
Deferred bonus shares subject to vesting period
DABP23 03 Mar 26 N/A 03 Mar 33 205,993 Unvested No
DABP24 07 Mar 27 N/A 07 Mar 34 209,190 Unvested No
DABP25 14 Mar 28 N/A 14 Mar 31 290,375 Unvested No
Sub-total 705,558
LTIP share options (subject to performance conditions)
LTIP23 17 Mar 26 17 Mar 28 17 Mar 33 567,921 Unvested Yes
LTIP24 22 Mar 27 22 Mar 29 22 Mar 34 319,464 Unvested Yes
Sub-total 887,385
Share options (no performance conditions)
1
DABP22 04 Mar 25 N/A 04 Mar 32 258,709 Vested No
LTIP22 04 Mar 25 04 Mar 27 04 Mar 32 725,133 Vested No
Sub-total 983,842
1. Jackie’s awards are stated after being subject to pro-rata reduction for cessation.
2. Excludes dividend equivalents on vesting.
Share Options (exercised during the year)
During her employment, Jackie Callaway exercised her 2021 LTIP over 1,000,328 shares
(inclusive of dividend equivalents), for a price of £0.831091 per share, The post-tax number of
shares are being held in our corporate nominee account where they will remain for the
remainder of any applicable holding periods.
After Jackie left employment with the Group, she exercised the DABP 22 and LTIP 22 awards
detailed above on 18 June 2025 for a share price of £0.771136 per share.
No other share options were exercised by the Directors during the year. Exercises by Former
Directors have been held, to the extent required, in the corporate nominee account and will be
released for sale once the restrictions have lifted.
No options have been exercised or transactions entered into by any Director between the year
end and the signing of this report.
The mid-market price of Coats Group plc shares at 31 December 2025 was 84.55 pence and
the range during the year was 68.15 pence to 96.05 pence.
Coats Group plc Annual Report and Accounts 202593 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Chief Executive Total Remuneration for the Last 10 Years
1
Executive Director 2016 2017 2018 2019 2020 2021 2022 2023 2024 2024 2025
Name Paul Forman Rajiv Sharma Rajiv Sharma Rajiv Sharma Rajiv Sharma Rajiv Sharma Rajiv Sharma Rajiv Sharma Rajiv Sharma David Paja David Paja
CEO single figure remuneration (£’000) 1,760.3 2,566.9 3,356.7 2,228.1 787.4 1,758.5 1,868.7 2,900.8 2,573.1 1,652.2 1,699.3
Annual bonus as a % of maximum opportunity 77.0% 79.5% 66.7% 67.3% 5.0% 97% 84% 66.5% 100% 100% 75%
LTIP award as a % of maximum opportunity 43.6% 60.0% 84.2% 95.8% 0% 0% 18.2% 96.27% 80.2% N/A N/A
1. The CEO figures for 2017, 2018 and 2019 reflect the appointment of Rajiv Sharma and in particular the increase in benefits reflect the relocation and expatriate support that was offered to him following his appointment as CEO on 1 January 2017. The 2024 figures
reflect the appointment of David Paja and departure of Rajiv Sharma.
Review of Performance
The graph below shows the difference between investing £100 in the Company and the constituents of the FTSE 250 from 1 January 2016 to 31 December 2025. It is assumed dividends are
reinvested over that period. The Board feels the FTSE 250 provides an appropriate comparator given the Company’s market capitalisation and its presence on the London Stock Exchange.
FTSE 250 Index
Coats
0
50
100
150
200
250
300
350
400
450
500
Dec 25Dec 24Dec 23Dec 22Dec 21Dec 20Dec 19Dec 18Dec 17Dec 16Dec 15
Coats Group plc Annual Report and Accounts 202594 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Director’s Remuneration – Annual Percentage Change
The table below shows the percentage change in the annual remuneration of Directors and the average UK colleague from 2020 onwards.
Salary or fees
3
(% change) Benefits
2
(% change) Bonus (% change)
2024 to
2025
2023 to
2024
2022 to
2023
2021 to
2022
2020 to
2021
2024 to
2025
2023 to
2024
2022 to
2023
2021 to
2022
2020 to
2021
2024 to
2025
2023 to
2024
2022 to
2023
2021 to
2022
2020 to
2021
David Paja 203.8% N/A N/A N/A N/A 234.6% N/A N/A N/A N/A 130.6% N/A N/A N/A N/A
Hannah Nichols N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Jackie Callaway
2
-56.3% 7.6% 5% 4% 1.4% -58.7% 28.9% 2.4% 35.7% -0.6% -73.1% 65.4% -9.7% -5.5% 100%
David Gosnell 2.7% 1.5% 0% 37.7% 163.4% 0% 0% 0% 0% 0% N/A N/A N/A N/A N/A
Sarah Highfield 9.3% 21.4% N/A N/A N/A 0% 0% N/A N/A N/A N/A N/A N/A N/A N/A
Echo Lu 2.7% 3.9% 6.6% 6% 22.5% 0% 0% 0% 0% 0% N/A N/A N/A N/A N/A
Stephen Murray 9.3% 18.7% 7.4% 0% N/A 0% 0% 0% N/A N/A N/A N/A N/A N/A N/A
Srinivas Phatak 2.7% N/A N/A N/A N/A 0% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Fran Philip 0.7% 3.6% 6.4% 11.1% 2.9% 80.6% 0% 0% 0% 0% N/A N/A N/A N/A N/A
Jakob Sigurdsson 2.6% 6.2% 4.9% 2.4% -6.8% 0% 0% 0% 0% 0% N/A N/A N/A N/A N/A
Wu Gang N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Average of all employees
1
4.2% 7.6% 5.5% 3.1% 0% -2.0% 4.0% 10.8% 0% 0% -22.7% 140% -13.8% N/A N/A
1. The average of all employees reflects the total number of employees based in the UK in the relevant years. The UK employee population includes employees across all levels of the organisation and for prior year comparisons, excludes acquisitions or disposals during
the relevant year.
2. Non-Executive Directors do not receive benefits-in-kind, however, figures are disclosed in the benefits Single Figure table to reflect business expense payments and tax support, where applicable, that are regarded as taxable by the UK tax authority. Year-on-year
variations in the reported benefits value have been ignored for this purpose unless there is the provision of a material specific benefit or if the difference in benefit is greater than £5,000 from one year to the next.
3. Hannah Nichols, David Paja, Srinivas Phatak, Sarah Highfield, Stephen Murray and Wu Gang do not have five years’ worth of disclosure as they joined the business during this time. David Paja and Jackie Callaway’s increased compensation reflects the shorter
employment period in 2024 and 2025 respectively.
4. To enable comparisons, non-executive leavers and joiners figures have been annualised. The figures for Stephen Murray, Sarah Highfield, David Gosnell, and Echo Lu in 2024, 2022 and 2021 reflect their increased fees following their appointments as SID, Audit Chair,
Chair, and Remuneration Committee Chair respectively.
Alignment of executive director and typical UK workforce remuneration in 2025
Wider workforce Element Executive directors
Market & role-based, reviewed annually Base Pay Market-competitive, reviewed annually
Company contribution/cash allowance (12% salary) Pension Aligned to UK workforce majority (12% salary)
Health insurance, EAP, car allowance, life insurance, income
protection
Benefits Health insurance, car allowance, life insurance, income
protection
Performance bonuses linked to financial, strategic &
individual goals (where appropriate)
Short-term Incentives Performance bonus linked to financial, strategic and
personal objectives
LTIP with 3-year performance period Long-term Incentives LTIP with 3-year performance period + 2-year holding period
Fixed pay Annual bonus (STIP) LTIP
Coats Group plc Annual Report and Accounts 202595 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Relative Importance of Spend on Pay
The table below shows the total pay for all of the Company’s employees compared to other key
financial indicators.
Year to
31December 2025
2
Year to
31December 2024
%
change
Employee costs (US$m) 300.6 291.1 3%
Distributions to shareholders
1
(US$m) 54.1 46.5 16%
Average number of employees 19,134 15,514 23%
Revenues from continuing operations (US$m) – CER basis 1,464.9 1,423.7 3%
Operating profit pre-exceptional (US$m) – CER basis 289.8 270.1 7%
1. By way of dividends.
2. Details of any adjustments are set out on in the notes to the financial statements.
Additional information on number of employees, total revenues and profit has been provided
for context. The figures for employee costs, average number of employees, revenues and
operating profit in 2025 and 2024 have been stated on the basis of continuing operations only
which includes the acquired OrthoLite business from the respective acquisition date of
29 October 2025 to 31 December 2025. The figures for revenues and operating profit are on a
constant exchange rate (CER) basis with amounts for 2024 restated at 2025 exchange rates.
CEO Pay Ratio
Coats is not required to publish a CEO pay ratio as the Group employs fewer than 250
employees in the UK. However, the Company publishes a disclosure on a voluntary basis. This
ratio shows the CEO’s pay relative to our UK employees.
Salary Salary plus bonus Total pay
Financial
Year
Calculation
methodology P25 P50 P75 P25 P50 P75 P25 P50 P75
2019 A 21 12 8 37 20 11 58 36 19
2020 A 20 12 7 20 12 7 20 14 7
2021 A 16 12 8 37 27 13 41 27 12
2022 A
1
15 10 6 34 21 10 42 23 11
2023 A
1
14 9 5 28 17 8 50 30 14
2024 A
1
11 8 5 27 18 10 37 24 14
2025 A 12 7 5 22 14 8 21 13 8
1. During 2022, Coats acquired Texon which had approximately 100 UK-based employees prior to the site closure. These
employees have been excluded from the analysis, in prior years, however, based on high-level analysis, Coats was comfortable
that the inclusion of these employees would not have had a material impact on the overall historical CEO pay ratios, and that
the ratios are reflective of the overall Group.
The ratios have remained relatively stable over the year, with a slight reduction in total pay
reflecting the fact the LTIPs have not yet vested for the Group CEO. The ratios in 2024 were
influenced by a change in Group CEO during the year and a change in UK headcount.
The lower quartile, median and upper quartile employees in the table below were identified on
the basis of full-time equivalent total remuneration and benefits in the 12-month period ending
31 December 2025 (this is referred to as methodology A according to the Regulations). This
calculation methodology was selected as it was the closest comparative methodology to the
basis on which the remuneration for the Group CEO is disclosed for the year ended
31 December 2025. The UK workforce is the most appropriate comparator group because the
Group CEO is employed by the UK parent company and the pay of the global workforce is
subject to very significant fluctuations due to local inflationary pressures and foreign exchange
rate movements.
The Committee has considered the pay data for the three individuals and concludes that the
median ratio is a fair reflection of pay and reward policies for the UK workforce as a whole.
In addition, the data was compared to the average of five individuals above and below their
remuneration in terms of total compensation and mix of pay for the year to 31 December
2025, to ensure the percentile ranking for each individual was comparable to all individuals
within that quartile grouping. No adjustments have been made to the data other than to
ensure full-time equivalence. Where a performance bonus is paid, an assumption about the
estimated attainment for some of the personal objectives have been made. The Committee
is satisfied that any assumptions do not have a material impact on the selected reference
employee nor on the calculated ratio. The remuneration details for the individuals are
shown below.
CEO Lower quartile Median Upper quartile
Base Pay £729,000 £62,982 £101,478 £136,500
Base and Bonus £1,559,273 £71,883 £114,827 £186,551
Total Remuneration £1,699, 348 £79,441 £133,880 £211,181
A significant proportion of the Group CEO’s remuneration is appropriately linked to the
Company’s performance and share price movements, which may fluctuate materially over time.
Therefore, to enable a more meaningful comparison to be made, we have also presented a
ratio based on base pay plus annual bonus.
Coats Group plc Annual Report and Accounts 202596 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Corporate Governance Code Requirements
Remuneration arrangements are clearly communicated and straightforward. Incentives are
linked to the key performance metrics of sales, profit and cash generation. These measures are
aligned throughout the Group’s incentive schemes and there is a balance between overall
Group performance across all three metrics and each individual local business unit, where
relevant. Personal performance is also an element, both in incentives and in salary reviews, but
there is an overall link to the achievement of company performance to ensure that the risk of
excessive rewards in cases of poor performance is managed. Teamwork is a key strength and
cultural aspect for Coats, and incentives are managed to ensure that there is cooperation and
flexibility in delivering performance and to ensure that incentive structures do not negatively
impact the culture of the organisation.
Although the Company does not formally consult with employees in determining the
Remuneration Policy, there are several routes by which employee engagement is achieved. Fran
Philip is the Designated Non-Executive for Workforce Engagement and is also a member of the
Remuneration Committee. During 2025, a programme of meetings was conducted by Fran
with business unit leadership teams to discuss a variety of issues of interest to employees. All
employees were encouraged to raise any areas of concern, including matters of remuneration,
directly or through line managers. Further details of the Board’s engagement with the
workforce is set out on page 61. In addition, during 2025 the Committee considered in-depth
for all employees the competitiveness of the remuneration offering, the level of any minimum
Living Wage and whether any employees were below this level, as well as the gender profile
and pay differentials of the workforce across the main operating countries.
Statement of Implementation of Remuneration Policy for 2026
Base salaries for Executive Directors and fees for the Non-Executive Directors will be reviewed
on 1 July 2026.
David Paja’s current base salary is £738,000 and he receives a car allowance of £20,000 and a
pension contribution (aligned to the UK workforce) of 12%.
As set out in last years Directors’ Remuneration Report, from appointment as Group CFO
Hannah Nichols received a base salary of £465,000. She also receives a car allowance of
£15,000 and a pension benefit (aligned to the UK workforce) of 12%.
All Executive Directors also receive private medical insurance, life and income replacement
insurance and tax return support where it is considered necessary.
In line with the Policy, it is expected that the LTIP award for the Group CEO will be 175% and
the maximum annual bonus opportunity will remain 150%. The Group CFO is anticipated to
receive an LTIP of 150% and a maximum annual bonus opportunity of 125% of base salary.
A minimum shareholding requirement of 200% applies during employment and a post-
employment shareholding requirement applies to all Executive Directors for two years following
termination of employment, based on the lower of 100% of the minimum shareholding
requirement or the actual shareholding at termination.
As detailed in the Chair’s Introductory Letter, the annual bonus performance measures are
unchanged relative to 2025, save for a slight adjustment to the underlying definition of free
cash flow to free cash flow pre dividends and M&A. To better align with the metrics included in
our published medium term financial framework, minor changes to the LTIP measures are
being made for 2026. A 30% weighting is being retained on EPS, a slightly higher weighting
on a revised cash metric (25% on free cash flow versus last year where we had a 20%
weighting on average cash conversion), 25% on relative TSR and 20% on sustainability
measures (reduced from a 25% weighting as a result of a reduction to the number of targets
applying in 2026 at three from five in 2024). The full metrics are set out below:
Annual bonus Long Term Incentive
Measure Weighting Measure Weighting
Sales 15% Earnings Per Share CAGR 30%
Earnings Before Interest
and Taxation Margin
20% Cumulative Free
Cash Flow
25%
Earnings Before Interest
andTaxation
20% Total Shareholder Return
compared to the FTSE 250
25%
Free Cash Flow 25% Sustainability 20%
Individual objectives 20%
Annual bonus targets are based on EBIT, EBIT margin, free cash flow and individual objectives,
excluding the impact of any exchange rate fluctuations. The Company does not publish annual
bonus targets in advance as these figures are considered commercially sensitive but will do so
at the time the bonus award is disclosed.
The Long Term Incentive Plan awards granted in 2026 will be subject to targets that will vest at
a level no more than 25% (for each measure) for threshold performance and at 100% (for
each measure) for performance at maximum. There will be straight-line vesting between
threshold, maximum and any intervening points.
The specific targets for both the annual bonus and Long Term Incentive Plan are set by the
Committee to be challenging having regard to internal planning expectations, external
expectations for the Company’s performance and economic conditions.
With the target setting process ongoing as at the date of signing the Annual Report, it is the
Committee’s intention to publish the targets in the announcement notifying the market of the
grant of the award.
Coats Group plc Annual Report and Accounts 202597 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REMUNERATION REPORT CONTINUED
Consideration by the Directors of Matters Relating to Directors’
Remuneration
In reviewing remuneration arrangements, the Committee considers the terms and conditions
of employees across the Group. In this regard, Fran Philip, as a member of the Committee,
is able to provide insight and support from her role as the Designated Non-Executive for
Workforce Engagement.
The responsibilities of the Committee are set out in the Corporate Governance section of the
Annual Report and the Committee’s Terms of Reference. The Committee also received
assistance from the Company Secretary (who also acted as Secretary to the Committee),
Chief People Officer and the Reward function. No Directors are involved in deciding their
own remuneration.
The Remuneration Committee receives independent external advice on executive remuneration
from Korn Ferry, a member of the Remuneration Consultants Group and signatory to its Code
of Conduct, who were appointed as remuneration advisors in 2022. Korn Ferry, who do not
have any connection with any Directors of the Company, provide advice to the Remuneration
Committee which supports robust and sound decision making. The Remuneration Committee
is satisfied that its remuneration advisors act independently. Korn Ferry fees for advising the
Remuneration Committee during 2025 were £95,700 (excl VAT).
Statement of Voting at the General Meeting
The table below sets out the result of the votes for the latest Directors’ Remuneration Report
and Remuneration Policy, at the 2025 AGM and 2023 AGM respectively.
Votes for Votes against
Votes
total
Votes
withheld
Number % Number % Number Number
Approval of
Remuneration
Report
(resolution 2)
1,311,577,545 95.16% 66,707,827 4.84% 1,378,285,372 13,759
Approval of
Remuneration
Policy
(resolution 3)
1,412,457,273 99.74% 3,641,947 0.26% 1,416,099,220 70,423
Committee performance and effectiveness
The Committee effectiveness in respect of the year ended 31 December 2025 was evaluated
externally. The Committee considered the key points that were identified in previous year’s
assessment. The 2025 evaluation indicated that the Committee’s ways of working and
dynamics were working effectively and noted areas they can further enhance their performance
in 2026.
Signed on behalf of the Remuneration Committee by:
Echo Lu
Chair, Remuneration Committee
4 March 2026
Coats Group plc Annual Report and Accounts 202598 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
DIRECTORS’ REPORT
Coats Group plc (Company) is the
holding company of the Coats group
of companies (Group).
Annual General Meeting
The Annual General Meeting (AGM) of the
Company will be held on 20 May 2026 at
14.30 at FTI Consulting, 200 Aldersgate,
London EC1A 4HD.
Corporate Governance Statement
Together with this Directors’ Report, the
Corporate Governance Statement, prepared
in accordance with rule 7.2 of the Financial
Conduct Authority’s Disclosure Guidance and
Transparency Rules, comprises the following
sections of the Annual Report: the ‘Strategic
Report’; the ‘Corporate Governance Report’;
the ‘Audit and Risk Committee Report’; the
‘Nomination Committee Report’; and the
‘Remuneration Committee Report’. As
permitted by legislation, some of the matters
required to be included in the Directors’ Report
have been included in the Strategic Report by
cross-reference, including details of the
Group’s financial risk management objectives
and policies, business review, future prospects,
stakeholder engagement, Section 172
Statement and environmental policy.
The 2024 UK Corporate Governance Code is
available from the Financial Reporting
Council’s website (frc.org.uk).
Directors
The names and biographical details of the
current Directors are shown on pages 52 to
53 of this Annual Report. Particulars of their
emoluments and beneficial and non-
beneficial interests in shares are given in the
Directors’ Remuneration Report on pages 86,
90 and 92 to 93.
The appointment and removal of directors
are governed by the Company’s Articles of
Association and the Companies Act 2006.
The Directors may, from time to time,
appoint one or more directors.
In accordance with the provisions of the
Code, all Directors will retire and submit
themselves for election or re-election at the
forthcoming AGM.
Directors’ Powers
The Board manages the business of the
Company under the powers set out in the
Company’s Articles of Association. These
powers include the Directors’ ability to issue
or buy back shares. Shareholders’ authority
to empower the Directors to make market
purchases of up to 10% of its own ordinary
shares is sought at the AGM each year (as set
out in the Share Capital section below).
The Company’s Articles of Association can
only be amended, or new Articles adopted,
by a resolution passed by shareholders in a
general meeting by at least three quarters of
the votes cast. The Company adopted new
Articles at the AGM held in May 2021.
In the event that a Director raises any
concerns about the operation of the Board or
management of the Company that cannot
be resolved, a record would be kept in the
Board minutes, and this should also be noted
in the Director’s resignation letter.
Further discussion of the Board’s activities,
powers and responsibilities appears within
the Corporate Governance Report on pages
48 to 61. Information on compensation for
loss of office is contained in the Directors’
Remuneration Report on page 91.
Directors’ Indemnities
The Directors of the Company have entered
into individual deeds of indemnity with the
Company which constitute ‘qualifying
third-party indemnity provisions’ for the
purposes of the Companies Act 2006. The
deeds indemnify the Directors, and the
directors of the Company’s subsidiary
companies, to the maximum extent
permitted by law. The deeds were in force
for the whole of the year, or from the date of
appointment for those appointed during the
year. In addition, the Company had Directors’
and Officers’ liability insurance cover in place
throughout the year.
“The AGM of the Company will
be held on 20 May 2026 at
14.30 at FTI Consulting, 200
Aldersgate, London EC1A 4HD.”
Share Capital
Details of the Company’s issued share capital,
together with details of the movements in the
Company’s issued share capital during the
year, are shown in note 26.
The Company has one class of ordinary
shares with a nominal value of five pence
each (ordinary shares), which does not carry
the right to receive a fixed income. Each
share carries the right to one vote at general
meetings of the Company. There are no
restrictions or agreements known to the
Company that may result in restrictions on
share transfers or voting rights in the
Company. There are no specific restrictions
on the size of a holding, on the transfer of
shares, or on voting rights, all of which are
governed by the provisions of the Articles of
Association and prevailing legislation.
Shareholder authority for the Company to
purchase up to 159,781,039 (representing
approximately 10% of the Company’s issued
shares as at the latest practicable date before
the publication of the notice of the Annual
General Meeting held in May 2025) of its
own ordinary shares was granted at the
2025 AGM. No shares were purchased
pursuant to this authority during the year.
Shareholder authority for the Company to
allot ordinary shares up to an aggregate
nominal amount of £53,255,020 was
granted at the 2025 AGM.
319,562,076 shares were allotted pursuant
to this authority during the year.
Coats Group plc Annual Report and Accounts 202599 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Concern is raised via
whistleblowing procedure
Acknowledgement is sent to the
whistleblower within seven days of
receipt of the concern.
The investigation team, independent of
the relevant operational business or
function, is nominated by the Chief
Legal & Risk Officer and Group
Company Secretary, Chief People Officer
and where appropriate the relevant
GET member.
Allegation is investigated by the
nominated team
Findings are presented to the Chief Legal
& Risk Officer and Group Company
Secretary, Chief People Officer and, where
appropriate, the relevant GET member to
decide appropriate remedial actions and
any controls/process enhancements.
The outcome of the investigation is
appropriately communicated to the
whistleblower once any remedial actions
and/or any controls/process
enhancements (even in circumstances
where the allegation has not been
upheld) have been determined.
Reports and outcomes are reviewed
by the Board and the Audit and
Risk Committee.
The issued share capital of the Company at
31 December 2025 was approximately
£79,890,520, divided into 1,917,372,461
ordinary shares.
Since 31 December 2025, 0 new shares have
been issued as a result of the exercise of
share options by the Company’s share option
scheme participants, and the total issued
share capital at 4 March 2026 is
1,917,372,461 ordinary shares. The
Company’s ordinary shares are listed on the
London Stock Exchange.
The register of shareholders is held in the UK.
The number of ordinary shares of the
Company in which the Directors were
beneficially interested as at 31 December
2025 is set out in the Directors’
Remuneration Report on pages 92 to 93.
Substantial Interests
Information provided to the Company
pursuant to the Financial Conduct Authority’s
Disclosure Guidance and Transparency Rules
(DTRs) is published on a Regulatory
Information Service and on the Company’s
website. The following information has been
received, in accordance with DTR 5, from
holders of notifiable interests in the
Company’s issued share capital.
% as at
31 December 2025
% as at
4 March 2026
Nature of
holding
Artemis Investment
Management LLP
5.47 5.47 Indirect
FIL Limited
9.91 9.91 Indirect
* % holding based on total number of shares in issue at the time of respective notification.
The Company has not been notified of any
other substantial interests in its securities.
The Company’s substantial shareholders do
not have different voting rights. The Group,
as far as is known by the Company, is not
directly or indirectly owned or controlled by
another corporation or by any government.
Change of Control
The Company is not party to any significant
agreements that would take effect, alter or
terminate upon a change of control of the
Company following a takeover bid. However,
the Group's Revolving Credit Facility
Agreement, Term Loan Facilities Agreement
and US Private Placement would terminate
upon a change of control of the Company.
The Company does not have agreements
with any Director or employee providing
compensation for loss of office or
employment that occurs because of a
takeover bid, except for provisions in the
rules of the Company’s share schemes which
result in options or awards granted to
employees vesting on a takeover.
Political Donations
No contributions were made to political
parties during the year (2024: £nil).
Whistleblowing Procedure
A whistleblowing, ethics and fraud report is a
standing agenda item that is presented
quarterly at Board meetings. Coats has a
well-publicised whistleblowing procedure,
which can be found on our website. This is
designed to empower all employees,
contractors and anyone else who is aware of,
suspects, or is concerned about potential
misconduct, illegal activities, fraud, abuse of
assets or other violations of Company policy/
the Ethics Code to report these confidentially
via email through the Group ethics channel
or via an externally hosted web service
whistleblowing hotline. Doing The Right
Thing and ways to raise concerns are
regularly communicated and discussed.
During the year ended 31 December 2025,
there were 171 whistleblowing concerns
raised (2024: 228). Of these concerns raised,
following investigation, 25% (2024: 16%) of
the closed cases were upheld and 5 cases are
still under review. In the case of substantiated
concerns, disciplinary action, up to and
including termination, was taken whenever
there was any evidence of misdemeanour,
and training and enhanced controls were
implemented wherever appropriate.
DIRECTORS’ REPORT CONTINUED
Coats Group plc Annual Report and Accounts 2025100 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Going Concern
The Company’s business activities, together
with the factors likely to affect its future
development, performance and position,
areset out in the Chair’s statement.
In addition, note 34 to the financial
statements addresses the Group’s objectives,
policies and processes for managing its
capital; its financial risk management
objectives; its financial instruments and
hedging activities; and its exposures to
creditrisk and liquidity risk.
The Directors believe that the Group is well
placed to manage its business risks successfully.
The Board expects to be able to meet any
actual and contingent liabilities from existing
resources. Further information on the
Group’s cash and borrowings is set out
innote 30(g).
The Directors are satisfied that the Company
and Group have sufficient resources to
continue in operation for the period from
thedate of this report to 30 June 2027.
Accordingly, the Directors consider that the
going concern basis of accounting is
appropriate for the Company and the Group,
and the financial statements have been
prepared on that basis.
DIRECTORS’ REPORT CONTINUED
Greenhouse Gas (GHG) Emissions
Absolute emissions for last four years plus 2019 SBTi baseline
1
Thousand tonnes ofCO
2
e 2019 2019
6
2022 2022
6
2023 2023
6
2024 2024
6
2025
Scope 1 Direct
2
73.5 73.2 59.7 59.6 51.9 52.4 52.4 52.1 48.2
Scope 2 Indirect
3
Location-based 232.6 220.0 201.8 175.0 172.2 155.6 181.2 163.4 167.3
Market-based 190.9 175.3 122.3 116.4 59.3 59.1 37.3 34.5 74.8
Scope 3 Value Chain
4
1009.9 – 944.7 – 824.2 – 865.5 – 806.1
Biogenic Emissions CO
2
5
38.2 49.4 27.5 40.4 24.1 28.2 25.7 28.6 30.7
1. All data is calculated following GHG Protocol guidelines.
2. Direct emissions relate to the use of fuels to generate energy on Group facilities, mainly the use of oil and gas to generate heat in the form of steam for use in processing. On-site generation of electricity using diesel or gas fired generators and the use of diesel, petrol
and LPG for on-site transport is also included. The calculation methodology here is to convert fuel purchased in each country to kWh and then to CO
2
e equivalent using DESNZ conversion factors; the data is consolidated globally.
3. Indirect emissions relate mainly to the purchase of electricity from third-party suppliers. This is mostly taken from local electricity grids, but does include some on-site generation of electricity or steam from third-party suppliers. The methodology converts the electricity
or other purchased energy from kWh to CO
2
e using the country level conversion factors published by the International Energy Authority (IEA) for electricity and DESNZ conversion factors for other energy types. This provides the location-based calculation. Market-
based calculation deducts any certified renewable energy that is purchased by country and continues to calculate the residue of the energy consumed at the IEA country or DESNZ conversion factors as appropriate. The data is then consolidated globally.
4. Scope 3 value chain emissions cover all other emissions that occur throughout our product and business value chain. This includes the cumulative emissions to produce our raw materials and capital equipment and installations, product and people transport at all
stages, downstream processing and consumer use of our sold products and treatment for our waste and our products at the end of their life. The methodology for this varies for each Scope 3 category and follows the GHG Protocol hierarchy of data quality to
determine the best available inventory calculation approach. Calculation models are maintained for each individual category and are updated annually as required and consolidated globally.
5. Biogenic emissions cover CO
2
emissions that occur from burning bio-mass for the purposes of steam generation. These CO
2
emissions are excluded from our reported emissions, however the CH4 and N20 emissions associated with bio-mass are included in
our reported.
6. Scope 1 and 2 emissions have been restated for 2019 to 2024 to reflect the sale of Americas yarns and associated Toluca facility closure and transfer of emissions calculations from manual Excel spreadsheet to use of Normative carbon accounting software.
In assessing the Group’s going concern
position, the Directors have considered a
number of factors, including the current
balance sheet position and available liquidity,
the principal and emerging risks which could
impact the performance of the Group and
compliance with borrowing covenants.
Further details are provided in note 1
oftheaccounts.
Results and Dividends
The results of the Group are shown on page
118 and movements in reserves are set out in
note 27 to the financial statements.
The Board is mindful of the importance of
returns to shareholders and is pleased to
propose a final dividend of 2.28 cents per
share (2024 final dividend: 2.19 cents).
Subject to approval at the forthcoming AGM,
the final dividend will be paid on 28 May
2026 to ordinary shareholders on the register
at 8 May 2026, with an ex-dividend date of
7 May 2026. Alongside the interim dividend
of 1.00 cent per share, this makes atotal of
3.28 cents per share for the full year 2025.
Coats Group plc Annual Report and Accounts 2025101 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Scope 1 and 2 combined absolute emissions on a market-based approach increase by 42%
between 2024 and 2025, however reduced by 30% between 2022 and 2025 versus a 2026
target to deliver a 22% reduction from our 2022 baseline. The increase in Scope 2 market-
based emissions in 2025 is due to a regulatory change in Tamil Nadu, India, which has
transferred ownership rights of energy attribute certificates (EACs) for offsite wind generated
electricity from Coats India to the Tamil Nadu government. Due to this regulatory change, the
proportion of our electricity covered by EACs reduced from 74% in 2024 to 62% in 2025,
however continues to remain well above our level of 29% in 2022.
We remain ahead of our SBTi 2030 Scopes 1 and 2 emissions reduction, having reduced emissions
by 51% from our 2019 baseline. In 2025 we had zero emissions from our UK facilities.
Emissions Intensity
1
Greenhouse gas emissions intensity per unit of production
kg CO
2
e per kg of finishedproduct 2022 2022
3
2023 2023
3
2024 2024
3
2025
Scope 1 & 2
2
1.5 1.5 1.1 1.1 0.8 0.8 1.2
Scope 3 7.8 8.1 7.7 7.6
Greenhouse gas emissions intensity per US$ sales value
tonnes CO
2
e per million $ sales 2022 2022
3
2023 2023
3
2024 2024
3
2025
Scope 1 & 2
2
118.4 124.6 79.7 84.1 59.8 60.4 83.9
Scope 3 614 591 577 550
1. We have used these two ratios for several years. The first uses volume of finished goods production in tonnes (Kilo tonnes used
for Scopes 1 & 2 are 2025: 107, 2024: 111, 2023: 101, 2022: 117 and hence relates directly to the industrial activity that drives
emissions, while the second uses Group turnover and hence relates to overall commercial activity.
2. Figures are calculated on a market basis for Scope 2 emissions.
3. Scope 1 and 2 emissions intensity has been restated for 2022 to 2024 to reflect the sale of the Americas yarns business and
associated Toluca facility closure and transfer of emissions calculations from manual Excel spreadsheet to use of Normative carbon
accounting software.
Our Scope 1 and 2 volume emissions intensity shows a 47% increase between 2024 and 2025,
and a 24% reduction between 2022 and 2025. The increase in 2025 versus 2024 is due to the
previously mentioned regulatory change in Tamil Nadu, India.
Scope 3 volume intensity has reduced by 2.4% from 2024 to 2025 and reflects our further
positive progress made in transition to non-virgin oil-based materials.
The overall value intensity for Scopes 1 & 2 emissions increased by 39% compared to 2024,
with the Scope 3 value intensity reducing by 4.6%.
The difference between the volume and value intensity movements is largely related to
movements in price and product mix.
Full details of all reportable greenhouse gas emissions and on the reporting methodology used
for the above figures can be found in our online Sustainability Report.
Energy Consumption
Million kWh 2022 2022
1
2023 2023
1
2024 2024
1
2025
Direct (Fuels) 311 309 264 263 271 271 255
Indirect (bought electricity
andsteam) 446 417 390 373 410 395 396
Total 756 726 654 637 681 665 651
1. Energy consumption has been restated for 2022 to 2024 to reflect the sale of the US yarns business and associated Toluca
facility closure.
Through 2025 we continued our focus on delivering improvements in energy efficiency, with
our smart energy metering programme extended to include structural footwear components
sites in China. External energy audits were conducted across a number of key sites. Energy
efficiency initiatives focussed on improved use of natural lighting in factories to reduce artificial
illumination requirements, use of invertors to optimise efficiency when running electric motors,
and optimisation projects on compressed air generation.
Energy consumption in our UK facilities in 2025 was 18MWh and represented 0.003% of
global energy consumption.
The following methodology is used for calculating emissions and energy consumption.
Boundary All emissions from operating companies that are consolidated in the Group
financial statements are included. Operational joint ventures are included
based on equity share. OrthoLite emissions are excluded.
Scope 1 Fuel consumption data is collated monthly from all units, based on metered or
invoiced consumption converted into kWh. We use DESNZ published gross
calorific value conversion factors to standardise emissions.
Scope 2 Electricity or steam purchase volumes are collected from all units monthly.
All electricity kWhs are converted using IEA country level conversion factors
for the location-based data. For the market-based data certified renewable
electricity purchased is not included and the remainder is converted using
the same IEA country factors, or country level residual emissions factors
where available.
Scope 3
Scope 3 emissions are calculated annually using multiple sources for data
(including suppliers, lifecycle assessment data providers and industry data
sources). Each category is calculated with the best available set of data sources,
and is consistent over the three reported years. Products & Services, Upstream
Energy and Transport are the main components of Scope 3 emissions.
More detail on methodology is available in our Sustainability Report online.
DIRECTORS’ REPORT CONTINUED
Coats Group plc Annual Report and Accounts 2025102 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Other Information
Other information relevant to this
Directors’ Report, and which is
incorporated by reference, including
information required in accordance with
the UK Companies Act 2006 and Listing
Rule 6.6.1, can be located as follows:
Subject matter Page(s)
Important events since the
financial year-end
171
Likely future developments in
the business
11
Exposures to price risk, credit
risk, liquidity risk and cash
flow risk
162
- 170
Research and development 11
Information on financial
instruments
162
- 170
Environmental policy 16
Energy efficiency 101
-102
Employment of disabled
persons
28
Employee involvement 28, 31,
34 -36
& 61
Stakeholder engagement 30 - 33
Diversity policy 28 & 64
Auditor
A resolution to re-appoint Ernst & Young
LLPas auditor will be proposed at the
2026AGM.
A statement in respect of the current auditor,
Ernst & Young LLP, in accordance with
Section 418 of the Companies Act 2006,
hasbeen included below.
Disclosure of Information to the
Auditor
The Directors who held office at the date
of approval of this Directors’ Report confirm
that, as far as they are aware, there is no
relevant audit information of which the
Company’s auditor is unaware, and each
Director has taken all reasonable steps to
ascertain any relevant audit information
and to ensure that the Company’s auditor
is aware of that information.
Branches
The Company, through various subsidiaries,
has branches in several different jurisdictions
in which the business operates outside the
UK. The full list of subsidiary companies can
be found from page 200.
This Directors’ Report was approved by order
of the Board.
On behalf of the Board
Stuart Morgan
Company Secretary
4 March 2026
DIRECTORS’ REPORT CONTINUED
Coats Group plc Annual Report and Accounts 2025103 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Directors’ Responsibilities
The Directors are responsible for preparing
the Annual 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 are required to
prepare the group financial statements in
accordance with United Kingdom adopted
international accounting standards. The
Directors have chosen to prepare the parent
company financial statements in accordance
with United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards and applicable law),
including FRS 102 ‘The Financial Reporting
Standard applicable in the UK and Republic
of Ireland’. 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
Company and of the profit or loss of the
Company for that period.
In preparing the parent company financial
statements, the Directors are required to:
– select suitable accounting policies in
accordance with Section 10 of FRS 102
and then apply them consistently;
– make judgements and accounting
estimates that are reasonable and prudent;
– present information, including accounting
policies, in a manner that provides
relevant, reliable, comparable and
understandable information;
– state whether applicable UK Accounting
Standards, including FRS 102, have been
followed, subject to any material
departures disclosed and explained in the
financial statements;
– provide additional disclosures when
compliance with the specific requirements
in FRS 102 are insufficient to enable users
to understand the impact of particular
transactions, other events and conditions
on the entity’s financial position and
financial performance; and
– prepare the financial statements on the
going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
In preparing the Group financial statements,
International Accounting Standard 1 requires
that Directors:
– properly select and apply accounting
policies in accordance with IAS 8
Accounting Policies, Changes in
Accounting Estimates and Errors;
– present information, including accounting
policies, in a manner that provides
relevant, reliable, comparable and
understandable information;
– state whether United Kingdom adopted
international accounting standards have
been followed, subject to any material
departures disclosed and explained in the
financial statements; and
– provide additional disclosures when
compliance with the specific requirements
in United Kingdom adopted international
DIRECTORS’ REPORT CONTINUED
accounting standards are insufficient to
enable users to understand the impact of
particular transactions, other events and
conditions on the entity’s financial
position and financial performance; and
– make an assessment of the Company’s
ability to continue as a going concern.
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 the 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.
Under applicable law and regulations, the
Directors are also responsible for preparing a
strategic report, Directors’ report, Directors’
remuneration report and corporate
governance statement that comply with that
law and those regulations. The Directors are
responsible for the maintenance and integrity
of the corporate and financial information
included on the Company’s website.
Directors’ Responsibility Statement
We confirm that to the best of our knowledge:
– the financial statements, prepared in
accordance with the relevant financial
reporting framework, give a true and fair
view of the assets, liabilities, financial
position and profit or loss of the Company
and the undertakings included in the
consolidation taken as a whole;
– the Annual Report including, the Strategic
Report, includes a fair review of the
development and performance of the
business and the position of the Company
and the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks
and uncertainties that they face; and
– the Annual Report and financial
statements, taken as a whole, are fair,
balanced and understandable and provide
the information necessary for shareholders
to assess the Company’s position,
performance, business model and strategy.
This responsibility statement was approved
by the Board of Directors on 4 March 2026
and is signed on its behalf by:
David Paja
Group CEO
4 March 2026
Coats Group plc Annual Report and Accounts 2025104 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Opinion
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF COATS GROUP PLC
In our opinion:
– Coats Group plc’s group financial statements and parent company financial statements
(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 31 December 2025 and of the Group’s profit for the
year then ended;
– the Group financial statements have been properly prepared in accordance with
United Kingdom adopted international accounting standards;
– the parent company financial statements have been properly prepared in accordance
with United Kingdom Generally Accepted Accounting Practice; and
– the financial statements have been prepared in accordance with the requirements of
the Companies Act 2006.
We have audited the financial statements of Coats Group plc (the ‘parent company’) and its
subsidiaries (the ‘Group’) for the year ended 31 December 2025 which comprise:
Group Parent company
Consolidated statement of financial position as
at 31 December 2025
Balance sheet as at 31 December 2025
Consolidated income statement for the year
then ended
Statement of changes in equity for the year then ended
Consolidated statement of comprehensive
income for the year then ended
Related notes 1 to 6 to the financial statements
including a summary of significant accounting policies
Consolidated statement of changes in equity
for the year then ended
Consolidated statement of cash flows for the
year then ended
Related notes 1 to 37 to the financial
statements, including material accounting
policy information
The financial reporting framework that has been applied in the preparation of the Group
financial statements is applicable law and United Kingdom adopted international accounting
standards. The financial reporting framework that has been applied in the preparation of the
parent company financial statements is applicable law and United Kingdom Accounting
Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in
the Auditor’s responsibilities for the audit of the financial statements section of our report. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We are independent of the Group and parent 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 public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the
Group or the parent company and we remain independent of the Group and the parent
company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the Group and parent company’s ability to continue
to adopt the going concern basis of accounting included:
– Confirming our understanding of management’s going concern assessment process,
including how principal and emerging risks were considered.
– Obtaining the forecast cash flows to 30 June 2027 used by management in its going
concern assessment and testing the arithmetical accuracy of the models, verifying inputs
against budgets approved by the Board and agreeing the opening net debt to the audited
31 December 2025 consolidated financial statements.
Coats Group plc Annual Report and Accounts 2025105
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
– Evaluating the appropriateness of the duration of the going concern assessment period to
30 June 2027 and considering the existence of any significant events or conditions beyond
this period, based on our inquiries of management, Coats Group plc’s viability statement
and knowledge arising from other areas of the audit.
– Evaluating the impact of the OrthoLite acquisition on the going concern assessment
including debt covenants and future cash flows as well as potential downside scenarios.
– Challenging the reasonableness of the cash flow forecast by performing analysis of
management’s historical forecasting accuracy and checking for consistency of the forecasts
with other areas of the audit, including the impairment assessment.
– Evaluating key assumptions used by management in preparing the going concern models, and:
– assessing contrary evidence by considering industry data, key customers’ outlook,
analyst expectations and information obtained from other areas of the audit;
– assessing whether assumptions made were reasonable and appropriate, in light of the
Group’s relevant principal risks and uncertainties and our own independent assessment
of those risks;
– assessing the impact of Coats Group plc’s climate commitments on the forecast cashflows.
– Ensuring management’s downside scenarios were reflective of the principal risks of the
business and had been quantified within the modelling appropriately including considering
whether i) there are other potential downsides for the Group which are not modelled in
management scenarios and the potential impact of these; ii) whether the downside risks
were reasonably possible, but not unrealistic and iii) whether the adverse effects could arise
individually and collectively.
– Obtaining the Group’s existing borrowing facility agreements and:
– reviewing the assumed extension and refinancing as applicable of the bridge facility,
revolving credit facility and USPP notes by engaging internal debt specialists to evaluate
the feasibility and timing of the proposed extension/refinancing, and to consider
whether these plans are consistent with market conditions and checking that the terms
attached to the new agreements were correctly factored into the going concern models
and debt covenant compliance tests;
– performing an examination of all agreements, to assess their continued availability to
the Group throughout the going concern period and to ensure completeness of debt
covenants identified by management.
– assessing the accuracy of management’s debt covenants forecast model on the base
case, verifying inputs to board approved forecasts and facility agreement terms.
– evaluating the compliance of the Group with debt covenants in the forecast period by
reperforming calculations of the covenant tests;
– assessing the impact of the downside risk scenarios on debt covenant compliance and
performing sensitivity analysis on the remaining headroom.
– Challenging the appropriateness of management’s ‘reverse stress test’ scenario, to
understand how severe conditions would have to be to breach liquidity and/or debt
covenant compliance and whether the required conditions have no more than a remote
possibility of occurring.
– Assessing management’s ability to execute controllable mitigating actions to respond to the
downside risk scenarios including the reverse stress test based on our understanding of the
Group and the sector.
– Performing an independent reverse stress test to understand the extent of reduction in
sales required to breach the debt covenants.
– Assessing the potential impact of geopolitical developments in the Middle East on the
going concern assessment including debt covenants and future cash flows.
– Considering whether management’s disclosures in the financial statements sufficiently
and appropriately reflect the going concern assessment including key judgements made
and outcomes.
Our key observations
– The directors’ assessment forecasts that the Group will maintain sufficient liquidity and
covenant compliance throughout the going concern period to 30 June 2027. We observed that
in management’s base case and in the downside sensitivity scenarios there is liquidity headroom
and covenant compliance without considering any identified controllable mitigations.
– Management also performed a reverse stress test, showing the business was able to withstand
a more severe decline in performance. Management considers such a scenario to be remote.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt on
the Group and parent company’s ability to continue as a going concern for the period to
30 June 2027.
In relation to the Group and parent company’s reporting on how they have applied the UK
Corporate Governance Code, we have nothing material to add or draw attention to in relation
to the directors’ statement in the financial statements about whether the directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee as to the Group’s ability to
continue as a going concern.
Coats Group plc Annual Report and Accounts 2025106
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Overview of our audit approach
Audit scope
– We performed an audit of the complete financial information
of 10 components (2024: 13), full audit procedures on
specific balances for a further 17 (2024: 8) components and
specified audit procedures on specific balances for a further 4
(2024: 3) components.
– We performed centralised procedures on the following
accounts: goodwill, acquired intangibles, borrowings, loans
receivable, investment in joint ventures, funded and unfunded
defined benefit obligations, equity (Group and parent company)
including share-based payments, investment in subsidiaries
(parent company), intercompany eliminations, consolidation
journals and discontinued operations.
– In addition to Group oversight procedures, we, as the primary
team, performed supplementary procedures on certain accounts
audited by component auditors being: revenue including
rebates, cash and cash equivalents, exceptional and acquisition
related items, income tax liabilities, deferred tax assets, deferred
tax liabilities, inventories and leases.
Key Audit Matters
– OrthoLite acquisition accounting
– Provisions for uncertain tax positions
– Impairment of assets allocated to the US and Mexico Cash
Generating Unit
– Revenue recognition
Materiality
– Overall Group materiality of $12.0m which represents
approximately 5.0% of profit before tax adjusted for
exceptional and acquisition related items
– Parent Company materiality is determined to be $16.7m which
is 1.0% of equity.
An overview of the scope of the parent company and group audits
Tailoring the scope
We have followed a risk-based approach when developing our audit approach to obtain
sufficient appropriate audit evidence on which to base our audit opinion. We performed risk
assessment procedures, with input from our component auditors, to identify and assess risks
of material misstatement of the Group financial statements and identified significant accounts
and disclosures. When identifying components at which audit work needed to be performed
to respond to the identified risks of material misstatement of the Group financial statements,
we considered our understanding of the Group and its business environment, the
components’ contribution to Group revenue and profit before tax, the number of significant
account balances with associated risk of material misstatements, historical misstatements
identified at each component, the applicable financial framework, the Group’s system of
internal control at the entity level, the existence of centralised processes, applications and any
relevant internal audit results.
We identified 21 (2024: 18) components as individually relevant to the Group due to relevant
events and conditions underlying the identified risks of material misstatement of the Group
financial statements being associated with the reporting components or a pervasive risk of
material misstatement of the group financial statements or a significant risk or an area of
higher assessed risk of material misstatement of the group financial statements being
associated with the components.
We then identified 6 (2024: 3) components of the Group as individually relevant due to
materiality or financial size of the component relative to the Group.
For those individually relevant components, we identified the significant accounts where audit
work needed to be performed at these components by applying professional judgement,
having considered the Group significant accounts on which centralised procedures will be
performed, the reasons for identifying the financial reporting component as an individually
relevant component and the size of the component’s account balance relative to the Group
significant financial statement account balance.
We then considered whether the remaining Group significant account balances not yet
subject to audit procedures, in aggregate, could give rise to a risk of material misstatement of
the Group financial statements. We selected 4 (2024: 3) components of the Group to include
in our audit scope to address these risks.
Having identified the components for which work will be performed, we determined the
scope to assign to each component.
Coats Group plc Annual Report and Accounts 2025107
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Climate change
Stakeholders are increasingly interested in how climate change will impact the Group. The
Group has determined that the most significant future impacts from climate change on their
operations will be from introduction of carbon taxes, disruption of water supply and extreme
weather events (floods and extreme heat). These are explained on pages 178-199 in the
required Task Force on Climate Related Financial Disclosures and on pages 39 to 46 in the
principal risks and uncertainties. They have also explained their climate commitments on pages
15 to 16. All of these disclosures form part of the “Other information,” rather than the
audited financial statements. Our procedures on these unaudited disclosures therefore
consisted solely of considering whether they are materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise appear to be
materially misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on
the Group’s business and any consequential material impact on its financial statements.
As explained in note 1, the basis of preparation, consideration of climate change impact on
the judgements in the accounts is not considered to have a material impact at this time.
Governmental and societal responses to climate change risks are still developing, and are
interdependent upon each other, and consequently financial statements cannot capture all
possible future outcomes as these are not yet known. The degree of certainty of these
changes may also mean that they cannot be taken into account when determining asset and
liability valuations and the timing of future cash flows under the requirements of United
Kingdom adopted international accounting standards.
Our audit effort in considering the impact of climate change on the financial statements was
focused on evaluating management’s assessment of the impact of climate risk being
appropriately reflected in asset values and associated disclosures where values are determined
through modelling future cash flows, being the impairment tests of tangible and intangible
assets and related disclosures.
We also challenged the Directors’ considerations of climate change risks in their assessment of
going concern and viability and associated disclosures.
Based on our work we have not identified the impact of climate change on the financial
statements to be a key audit matter or to have a material impact on a key audit matter.
Of the 31 components selected, we designed and performed audit procedures on the entire
financial information of 10 (2024: 13) components (“full scope components”). For 17
(2024: 8) components, we designed and performed audit procedures on specific significant
financial statement account balances or disclosures of the financial information of the
component (“specific scope components”). For the remaining 4 (2024: 3) components, we
performed specified audit procedures to obtain evidence for one or more relevant assertions.
Our scoping to address the risk of material misstatement for each key audit matter is set out
in the Key Audit Matters section of our report on page 109.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that
needed to be undertaken at each of the components by us, as the Group audit engagement
team, or by component auditors operating under our instruction.
The Group audit team continued to follow a programme of planned visits that has been
designed to ensure that the Senior Statutory Auditor and delegates visit key locations on a
rotational basis. During the current year’s audit cycle, visits were undertaken by the primary
audit team to the component teams in Indonesia, Bangladesh and Vietnam. These visits
involved performing the following procedures as appropriate: understanding the audit
approach with the component team and any issues arising from their work; meeting with
local management; attending planning and closing meeting; reviewing relevant audit working
papers on risk areas. The Group audit team interacted regularly with all component teams
where appropriate during various stages of the audit, reviewed relevant working papers and
were responsible for the scope and direction of the audit process.
Where relevant, the section on Key Audit Matters details the level of involvement we had with
component auditors to enable us to determine that sufficient audit evidence had been
obtained as a basis for our opinion on the Group financial statements as a whole.
We maintained continuous and open dialogue with the component audit teams in addition to
holding formal meetings to ensure that we were fully aware of their progress and the results
of their procedures. Close meetings for full, specific, and specified audit procedures
components (excluding those performed by the primary audit team) were held via video
conference in January and February 2026 and were attended by the Senior Statutory Auditor
and/or other members of the primary audit team. This, together with the additional
procedures performed at Group level, gave us appropriate evidence for our opinion on the
Group financial statements.
Coats Group plc Annual Report and Accounts 2025108 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
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) that we identified. These matters included 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 our opinion
thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk
Key observations communicated to the
Audit Committee
OrthoLite Acquisition Accounting -
$569.1m acquired intangibles
(2024: $0m) and $242.2m goodwill
(2024: $0m)
Refer to the Audit Committee Report (page 68);
Accounting policies (page 126); and Note 31
of the Consolidated Financial Statements
(page 158)
On 29 October 2025, Coats Group plc acquired
OrthoLite Holdings LLC with an enterprise value
of $770m for a total cash outflow of $829.3m.
Management have accounted for this
acquisition as a business combination in
accordance with the requirements of IFRS 3 and
have calculated the provisional fair value of the
acquired assets and liabilities as at the date of
acquisition.
In order to respond to the risk relating to the valuation of intangible assets, goodwill, and
acquisition accounting, we:
– Performed a walkthrough of the acquisition and Provisional Purchase Price Allocation
(‘PPA’) process and key controls.
– Obtained and reviewed the sale and purchase agreement to ensure that the accounting
transactions recorded were consistent with the terms and conditions of the deal, including
the acquisition date on which control passed to the Group, being 29 October 2025.
– Performed substantive testing over OrthoLite’s opening balances and material fair value
adjustments, including inventory provisions, PPE impairments, uncertain tax positions and
deferred tax impacts.
– Reviewed management’s IFRS 3 accounting judgements and conclusions with respect to
the assumptions underpinning the PPA.
– Agreed the consideration transferred to the acquisition agreement and supporting
documentation and to the total amount recorded and disclosed
– Evaluated the work of the external expert engaged by management by making enquiries
of the expert and assessed their competence, capability and objectivity.
– With the assistance of our own valuation specialists, we challenged the completeness of
intangible assets identified, and assessed the appropriateness of the valuation
methodologies used.
– With the assistance of our valuation specialists, we assessed and challenged, the
prospective financial information underpinning the PPA, including key assumptions such as
discount rate, customer attrition rate, royalty rates, revenue growth, EBIT margin, useful
economic lives and synergies.
Based on our procedures performed, we
concluded the provisional Purchase Price
Allocation and associated accounting for
intangible assets and goodwill arising from
the purchase of OrthoLite to be appropriate.
We are also satisfied that the acquisition of
OrthoLite has been appropriately accounted
for and concluded that the disclosure in the
Consolidated Financial Statements in relation
to the acquisition is appropriate.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Coats Group plc Annual Report and Accounts 2025109 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Risk Our response to the risk
Key observations communicated to the
Audit Committee
This included engaging external valuation
specialists to perform a purchase price
allocation and support in identifying and
calculating the fair value of intangible
assets, which were concluded as being
customer relationships ($437.4m), the
“OrthoLite” trade name ($59.3m) and
acquired technology ($72.4m). The Group
also recognised a provisional goodwill
balance of $242.2m.
The valuation of these assets requires
management to exercise judgement and
make assumptions in support of the
valuation of the acquired intangibles.
Given the size and importance of the
acquisition to the Group as a whole, we
determined the acquisition accounting of
OrthoLite to be a key audit matter.
– Assessed management’s application of provisional accounting under IFRS 3 and the related
disclosures given the measurement-period status.
– Engaged tax specialists to assess tax assumptions underpinning the PPA, including deferred tax
impacts and the recognition of uncertain tax positions under IFRIC 23. Refer to “Provisions for
uncertain tax positions” key audit matter below for our conclusions.
– We performed a stand-back analysis with the assistance of valuations specialists, to assess the
reasonableness of the key assumptions underpinning the prospective financial information, the
fair values of the acquired intangibles and the resulting goodwill.
All procedures were performed by the Group primary team covering 100% of the balance of
acquired intangible assets, deferred tax balances and goodwill arising from the OrthoLite
transaction, with the exception of certain account balances such as cash and cash equivalents,
inventory and fixed assets physical verification, for which we engaged component teams to
perform substantive testing.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Coats Group plc Annual Report and Accounts 2025110 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Risk Our response to the risk
Key observations communicated to the
Audit Committee
Provisions for uncertain tax positions -
$58.3m (2024: $26.0m)
Refer to the Audit Committee Report (page 68);
Accounting policies (page 130); and Note 9
of the Consolidated Financial Statements
(page 136)
The Group operates in a number of international
jurisdictions, and as a result there is a risk of
uncertain tax exposures arising around the
Group, as well as heightened risk around
estimates in determining the tax effect of cross
border transactions, including transfer pricing
arrangements. The Group is subject to tax
authority audits and may have open tax enquiries
in multiple jurisdictions at any point in time.
Following the OrthoLite acquisition there are
new uncertain tax positions that require
management judgement and estimation.
We focused on this area due to the complexity,
subjectivity, quantification of the provision and
the judgement around the trigger for
recognition or release.
Our procedures on uncertain tax provisions were performed centrally by the Group team
supported by subject matter specialists (including UK transfer pricing specialists) and overseas
tax teams with expertise in local tax regulations where appropriate.
To address the risk, we:
– Performed a walkthrough of the tax provisioning process and identified key controls in
place noting that they were designed appropriately. We also evaluated the
appropriateness of the Group’s transfer pricing and uncertain tax provisioning policies.
– Inquired of management to understand the Group cross-border transactions, status of all
significant tax positions, including those provided for, and any changes to management’s
judgements in the year.
– Reviewed correspondence with tax authorities and external advisors to inform our
assessment of recorded estimates and evaluate the completeness of the provisions
recorded, directly engaging with external advisors where appropriate.
– Independently assessed management’s significant assumptions and judgements to record or
release provisions following tax audits, settlements and the expiry of statute of limitations.
– Tested the accuracy of the calculation of the year end provisions by inspecting underlying
documentation and supporting schedules.
– Engaged transfer pricing specialists to evaluate intercompany transactions for compliance
with arm’s-length principles, ensuring alignment with OECD guidelines and local tax
regulations including review of transfer pricing risks and related exposures.
– In addition to the above we have specifically performed the following procedures for OrthoLite:
– reviewed management’s specialist due diligence report prepared in respect of the
OrthoLite acquisition to assess the identification and evaluation of uncertain tax positions.
– Involved internal and local tax specialists to challenge management’s judgements over
jurisdiction-specific OrthoLite tax risks, including interpretation of local tax legislation,
historic audit activity and expected outcomes.
– Assessed the appropriateness of the accounting treatment of OrthoLite uncertain tax
positions under IFRS 3, including whether exposures were appropriately reflected.
– Evaluated the adequacy of tax disclosures in the financial statements.
We are satisfied that management’s
judgements in relation to the provisions for
uncertain tax positions are supportable.
We consider the disclosures with respect to
uncertain tax positions to be appropriate.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Coats Group plc Annual Report and Accounts 2025111 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Risk Our response to the risk
Key observations communicated to the
Audit Committee
Impairment of assets allocated to US and
Mexico Cash Generating Unit (‘CGU’)
(CGU carrying value: $70.0m (2024: $105.9m)
Refer to the Audit Committee Report (page 68);
Accounting policies (page 126); and Note 14 of
the Consolidated Financial Statements
(page148)
The estimation of recoverable amount involves
judgement including assumptions relating to
prospective financial information (future
cashflows, impact of US tariffs, LTGRs etc.),
WACC and the success of strategic initiatives.
Our procedures on impairment were performed centrally by the Group team supported by EY
valuation specialists where appropriate.
To address the risk, we:
– Validated that management’s impairment methodology is consistent with the
requirements of IAS 36 Impairment of Assets.
– Performed a walkthrough of the impairment testing process and identified the key
controls in place noting that they were designed appropriately.
– Understood the nature and risk of the assets in the CGU, noting these to largely be Land
and Buildings, Plant and Machinery and allocation of central assets and working capital
subject to separate valuation assessments.
– Assessed management’s indicators of impairment assessment and noted any events or
conditions that require an impairment test to be performed.
– Obtained management’s value-in-use model and tested for mathematical accuracy.
– Engaged EY valuation specialists to assess the appropriateness of the discount rate,
long-term growth rates, and the overall methodology used in the value-in-use model
prepared for the purposes of the US & Mexico CGU impairment test.
– Assessed management’s forecasting ability by comparing forecasts to actual results for this
year and the prior year.
– Understood management’s strategy to grow Revenue and EBIT of the remaining business
by making inquiries of the Coats Group Leadership Team.
– Performed independent research, including on expected industry growth rates, to identify
contrary information and evaluate assumptions for evidence of management bias.
– Reviewed recent actual monthly performance against plan to assess the impact of strategic
actions taken by management.
– Performed sensitivity analysis over key assumptions underpinning management’s forecasts
including discount rate, long term growth rate and assumptions relating to revenue and
margin growth.
– We also assessed the appropriateness of the Group’s related disclosures in the
consolidated financial statements.
Based on our audit procedures we have
concluded that no impairment of the
assets in the US & Mexico Cash Generating
Unit is required.
We concur with management’s impairment
conclusion based on the strategic actions
taken to date, including more simplified
operating structure and targeted operational
fixes and nature of the asset base in the CGU.
We have concluded appropriate sensitivity
disclosures for key assumptions have been
included in the financial statements.
Coats Group plc Annual Report and Accounts 2025112
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Risk Our response to the risk
Key observations communicated to
the Audit Committee
Revenue recognition
($1,464.9m (2024: $1,433.0m)
Refer to the Audit Committee Report
(page 68); Accounting policies (page
129); and Note 3 of the Consolidated
Financial Statements (page 133)
There is an incentive to overstate
revenue for the financial year in order to
meet individual or Company financial
targets (principally adjusted operating
profit and adjusted EPS targets).
The process for accounting for
revenue transactions at or near the
year end contains manual elements
and therefore there is opportunity for
error (either accidental or with intent).
Further, due to the varied incoterms
across the Group (excluding OrthoLite)
as well as some export products with
longer delivery lead times, there is a risk
of revenue being recorded prior to the
performance obligations being satisfied.
In addition, for OrthoLite, revenue
recognition involves manual process,
with reliance on batch-posted journals,
which increases the risk of error.
We performed full or specific audit procedures over this risk area in 9 (2024: 11) full scope, 6 (2024: 4) specific
scope and 4 (2024: 3) specified procedures components with material revenue balances, which covered 80%
(2024: 83%) of the Group’s revenue.
Procedures around this risk area are primarily performed at a component level and therefore, form a significant
part of our oversight procedures. We instructed our component teams and each of them performed
walkthroughs to obtain an understanding of the revenue recognition processes and key controls.
For entities with a higher risk of revenue cut-off, our teams:
– Obtained an understanding of management’s cut off assessment at year-end, including the split between
export and domestic sales and the delivery lead time assumptions utilised by management.
– Tested revenue cut off by obtaining management’s sales cut off assessment and, where material, and
independently testing a sample of transactions therein by vouching to invoices and proof of delivery.
– Tested an independent sample of transactions invoiced in the 21 days for the pre-year end period and 7
days for the post year end period. We stratified the population between revenue type and selected our
sample based on the following criteria:
– Key items based on a quantitative threshold or specific qualitative factors.
– Statistical sample of items invoiced within the 21 days prior to the balance sheet date, which we
considered to be of higher risk based on average delivery lead times.
– We tested our sample by vouching to invoices and third-party evidence (e.g., proof of delivery, bill of
lading) to assess whether the performance obligation is satisfied.
– Tested a sample of journal entries recorded at or near year end as well as top-side adjustments by verifying
to appropriate supporting documentation.
For OrthoLite, we note there are no material export sales and delivery of goods has a shorter lead time.
However, revenue recognition involves a manual process, with reliance on batch-posted journals. In response,
we have performed the following procedures around the risk of inappropriate manual journals posted to
revenue related to OrthoLite:
– Obtained an understanding of the OrthoLite revenue recognition and reporting process.
– We reviewed the OrthoLite consolidation process to identify manual journals to revenue.
– Obtained a listing of underlying sales and reconciled this to the accounting system.
For the remaining components, constituting the residual 20% (PY: 17%) of revenue, we performed risk based
analytical review procedures and we utilised a combination of data analytical tools and trend analysis to search
for any unusual items near the year end.
We concluded that the revenue
recognised at or near year end was
properly accounted for and that
revenue was appropriately recognised
in accordance with the relevant
accounting standards.
We concluded that management’s
presentation and disclosures in
relation to revenue are appropriate.
As part of our procedures, we noted
no indication of deliberate or other
manipulation of revenue cut-off or
management override through manual
journals.
Coats Group plc Annual Report and Accounts 2025113
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
In the current year, the following changes have been reflected in our Key Audit Matters (‘KAMs’):
– For the year ended 31 December 2024, our auditor’s report included a Key Audit Matter in
relation to UK Defined benefit pension liability valuation. In the prior year we identified a
significant risk on judgements related to the UK pension liability actuarial assumptions due
to the subjectivity involved as well as the quantum of the balance. The risk has decreased
following the de-risking of the UK pension scheme in the prior year after the completion of
the buy-in transaction hence we concluded this no longer represents a Key Audit Matter.
– For the year ended 31 December 2025, due to the OrthoLite acquisition we have included
a Key Audit Matter on OrthoLite acquisition accounting as this is inherently judgemental,
requiring the use of forward-looking assumptions and estimates.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the
effect of identified misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could
reasonably be expected to influence the economic decisions of the users of the financial statements.
Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be $12.0m (2024: $12.0m), which is
approximately 5.0% (2024: 5.0%) of profit before tax adjusted for exceptional and acquisition
related items. We believe that profit before tax adjusted for exceptional and acquisition
related items provides us with appropriate measure given the prominence of this metric to
investors, shareholders, and management.
We determined materiality for the Parent Company to be $16.7m (2024: $13.5m), which is
1.0% (2024: 1.0%) of equity which is the metric the investors and shareholders are most
interested in.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount
to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall
control environment, our judgement was that performance materiality was 75% (2024: 75%)
of our planning materiality, $9.0m (2024: $9.0m). We have set performance materiality at this
percentage due to our assessment of the control environment and lower likelihood of
undetected misstatements.
Audit work was undertaken at component locations for the purpose of responding to the
assessed risks of material misstatement of the Group financial statements. The performance
materiality set for each component is based on the relative scale and risk of the component to
the Group as a whole and our assessment of the risk of misstatement at that component. In
the current year, the range of performance materiality allocated to components was $1.8m to
$3.0m (2024: $1.6m to $2.5m).
– $201.6m
– Profit before tax
Starting
basis
Adjustments
Materiality
– Add back $51.6m for exceptional and acquisition related items
– Totals $253.2m profit before tax adjusted for exceptionals and
acquisition related items
– Materiality of $12.0m ( approximately 5.0% of profit before tax
adjusted for exceptionals and acquisition related items)
Coats Group plc Annual Report and Accounts 2025114
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit
differences in excess of $0.6m (2024: $0.6m), which is set at 5.0% of planning materiality, as well
as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of
materiality discussed above and in light of other relevant qualitative considerations in forming
our opinion.
Other information
The other information comprises the information included in the annual report set out on
pages 1 to 104, including taskforce on climate-related financial disclosures report, Group
structure and five-year summary set out on pages 178 to 204, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in this report, we do not express any form of assurance
conclusion thereon.
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 course of 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 this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
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
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 or the directors’ report.
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:
– adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
– the parent company financial statements and the part of the Directors’ Remuneration
Report to be audited are not in agreement with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement relating to the Group and company’s
compliance with the provisions of the UK Corporate Governance Code specified for our
review by the UK Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with the
financial statements or our knowledge obtained during the audit:
– Directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified set out on page 101;
– Directors’ explanation as to its assessment of the company’s prospects, the period this
assessment covers and why the period is appropriate set out on page 101;
– Directors’ statement on whether it has a reasonable expectation that the Group will be able
to continue in operation and meets its liabilities set out on page 47 and 101;
– Directors’ statement on fair, balanced and understandable set out on page 67;
– Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 39;
– The section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on page 69; and
– The section describing the work of the audit committee set out on page 66.
Coats Group plc Annual Report and Accounts 2025115
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 104, 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
and 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.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect irregularities,
including fraud. The risk of not detecting a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations, or through collusion. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both
those charged with governance of the company and management.
– We obtained an understanding of the legal and regulatory frameworks that are applicable
to the Group and determined that the most significant are frameworks which are directly
relevant to specific assertions in the financial statements are those that relate to the
reporting framework (United Kingdom adopted international accounting standards, United
Kingdom GAAP, the Companies Act 2006, UK Listing Rules of the Financial Conduct
Authority and the UK Corporate Governance Code) and the relevant tax laws and
regulations in the jurisdictions in which the Group operates. In addition, we concluded that
there are certain significant laws and regulations which may have an effect on the
determination of the amounts and disclosures in the financial statements being the Listing
Rules of the UK Listing Authority, and those laws and regulations relating to health and
safety, employees, environmental and bribery and corruption practices. We understood
how Coats Group plc is complying with those frameworks by making enquiries of
management, internal audit, those responsible for legal and compliance procedures and
the company secretary. We corroborated our enquiries through our review of board
minutes, papers provided to the Audit Committee, correspondence received from
regulatory bodies and information relating to the Group’s anti-money laundering
procedures as part of our walkthrough procedures.
– We assessed the susceptibility of the Group’s financial statements to material misstatement,
including how fraud might occur by meeting with finance and operational management from
various parts of the business to understand where it considered there was susceptibility to
fraud. We also considered performance targets and their potential to influence management
to manage earnings or influence the perceptions of analysts. We have determined there is a
risk of fraud associated to revenue recognition. We considered the policies, processes and
controls that the Group has established to address the risks identified, including the design of
controls over revenue recognition. We also considered the controls that the Group has that
otherwise prevent, deter and detect fraud, and how senior management monitors these
controls. We performed audit procedures to address each identified fraud risk. These
procedures were designed to provide reasonable assurance that the financial statements as a
whole are free from material misstatement, due to fraud or error.
– Based on this understanding we designed our audit procedures to identify non-compliance
with such laws and regulations including providing specific instructions to full scope and
specific scope component teams. Our procedures included journal entry testing, with a
focus on manual journal entries, consolidation journals and journal entries indicating large
or unusual transactions using data analytics. We based this testing on our understanding of
the business, enquiries of management, including internal audit, legal and other advisors,
the company secretary and reading relevant reports. We performed specific searches
derived from forensic investigations experience and leveraged our data analytics platform in
performing our testing. We have also reviewed the whistleblowing reports issued during
the year. Any instances of non-compliance with laws and regulations identified that might
have an impact on components were communicated to the component audit teams and
considered in our audit approach.
A further description of our responsibilities for the audit of the financial statements is located
on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Coats Group plc Annual Report and Accounts 2025116
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COATS GROUP PLC CONTINUED
Other matters we are required to address
– Following the recommendation of the Audit and Risk Committee, we were appointed by
the company on 16 May 2023 to audit the financial statements for the year ending
31 December 2023 and subsequent financial periods.
– The period of total uninterrupted engagement including previous renewals and
reappointments is 3 years, covering the years ended 31 December 2023 to 31 December 2025.
– The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we
might state to the company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Anup Sodhi
(Senior statutory auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
Luton
4 March 2026
Coats Group plc Annual Report and Accounts 2025117
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
2025 2024
Year ended 31 December US$mUS$m
Profit for the year
121.2
99.7
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit schemes (note 10)
(10.1)
(225.1)
Tax on items that will not be reclassified
–
(0.6)
(10.1)
(225.7)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
17.5
(20.4)
Other comprehensive income and expense for the year
7.4
(246.1)
Net comprehensive income and expense for the year
128.6
(146.4)
Attributable to:
Equity shareholders of the company
110.8
(165.6)
Non-controlling interests
17.8
19.2
128.6
(146.4)
Notes on pages 122 to 174 form part of these financial statements.
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Notes on pages 122 to 174 form part of these financial statements.
Coats Group plc Annual Report and Accounts 2025118
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
2025 2024
31 December
Notes
US$mUS$m
Non-current assets:
Goodwill
13
372.9
120.4
Other intangible assets
13
1,002.3
443.5
Property, plant and equipment
14
248.7
226.3
Right-of-use assets
15
75.0
68.9
Investments in joint ventures
16
13.3
13.7
Other equity investments
16
0.5
0.6
Deferred tax assets
17
17.9
13.6
Pension surpluses
10
48.7
44.0
Loan receivable
10
43.6
38.3
Trade and other receivables
19
20.1
25.0
1,843.0
994.3
Current assets:
Inventories
18
173.5
176.1
Trade and other receivables
19
336.3
292.2
Pension surpluses
10
1.5
1.5
Cash and cash equivalents
30(g)
232.0
146.0
Non-current assets classified as held for sale
0.4
0.6
743.7
616.4
Total assets
2,586.7
1,610.7
Current liabilities:
Trade and other payables
21
(338.1)
(299.2)
Income tax liabilities
(76.5)
(49.5)
Bank overdrafts and other borrowings
23
(0.5)
(0.2)
Lease liabilities
15
(21.2)
(16.6)
Retirement benefit obligations:
– Funded schemes
10
(0.4)
(0.4)
– Unfunded schemes
10
(6.8)
(7.5)
Provisions
25
(32.3)
(26.5)
(475.8)
(399.9)
Net current assets
267.9
216.5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2025 2024
31 December
Notes
US$mUS$m
Non-current liabilities:
Trade and other payables
21
(4.9)
(7.4)
Deferred tax liabilities
24
(107.5)
(58.0)
Borrowings
23
(1,046.2)
(595.1)
Lease liabilities
15
(71.7)
(66.6)
Retirement benefit obligations:
– Funded schemes
10
(30.0)
(14.4)
– Unfunded schemes
10
(67.7)
(65.6)
Provisions
25
(19.6)
(25.1)
(1,347.6)
(832.2)
Total liabilities
(1,823.4)
(1,232.1)
Net assets
763.3
378.6
Equity:
Share capital
26
120.4
99.0
Share premium account
27
412.3
111.4
Own shares
26, 27
(3.2)
(5.3)
Translation reserve
27
(112.2)
(129.7)
Capital reduction reserve
27
59.8
59.8
Other reserves
27
246.3
246.3
Retained loss
27
(0.9)
(35.4)
Equity shareholders’ funds
722.5
346.1
Non-controlling interests
27
40.8
32.5
Total equity
763.3
378.6
David Paja Hannah Nichols
Group Chief Executive Officer Group Chief Financial Officer
Approved by the Board 4 March 2026
Company Registration No.103548
Notes on pages 122 to 174 form part of these financial statements.
Coats Group plc Annual Report and Accounts 2025119
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Translation Capital reduction Retained Non-controlling
capital premium account Own shares reserve reserve Other reserves (loss)/profit Total interests Total equity
US$mUS$mUS$mUS$mUS$mUS$mUS$mUS$mUS$mUS$m
Balance as at 1 January 2024
99.0
111.4
(6.1)
(109.7)
59.8
246.3
157.4
558.1
31.3
589.4
Profit for the year
–
–
–
–
–
–
80.1
80.1
19.6
99.7
Other comprehensive income and expense for theyear
–
–
–
(20.0)
–
–
(225.7)
(245.7)
(0.4)
(246.1)
Dividends
–
–
–
–
–
–
(46.5)
(46.5)
(18.0)
(64.5)
Purchase of own shares by Employee Benefit Trust
–
–
(8.7)
–
–
–
–
(8.7)
–
(8.7)
Movement in ownshares
–
–
9.5
–
–
–
(8.6)
0.9
–
0.9
Share based payments
–
–
–
–
–
–
7.9
7.9
–
7.9
Balance as at 31December 2024
99.0
111.4
(5.3)
(129.7)
59.8
246.3
(35.4)
346.1
32.5
378.6
Profit for the year
–
–
–
–
–
–
103.4
103.4
17.8
121.2
Other comprehensive income and expense for theyear
–
–
–
17.5
–
–
(10.1)
7.4
–
7.4
Dividends (see notes 12 and 27)
–
–
–
–
–
–
(54.1)
(54.1)
(14.7)
(68.8)
Acquisition of business
–
–
–
–
–
–
–
–
5.2
5.2
Issue of ordinary shares
21.4
300.9
–
–
–
–
–
322.3
–
322.3
Purchase of own shares by Employee Benefit Trust
–
–
(9.0)
–
–
–
–
(9.0)
–
(9.0)
Movement in ownshares
–
–
11.1
–
–
–
(10.8)
0.3
–
0.3
Deferred tax on share schemes
–
–
–
–
–
–
(0.7)
(0.7)
–
(0.7)
Share based payments
–
–
–
–
–
–
6.8
6.8
–
6.8
Balance as at 31December 2025
120.4
412.3
(3.2)
(112.2)
59.8
246.3
(0.9)
722.5
40.8
763.3
Notes on pages 122 to 174 form part of these financial statements.
Coats Group plc Annual Report and Accounts 2025120
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
CONSOLIDATED STATEMENT OF CASH FLOWS
2025 2024
Year ended 31 December
Notes
US$mUS$m
Cash inflow from operating activities:
Cash generated from operations
30(a)
330.8
196.7
Interest paid
30(b)
(35.3)
(31.5)
Taxation paid
30(c)
(70.8)
(69.4)
Net cash generated by operating activities
224.7
95.8
Cash outflow from investing activities:
Investment income
30(d)
1.7
1.0
Net capital expenditure and financial investment
30(e)
(29.5)
(24.0)
Acquisition of businesses
30(f)
(552.0)
–
Disposal of business
30(f)
13.1
–
Loan made to UK Pension Scheme
30(a)
–
(38.3)
Net cash absorbed in investing activities
(566.7)
(61.3)
Cash inflow from financing activities:
Issue of ordinary shares
322.9
–
Purchase of own shares by Employee Benefit Trust
(9.0)
(8.7)
Dividends paid to equity shareholders
(53.6)
(46.2)
Dividends paid to non-controlling interests
(14.7)
(18.0)
Payment of lease liabilities
(19.0)
(17.4)
Drawdown of acquisition loan facilities
31
450.0
–
Borrowings settled on completion of acquisitions
31
(247.6)
–
Issue of senior notes
30(g)
–
248.7
Repayment of senior notes
30(g)
–
(125.0)
Net decrease in other borrowings
(1.0)
(28.0)
Discontinued operations
(1.2)
(1.8)
Net cash generated from financing activities
426.8
3.6
2025 2024
Year ended 31 December
Notes
US$mUS$m
Net increase in cash and cash equivalents
84.8
38.1
Net cash and cash equivalents at beginning of the year
145.8
111.5
Foreign exchange gains/(losses) on cash and cash equivalents
1.4
(3.8)
Net cash and cash equivalents at end of the year
30(g)
232.0
145.8
Reconciliation of net cash flow to movements in net debt
Net increase in cash and cash equivalents
84.8
38.1
Drawdown of acquisition loan facilities
31
(450.0)
–
Issue of senior notes
30(g)
–
(248.7)
Repayment of senior notes
30(g)
–
125.0
Net decrease in other borrowings
1.0
28.0
Change in net debt resulting from cash flows
(free cash flow)
37(e)
(364.2)
(57.6)
Net movement in lease liabilities during the year
(7.7)
1.0
Movement in fair value hedges
–
(1.6)
Other non-cash movements
(2.5)
(2.2)
Foreign exchange losses
(0.7)
(1.2)
Increase in net debt
(375.1)
(61.6)
Net debt at the start of the year
(532.5)
(470.9)
Net debt at the end of the year
30(g)
(907.6)
(532.5)
Notes on pages 122 to 174 form part of these financial statements.
Coats Group plc Annual Report and Accounts 2025121
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1 Principal accounting policies
The following are the principal accounting policies adopted in preparing the financial statements.
Critical accounting judgements and key sources of estimation uncertainty
The principal accounting policies adopted by the Group are set out in this note to the consolidated
financial statements. Certain of the Group’s accounting policies inherently rely on subjective
assumptions and judgements, such that it is possible over time the actual results could differ from
the estimates based on the assumptions and judgements used by the Group. Due to the size of
the amounts involved, changes in the assumptions relating to the following policies could
potentially have a significant impact on the result for the year and/or the carrying values of assets
and liabilities in the consolidated financial statements.
Critical judgements in applying the Group’s accounting policies
In the course of preparing the financial statements, the critical judgements set out below have
had a significant effect on the amounts recognised in the financial statements for the year ended
31 December 2025.
Exceptional and acquisition related items
Judgement is used to determine those items which should be separately disclosed as exceptional
and acquisition related items to provide valuable additional information for users of the financial
statements in understanding the Group’s performance. This judgement includes assessment of
whether an item is of sufficient size or of a nature that is not consistent with normal trading
activities. Please see note 4 for further details.
This critical accounting judgement made by management in applying the Group’s accounting
policies also applied to the consolidated financial statements for the year ended 31 December
2024. In addition, in the course of preparing the financial statements for the year ended
31 December 2025, a critical accounting judgement was made by management in relation to the
strategic exit from the Americas Yarns business which has been presented as a discontinued
operation as set out below
Discontinued operations
In December 2024 the Group closed its Performance Materials Division facility in Toluca, Mexico
and in April 2025 announced the full exit from the non-core US Yarns business based in Kings
Mountain, North Carolina. The sale of the Kings Mountain plant was completed in June 2025.
This followed a strategic review of the Americas Yarns business which started in Q4 2024. The
strategic review concluded that the Americas Yarns business did not fit with Coats' future
strategy and the exit allows management to focus on driving forward and growing other parts
of the Group's attractive portfolio.
The results of the Americas Yarns business have been presented as a discontinued operation in
the consolidated income statement for the year ended 31 December 2025. Amounts for the year
ended 31 December 2024 in the consolidated income statement have been represented to
reclassify the results of the Americas Yarns business from continuing operations to discontinued
operations. Note 32 provides further details.
NOTES TO THE FINANCIAL STATEMENTS
Judgement is used by the Group in assessing whether a disposal of a business represents a
disposal of a separate major line of business considering the facts and circumstances of each
disposal. In determining whether a disposal represents a separate major line of business, the
Group considers both quantitative and qualitative factors.
If the Group had concluded that the exit of the Americas Yarns business did not represent a
discontinued operation, the Group’s revenue and operating profit before exceptional and
acquisition related items from continuing operations for the year ended 31 December 2025
would have been $1,491.2m and $290.3m respectively (2024: $1,500.9m and $269.6m
respectively). The Group’s revenue and operating profit before exceptional and acquisition
related items from continuing operations for the year ended 31 December 2025 was $1,464.9m
and $289.8m respectively (2024: $1,433.0m and $271.9m respectively) with the Americas Yarns
business reported as a discontinued operation.
In addition total exceptional costs associated with the exit of the Americas Yarns business of
$16.7m for the year ended 31 December 2025 (2024: $22.4m) would have been charged to
operating profits from continuing rather than the loss from discontinued operations. As a result,
total exceptional and acquisition related items charged to operating profits from continuing
operations for the year ended 31 December 2025 would have been $65.1m (2024: $69.8m)
compared to $48.4m (2024: $47.4m) that has been reported. See note 32 for further details on
the results of the Americas Yarns business.
Key sources of estimation uncertainty
There are no sources of estimation uncertainty at the 31 December 2025 balance sheet date, that
may have a significant risk of causing material adjustment to the carrying amounts of assets and
liabilities within the next financial year.
Other areas of estimation uncertainty
Other areas of estimation uncertainty are as follows:
Goodwill and other intangible assets arising from the OrthoLite acquisition
The acquisition of OrthoLite during the year ended 31 December 2025 resulted in intangible
assets being recognised by the Group which consisted of customer relationships, brands and trade
names and technology. External professional valuation advisors were engaged to assist in
identifying and valuing these intangible assets. Other intangible benefits that did not meet the
criteria for recognition formed part of goodwill. Judgements and estimates were made in the
determination of the valuation of these intangible assets. These judgments and estimates included
expected future cash flows, customer attrition rates, royalty rates and the useful economic lives of
the intangible assets acquired. See Note 31 for details of the OrthoLite acquisition.
Assumptions used in determining the value in use for the US and Mexico cash
generating unit (“CGU”)
A change in key revenue and margin growth assumptions could result in a change in the assessed
recoverable amount of the CGU. The impact of sensitivities on key assumptions are set out in note 14.
Coats Group plc Annual Report and Accounts 2025122
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Discontinued operations
In December 2024 the Group closed its Performance Materials Division’s plant in Toluca, Mexico
and in April 2025 announced the full exit from the low-margin Americas Yarns business based in
Kings Mountain, North Carolina. The sale of the Kings Mountain plant was completed in June
2025. This follows the strategic review of the Americas Yarns business. The results of the
Americas Yarns business have been presented as a discontinued operation in the consolidated
income statement for the year ended 31 December 2025. Note 32 provides further details.
Joint ventures
Joint ventures are entities in which the Group has joint control, shared with a party outside the
Group. The Group reports its interests in joint ventures using the equity method.
Going concern
The Directors are satisfied that the Group and the Company has sufficient resources to continue
in operation for the period from the date of this report to 30 June 2027. Accordingly, they
continue to adopt the going concern basis in preparing the consolidated financial statements. In
assessing the Group’s going concern position, the Directors have considered a number of factors,
including the current balance sheet position and available liquidity, the current trading
performance as set out in the Full Year Results Overview section of the Chief Executive’s Review
on page 6, the principal and emerging risks which could impact the performance of the Group
and compliance with borrowing covenants.
In order to assess the going concern status of the Group management has prepared:
– A base case scenario, aligned to the latest Group budget for 2026 as well as the Group’s
updated Medium Term Plan for 2027;
– A downside scenario has been prepared, which assumes that the global economic environment
is depressed over the assessment period. This scenario assumes trading below 2025 levels, this
scenario is considered to be severe but plausible given the current uncertain global macro-
economic and geo-political environment; and
– A reverse stress test flexing sales to determine what circumstance would be required to either
reduce headroom to nil on committed borrowing facilities or breach borrowing covenants,
whichever occurred first.
As more fully described in the Outlook section on page 11, the Directors expect that the core
apparel and footwear end markets will remain uncertain in 2026. The Directors expect the Group
to grow organically in 2026, even under conditions of market uncertainty, with modest organic
operating margin improvement in addition to the margin enhancement benefit of bringing
OrthoLite into the Group. The Directors also expect another strong year of free cash flow
generation. The severe but plausible downside scenario includes further management actions
that would be deployed if required (for example further reduction in costs).
1 Principal accounting policies continued
a) Accounting convention and format
The Group’s financial statements for the year ended 31 December 2025 have been prepared in
accordance with United Kingdom adopted international accounting standards and with the
requirements of the Companies Act 2006, and complies with the disclosure requirements of the
Listing Rules of the UK Financial Conduct Authority. The financial statements are prepared under
the historical cost convention except for investments and derivatives which are stated at fair value
and retirement benefit obligations which are valued in accordance with IAS 19 Employee Benefits.
Except for the changes arising from the adoption of new accounting standards, interpretations
and amendments (as detailed in note 1), the same accounting policies, presentation and methods
of computation have been followed in these consolidated financial statements as applied in the
Group’s annual financial statements for the year ended 31 December 2024.
b) Basis of preparation
Subsidiaries
Subsidiaries are consolidated from the effective date of acquisition or up to the effective date of
disposal, as appropriate. The effective date is when control passes to or from the Group. Control
is achieved when the Group has the power over the investee and is exposed, or has the rights to
variable returns from its involvement with the investee and has the ability to use its power to
affect its returns. The existence and effect of potential voting rights that are currently exercisable
or convertible are considered in determining the existence or otherwise of control. Where
necessary, adjustments are made to the financial statements of subsidiaries to align their
accounting policies with those used by the Group.
Where subsidiaries are not 100% owned by the Group, the share attributable to outside
shareholders is reflected in non-controlling interests. Non-controlling interests are identified
separately from the Group’s equity, and may initially be measured at either fair value or at the
non-controlling interests’ share of the fair value of the subsidiary’s identifiable net assets. The
choice of measurement is made on an acquisition-by-acquisition basis. Changes in the Group’s
interests in subsidiaries, that do not result in a loss of control, are accounted for as equity
transactions. Where control is lost, a gain or loss on disposal is recognised through the
consolidated income statement, calculated as the difference between the fair value of
consideration received (plus the fair value of any retained interest) and the Group’s previous
share of the former subsidiary’s net assets. Amounts previously recognised in other comprehensive
income in relation to that subsidiary are reclassified and recognised through the income statement
as part of the gain or loss on disposal.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025123
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
c) Functional currency
The functional currency of Coats Group plc the company continued to be United States dollars
(USD) during the year ended 31 December 2025.
d) Foreign currencies
Foreign currency translation
The Group’s presentation currency is USD. Transactions of companies within the Group are
recorded in the functional currency of that company. Currencies other than the functional
currency are foreign currencies.
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the rates of
exchange ruling at the period end. All currency differences on monetary items are taken to the
consolidated income statement with the exception of currency differences that represent a net
investment in a foreign operation, which are taken directly to equity until disposal of the net
investment, at which time they are recycled through the consolidated income statement. Non-
monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate as at the date of initial transaction.
Group companies
Assets and liabilities of subsidiaries whose functional currency is not USD are translated into the
Group’s presentation currency at the rates of exchange ruling at the period end and their income
statements are translated at the average exchange rates for the year.
The exchange differences arising on the retranslation since 1 January 2004 are taken to a separate
component of equity. On disposal of such an entity, the deferred cumulative amount recognised
in equity since 1 January 2004 relating to that particular operation is recycled through the
consolidated income statement. Translation differences that arose before the date of transition
to IFRS in respect of all such entities are not presented as a separate component of equity.
Goodwill and fair value adjustments arising on acquisition of such operations are regarded as
assets and liabilities of the particular operation, expressed in the currency of the operation and
recorded at the exchange rate at the date of the transaction and subsequently retranslated at the
applicable closing rates.
1 Principal accounting policies continued
The reverse stress test noted an implausible decrease in trading performance, with revenues
almost 20% below the base case, would be required. The test also includes further controllable
management actions that could be deployed if required (for example no bonus payments,
reduced discretionary costs and significantly reduced capital expenditure). The outcome of the
reverse stress test was that the leverage covenant would be breached, however, at the breaking
point in the test the Group still maintained sufficient liquidity on committed borrowing facilities.
The Directors consider the likelihood of the condition in the reverse stress test occurring to be
remote on the basis that the Group has not experienced such a decline historically.
Liquidity headroom
As at 31 December 2025 the Group’s net debt (excluding IFRS 16 leases liabilities) was $814.7m
(2024: $449.3m). The Group’s committed debt facilities total $1,470m across its Banking and US
Private Placement group, with a range of maturities from October 2026 through to 2034. The
only facility which matures during the going concern assessment period is the bridge facility of
$300m used to fund the acquisition of OrthoLite, this facility has an initial term of 12 months and
matures in October 2026. This initial term can be extended by a further 12 months at Coats
option. The going concern assessment assumes that the option to extend the bridge facility by
12 months is exercised, in the event it is not refinanced before then. As of 31 December 2025
the Group had around $441m of headroom against these committed banking facilities. In each
scenario liquidity headroom exists throughout the assessment period.
Covenant testing
The Group’s committed borrowing facilities are subject to ongoing covenant testing. Covenants
are measured twice a year, at full year and half year on a twelve month rolling basis and are
measured under frozen accounting standards and therefore exclude the effects of IFRS 16. The
financial covenants under the borrowing agreements are for leverage (net debt / EBITDA) to be
less than 3.0 and interest cover (EBITDA / interest charge) to be in excess of 4.0. All banking
covenants tests were met at 31 December 2025, with leverage of 2.2x and interest cover of
11.2x. The base case forecast indicates that banking covenants will be met throughout the
assessment period. Under the severe but plausible downside scenario covenant compliance is still
projected to be achieved throughout the assessment period.
Conclusion
In conclusion, after reviewing the base case, the severe but plausible downside scenario and
considering the remote likelihood of the scenario in the reverse stress test occurring, the Directors
have formed the judgement that, at the time of approving the consolidated financial statements,
there are no material uncertainties that cast doubt on the Group’s and the Company’s going
concern status and that it is appropriate to prepare the consolidated financial statements on the
going concern basis for the period from the date of this report to 30 June 2027.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025124 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
g) Exceptional and acquisition related items
The Group has adopted an income statement format which seeks to highlight significant items
within the Group results for the year. Exceptional items may include significant restructuring
associated with a business or property disposal, litigation costs and settlements, profit or loss on
disposal of property, plant and equipment, non-actuarial gains or losses arising from significant
one-off changes to defined benefit pension obligations, regulatory investigation costs and
impairment of assets. Acquisition related items include amortisation of acquired intangible assets,
acquisition transaction costs, contingent consideration linked to employment and adjustments to
contingent consideration. Please see note 4 for further details on why management consider
these items to be exceptional.
Judgement is used by the Group in assessing the particular items, which by virtue of their scale
and nature, should be presented in the income statement and disclosed in the related notes as
exceptional items. In determining whether an event or transaction is exceptional, materiality is a
key consideration and qualitative factors, such as frequency or predictability of occurrence, are
also considered. This is consistent with the way financial performance is measured by management
and reported to the Board.
h) Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation and any
accumulated impairments.
Subsequent expenditure
Expenditure incurred to replace a component of an item of property, plant and equipment that
is accounted for separately, including major inspection and overhaul expenditure, is capitalised.
Other subsequent expenditure is capitalised only when it increases the future economic benefits
embodied in the item of property, plant and equipment. All other expenditure is recognised in
the income statement as an expense as incurred.
1 Principal accounting policies continued
The principal exchange rates (to the US dollar) used in preparing these financial statements are
as follows:
2025
2024
Average
Sterling
0.76
0.78
Euro
0.88
0.92
Chinese Renminbi
7.19
7.20
Indian Rupee
87.12
83.66
Turkish Lira*
39.52
32.82
Period end
Sterling
0.74
0.80
Euro
0.85
0.97
Chinese Renminbi
6.99
7.30
Indian Rupee
89.85
85.55
Turkish Lira
42.95
35.34
* Cumulative inflation rates over a three-year period exceeded 100% in Turkey in May 2022 and since then Turkey is
considered as hyperinflationary. As a result, IAS 29 “Financial Reporting in Hyperinflationary Economies” has been
applied. In accordance with IAS 29, the financial statements of the Company’s subsidiary in Turkey are translated into
the Group’s US Dollar presentational currency at the year end exchange rate. Monetary assets and liabilities are not
restated. All non-monetary items recorded at historical rates are restated for the change in purchasing power caused by
inflation from the date of initial recognition to the year end balance sheet date. The income statement of the Company’s
subsidiary in Turkey is adjusted for inflation during the reporting period. A net gain of $2.0m for the year ended
31 December 2025 (2024: $0.3m) was recognised within finance income on non-monetary items held in Turkish Lira.
The inflation rate used is the consumer price index published by the Turkish Statistical Institute, TurkStat. The movement
in the price index for the year ended 31 December 2025 was 31% (2024: 44%).
e) Operating segments
Operating segments are components of the Group about which separate financial information is
available that is evaluated by the Coats Group plc Group Executive Team in deciding how to
allocate resources and in assessing performance. See note 2 for further details.
f) Operating profit
Operating profit is stated before the share of results of joint ventures, investment and interest
income, finance costs and foreign exchange gains and losses from financing activities.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025125 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Goodwill is allocated to cash-generating units (CGUs) for the purpose of impairment testing.
CGUs represent the smallest group of assets that generate cash inflows that are largely
independent of the cash inflows from other assets or groups of assets.
Negative goodwill is recognised immediately in the income statement.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are
initially recognised at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are
reported at cost less accumulated amortisation and accumulated impairment losses, on the same
basis as intangible assets that are acquired separately.
The estimated useful lives (other than Coats Brand) are as follows:
Brands and trade names
5 years to 20 years
Technology
4 years to 15 years
Customer relationships
9 years to 20 years
The useful life of the Coats Brand is considered to be indefinite.
Other intangibles
Acquired computer software licences and computer software development costs are capitalised
on the basis of the costs incurred to acquire and bring to use the specific software and are
amortised over their estimated useful lives of up to 5 years.
Intellectual property, comprising trademarks, designs, patents and product development which
have a finite useful life, are carried at cost less accumulated amortisation and impairment charges.
Amortisation is calculated using the straight-line method to allocate the cost over the assets’
useful lives, which vary from 5 to 10 years.
The amortisation charge for both acquired and other intangibles assets is included within the
distribution costs and administrative expense lines in the consolidated income statement.
Impairment of property, plant and equipment, right-of-use assets and intangible
assets excluding goodwill
Assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment. Assets that are subject to depreciation or amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable.
1 Principal accounting policies continued
Depreciation
Depreciation is charged to the income statement on a straight-line basis over the estimated
useful lives of property, plant and equipment, and major components that are accounted for
separately. Land is not depreciated. The estimated useful lives are as follows:
Freehold buildings
50 years to 100 years
Leasehold improvements
10 years to 50 years or over the term of the lease if shorter
Plant and equipment
3 years to 20 years
Vehicles and office equipment
2 years to 10 years
Assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each period end.
i) Business combinations and Intangible assets
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The cost of an
acquisition is measured as the aggregate of the consideration transferred, which is measured at
acquisition date fair value. Acquisition-related costs are recognised in the consolidated income
statement, as incurred, in operating costs.
If the initial accounting for a business combination is incomplete by the end of the reporting
period in which the combination occurs, the Group reports provisional amounts for the items for
which the accounting is incomplete. Those provisional amounts are adjusted during the
measurement period (see below), or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the acquisition date that,
if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains
complete information about facts and circumstances that existed as of the acquisition date and
is subject to a maximum of one year.
Goodwill
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of
any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held
equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. Goodwill is recognised as an asset and
tested for impairment at least annually. Any impairment is recognised immediately in the income
statement. On disposal of a subsidiary, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025126 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
The Group remeasures the lease liability (and makes a corresponding adjustment to the related
right-of-use asset) whenever:
– the lease term has changed or there is a change in the assessment of exercise of a purchase
option, in which case the lease liability is remeasured by discounting the revised lease payments
using a revised discount rate;
– the lease payments change due to changes in an index or rate or a change in expected payment
under a guaranteed residual value, in which cases the lease liability is remeasured by discounting
the revised lease payments using the initial discount rate (unless the lease payments change is
due to a change in a floating interest rate, in which case a revised discount rate is used); and
– a lease contract is modified and the lease modification is not accounted for as a separate lease,
in which case the lease liability is remeasured by discounting the revised lease payments using
a revised discount rate.
The right-of-use assets comprise the initial measurement of the corresponding lease liability,
lease payments made at or before the commencement day and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset,
restore the site on which it is located or restore the underlying asset to the condition required by
the terms and conditions of the lease, a provision is recognised and measured under IAS 37
‘Provisions, Contingent Liabilities and Contingent Assets’. The costs are included in the related
right-of-use asset, unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the
underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-
use asset reflects that the Group expects to exercise a purchase option, the related right-of-use
asset is depreciated over the useful life of the underlying asset. The depreciation starts at the
commencement date of the lease.
Variable rents that do not depend on an index are not included in the measurement of the lease
liability and the right-of-use asset. The related payments are recognised as an expense in the
period in which the event or condition that triggers those payments occurs.
k) Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the relevant financial instrument.
1 Principal accounting policies continued
An impairment charge is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs to sell and its 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. For the purposes of assessing impairment, assets
are measured at the CGU level.
Research and development
All research costs are expensed as incurred.
An internally-generated intangible asset arising from development is recognised only if all of the
following conditions are met:
– an asset is created that can be separately identified;
– it is probable that the asset created will generate future economic benefits; and
– the development costs can be measured reliably.
Internally-generated intangible assets are amortised on a straight-line basis over their useful lives.
Where no internally-generated intangible asset can be recognised, development expenditure is
recognised as an expense in the period in which it is incurred.
j) Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. The
Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease
term of 12 months or less) and leases of low value assets (defined as assets with a value of
US$5,000 or less when new). For these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the lease unless another systematic
basis is more representative of the time pattern in which economic benefits from the leased
assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid
at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot
be readily determined, the Group uses its incremental borrowing rate.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest
on the lease liability (using the effective interest method) and by reducing the carrying amount
to reflect the lease payments made.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025127 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
(iii) Compound instruments
The component parts of compound instruments are classified separately as financial liabilities and
equity in accordance with the substance of the contractual arrangement. At the date of issue, the
fair value of the liability component is estimated using the prevailing market interest rate for a
similar non-convertible instrument, and this amount is recorded as a liability at amortised cost.
The equity component is the fair value of the compound instrument as a whole less the amount
of the liability component, and is recognised in equity, net of income tax effect, without
subsequent remeasurement.
(iv) Derivative financial instruments and hedge accounting
The Group’s activities expose it to the financial risks of changes in foreign exchange rates and
interest rates.
The use of financial derivatives is regulated by the Board or that of the relevant operating
subsidiary in accordance with their respective risk management strategies. Changes in values of
all derivatives of a financing nature are included within finance costs in the income statement.
Derivative financial instruments are initially measured at fair value at contract date and are
remeasured at each reporting date.
The Group designates hedging instruments as either fair value hedges, cash flow hedges or
hedges of net investments in foreign operations. Hedges of interest rate risk are accounted for
as fair value or cash flow hedges.
At the inception of each hedge transaction the issuing entity documents the relationship between
the hedging instrument and the hedged item and the anticipated effectiveness of the hedge
transaction, and monitors the ongoing effectiveness over the period of the hedge. Hedge
accounting is discontinued when the issuing entity revokes the hedging relationship, the hedge
instrument expires, is sold, exercised or otherwise terminated, and the adjustment to the carrying
amount of the hedged item arising from the hedged risk is amortised through the income
statement from that date.
(v) Fair value hedges
Changes in the fair values of derivatives that are designated and qualify as fair value hedges are
recognised immediately through the income statement, together with any changes in the fair
value of the related hedged items due to changes in the hedged risks. On discontinuation of
the hedge the adjustment to the carrying amount of the hedged item arising from the hedged
risk is amortised through the consolidated income statement from that date.
1 Principal accounting policies continued
Financial assets
(i) Investments in equity securities
Investments in equity securities are recognised and derecognised on a trade date basis and are
initially measured at fair value, plus directly attributable transaction costs and are remeasured at
subsequent reporting dates at fair value, with movements recorded in other comprehensive
income. Listed investments are stated at market value. Unlisted investments are stated at fair
value based on directors’ valuation, which is supported by external experts’ advice or other
external evidence.
(ii) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in
hand and short-term deposits maturing in less than three months. For the purposes of the
statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts.
(iii) Trade and other receivables
Trade receivables are recognised at fair value (which ordinarily reflects the invoice amount) and
carried at amortised cost, less an allowance for expected lifetime losses as permitted under the
simplified approach in IFRS 9. Fully provided balances are not written off from the balance sheet
until the Group has decided to cease enforcement activity.
Financial liabilities
(i) Trade payables
Trade payables are not interest-bearing and are recognised at fair value, and measured
subsequently at amortised cost.
(ii) Borrowings
Interest-bearing loans and overdrafts are initially measured at fair value, net of direct issue costs.
These financial liabilities are subsequently measured at amortised cost using the effective interest
method, with interest expense recognised over the period of the relevant liabilities.
Financial liabilities designated as hedged items in a fair value hedge are subsequently measured
at fair value.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025128 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
m) Inventories
Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing
each product to its present location and condition are accounted for as follows:
Raw materials are valued at cost on a first-in, first-out basis.
The costs of finished goods and work in progress include direct materials and labour and a
proportion of manufacturing overheads based on normal operating capacity but excluding
borrowing costs. Net realisable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and the estimated costs necessary to make the sale.
Provision is made for obsolete, slow-moving and defective inventories.
n) Employee benefits
(i) Retirement and other post-employment obligations
For retirement and other post-employment benefit obligations, the cost of providing benefits is
determined using the Projected Unit Credit Method, with actuarial valuations being carried out
at the end of each reporting period by independent actuaries.
Remeasurement comprising actuarial gains and losses, the effect of the asset ceiling (if applicable)
and the return on scheme assets (excluding interest) are recognised immediately in the
consolidated statement of financial position with a charge or credit to the consolidated statement
of comprehensive income in the period in which they occur. Remeasurement recorded in the
consolidated statement of comprehensive income is not recycled.
Current and past service costs, along with the impact of any settlements or curtailments, are
charged to the consolidated income statement. The net interest expense on pension plans’
liabilities and the expected return on the plans’ assets is recognised within finance expense in the
consolidated income statement.
In addition, pension scheme administrative expenses including the Pension Protection Fund (PPF)
levy and actuary, audit, legal and trustee charges are recognised as administrative expenses.
The retirement benefit and other post-employment benefit obligation recognised in the
consolidated statement of financial position represents the deficit or surplus in the Group’s
defined benefit schemes. Any surplus resulting from this calculation is limited to the present
value of any economic benefits available in the form of refunds from the schemes (net of taxes)
or reductions in future contributions to the schemes and refunds expected from the schemes to
fund other Group defined benefit schemes, in accordance with relevant legislation.
For defined contribution plans, the Group pays contributions to publicly or privately administered
pension plans on a mandatory, contractual or voluntary basis. The contributions are recognised as
employee benefit expenses when they are due. Prepaid contributions are recognised as an asset
to the extent that a cash refund or a reduction in the future payments is available.
1 Principal accounting policies continued
(vi) Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges is deferred in equity. Once the related hedged item is recognised in the income
statement, the amounts deferred in equity are recycled through the consolidated income statement.
The gain or loss arising from any ineffective portion of the hedge is recognised immediately through
the consolidated income statement.
(vii) Hedges of net investments in foreign operations
Gains and losses on hedging instruments relating to the effective portion of such hedges are
recognised through the translation reserve, and recycled through the consolidated income statement
on disposal of the respective foreign operations. The gain or loss arising from any ineffective portion
of such hedges is recognised immediately through the consolidated income statement.
l) Revenue
Revenue comprises the fair value of the sale of goods and services, net of sales tax and discounts
and rebates, and after eliminating sales within the Group. Revenue is recognised as follows:
(i) Sales of goods
Sales of goods are recognised in revenue at a single point in time when control of the goods has
been transferred to the buyer. The point in time at which control is deemed to have transferred
varies depending on the commercial terms agreed with the buyer.
(ii) Sales of services
Sales of services are recognised in the period in which the services are rendered, as follows:
– Software implementation and licensing income – performance obligations are satisfied over a
period of time and therefore revenue is recognised by reference to the stage of completion at
the period end. The Group uses labour hours expended to assess the stage of completion as it
is deemed to be the most appropriate basis to measure progress.
– Maintenance income – performance obligations are satisfied evenly over a fixed period of time
and therefore revenue is recognised on a straight line basis over the maintenance period.
Advances received from customers are included within contract liabilities.
(iii) Income from sales of property
Income from sales of property is recognised on completion when legal title of the property passes
to the buyer.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025129 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have
been enacted by the period end.
Deferred tax is provided using the liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. Deferred taxation is measured on a non-discounted basis. The
following temporary differences are not provided for: goodwill not deducted for tax purposes,
the initial recognition of assets or liabilities that affect neither accounting, nor taxable profit, and
differences relating to investments in subsidiaries to the extent that they will probably not reverse
in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement
of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted
at the period end. A deferred tax asset is recognised only to the extent that it is probable that
future profits will be available against which the asset can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable that the temporary difference
will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only recognised to the extent that
it is probable that there will be sufficient taxable profits against which to utilise the benefits of
the temporary differences and they are expected to reverse in the foreseeable future.
The carrying values of deferred tax assets are reviewed at each period end.
Deferred tax is charged or credited in the income statement, except when it relates to items
charged or credited directly to other comprehensive income or equity, in which case the deferred
tax is also dealt with in other comprehensive income or equity.
p) Government grants
Government grants are not recognised until there is reasonable assurance that the Group will
comply with the conditions attaching to them and that the grants will be received. Government
grants are recognised in profit or loss on a systematic basis over the periods in which the Group
recognises as expenses the related costs for which the grants are intended to compensate.
Government grants that are receivable as compensation for expenses or losses already incurred
or for the purpose of giving immediate financial support to the Group with no future related
costs are recognised in profit or loss in the period in which they become receivable.
1 Principal accounting policies continued
(ii) Share-based compensation
Cash-settled
Cash-settled share-based payments are measured at fair value (excluding the effect of non-
market-based vesting conditions) at each reporting date. The fair value is expensed on a straight-
line basis over the vesting period, with a corresponding increase in liabilities.
Equity-settled
The Group operates an equity-settled Long Term Incentive Plan for executives and senior
management. Awards under this Plan are subject to both market-based and non-market-based
vesting criteria.
The fair value at the date of grant is established by using an appropriate simulation method to
reflect the likelihood of market-based performance conditions being met. The fair value is
charged to the consolidated income statement on a straight-line basis over the vesting period,
with appropriate adjustments being made during this period to reflect expected vesting for non-
market-based performance conditions and forfeitures. The corresponding credit is to equity
shareholders’ funds.
To satisfy awards under this Plan, shares may be purchased in the market by an Employee Benefit
Trust over the vesting period.
(iii) Non-share-based long-term incentive schemes
The anticipated present value cost of non-share-based incentive schemes is charged to the
consolidated income statement on a straight-line basis over the period the benefit is earned,
based on remuneration rates that are expected to be payable.
(iv) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement
date, or whenever an employee accepts voluntary redundancy in exchange for these benefits.
The Group recognises termination benefits when it is demonstrably committed to either:
terminating the employment of current employees according to a detailed formal plan without
possibility of withdrawal; or providing termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits falling due more than 12 months after the period end
are discounted to present value.
o) Taxation
The tax expense represents the sum of the current tax 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 consolidated income statement because it excludes items of income and
expense that are taxable or deductible in other years and it further excludes items that are never
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025130 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
u) Assets held for sale and discontinued operations
Non-current assets and businesses which are to be sold (disposal groups) classified as held for
sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current
assets (and disposal groups) are classified as held for sale if their carrying amount is expected to
be recovered through a sale transaction rather than through continuing use. This condition is
regarded as met only when such a sale is highly probable and the asset (or disposal group) is
available for immediate sale in its present condition. Management must be committed to the
sale, which should be expected to qualify for recognition as a completed sale within one year
from the date of classification.
Non-current assets are classified as held for sale from the date these conditions are met, and such
assets are no longer depreciated.
Discontinued operations are classified as held for sale and are either a separate major line of
business or geographical area of operations that is part of a single coordinated plan to sell. Once
an operation has been identified as discontinued, or is reclassified as discontinued, the
comparative information in the Income Statement is restated.
v) Climate change
In preparation of the consolidated financial statements, consideration has been given to the
impact of climate change on the Group’s key accounting policies, estimates and judgements. As
noted in the Taskforce on Climate-related Financial Disclosures (TCFD) on pages 178-199 we are
exposed to specific transitional and physical climate related risks. The key areas in the consolidated
financial statements that were identified for consideration of potential impacts from these
climate related risks were the assumptions used to support impairment reviews of cash generating
units (CGUs) and accounting policies on estimated useful lives of tangible fixed assets.
(i) Impairment of assets
The key climate related risks considered were the introduction of carbon taxes, disruption of
water supply and extreme weather events (floods and extreme heat). These risks as well as any
potential mitigations were considered when assessing the appropriateness of the assumptions
used to project future cash flows to support the value in use of a CGU. No specific significant
financial impacts relating to climate related risks were identified in relation to the CGUs that were
subject to an impairment review during the year ended 31 December 2025 (see note 13).
In addition, no significant short to medium term (pre 2045) climate related impacts have been
identified for individual assets or other CGUs in the Group.
1 Principal accounting policies continued
q) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to prepare for their
intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. Investment income earned on the temporary
investment of specific borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in the income statement in the period in which they
are incurred.
r) Provisions
A provision is recognised in the consolidated statement of financial position when the Group has
a legal or constructive obligation as a result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation. If the effect is material, a provision
is determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as a borrowing cost.
When some or all of the economic benefits required to settle a provision are expected to be
recovered from an insurer, a receivable is recognised as an insurance reimbursement asset and
included separately within other receivables if it is virtually certain that reimbursement from the
insurer will be received and the amount of the receivable can be measured reliably.
s) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by
the Group from a contract are lower than the unavoidable cost of meeting its obligations under
the contract.
t) Restructuring
A provision for restructuring is recognised when the Group has approved a detailed and formal
restructuring plan, and the restructuring has either commenced or has been announced publicly.
Future operating costs are not provided for.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025131 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
2 Segmental analysis
Operating segments are components of the Group’s business activities about which separate
financial information is available that is evaluated regularly by the chief operating decision maker
(the Group Executive Team) in deciding how to allocate resources and in assessing performance.
The Group’s customers throughout the year ended 31 December 2025 were grouped into three
segments Apparel, Footwear and Performance Materials which have distinct different strategies
and differing customer/end-use market profiles. The Footwear Division includes the results of the
acquired OrthoLite business (see note 31). On 30 October 2025 the Group announced that it was
streamlining its organisation structure into two divisions: Apparel and Footwear, to reflect the
transformation of the Group’s profile following the exit from the Americas Yarns business and
the acquisition of OrthoLite. This change reduces internal complexity and aligns the divisions
more closely with the underlying textile engineering and polymer science technologies.
Effective 1 January 2026 the Group’s new organisational structure and reporting structure
consisted of two divisions: Apparel and Footwear. The Group will report its financial results on
this new segmental basis from half year 2026 and, from 1 January 2026, this is the basis on
which financial information will be reported internally to the chief operating decision maker
(CODM) for the purpose of allocating resources between segments and assessing their
performance. The Personal Protection and Performance Threads business (approximately 80% of
Performance Materials) has become part of the Apparel division. The Telecoms & Energy business
(approximately 20% of Performance Materials) has become part of the Footwear division.
As at 31 December 2025, this internal reorganisation had not been completed and segment
results were grouped into three segments Apparel, Footwear and Performance Materials. The
CODM was provided financial information throughout the year ended 31 December 2025 on
this basis to assess performance and allocate resources.
a) Segment revenue and results
Performance
Apparel Footwear Materials Total
Year ended 31 December 2025 US$m US$m US$m US$m
Continuing operations
Revenue
768.7
440.0
256.2
1,464.9
Segment profit
155.5
105.3
29.0
289.8
Exceptional and acquisition related items (note 4)
(48.4)
Operating profit
241.4
Share of profits of joint ventures
1.3
Finance income
11.0
Finance costs
(52.1)
Profit before taxation from continuing operations
201.6
1 Principal accounting policies continued
(ii) Fixed asset useful lives
Consideration was given as to whether the impact of physical risks relating to extreme weather
events (e.g. flood risk damage) may require a reassessment of the estimated useful lives of fixed
assets. As noted in the physical risks section in our TCFD disclosures, no significant impacts are
currently expected in the short to medium term (pre 2045), after which point the majority of the
Group’s current fixed asset portfolio will be fully depreciated. As such, the reassessment of fixed
asset useful lives to reflect potential impacts of climate change was not deemed necessary.
In light of the above, the Group’s current assessment is that the climate related risks detailed in
the TCFD disclosures section of the Annual Report do not have a material impact on the key
accounting policies, estimates and judgements that form the basis of these consolidated
financial statements.
New IFRS accounting standards, interpretations and amendments adopted in the year
During the year, the Group has adopted the following standards, interpretations and amendments:
– Lack of Exchangeability (Amendments to IAS 21).
The adoption of these standards has not had a material impact on the financial statements of
the Group.
New IFRS accounting standards and interpretations not yet adopted
The following published standards and amendments to existing standards, which have not yet all
been endorsed by the UKEB, are expected to be effective as follows:
From the year beginning 1 January 2026:
– Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7.
– Contracts Referencing Nature-dependent Electricity– Amendments to IFRS 9 and IFRS 7.
– Annual Improvements to IFRS Accounting Standards – Volume 11
From the year beginning 1 January 2027:
– IFRS 18 Presentation and Disclosure in Financial Statements.
– IFRS 19 Subsidiaries without Public Accountability: Disclosures.
The directors do not expect that the adoption of the Standards and Interpretations listed above
will have a material impact on the financial statements of the Group in future periods, although
the full assessment is not complete.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025132 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
2 Segmental analysis continued
Performance
Apparel Footwear Materials Total
Year ended 31 December 2024* US$m US$m US$m US$m
Continuing operations
Revenue
769.8
403.5
259.7
1,433.0
Segment profit
150.6
94.8
26.5
271.9
Exceptional and acquisition related items (note 4)
(47.4)
Operating profit
224.5
Share of profits of joint ventures
1.9
Finance income
3.1
Finance costs
(31.5)
Profit before taxation from continuing operations
198.0
Segment results include items directly attributable to a segment as well as those that can be allocated
on a reasonable basis. Exceptional and acquisition related items are not allocated to segments. In
addition, no measures of total assets and total liabilities are reported for each reportable segment as
such amounts are not regularly provided to the chief operating decision maker.
b) Geographic information
Revenue by origin
Revenue by destination
Non-current assets
2025 2024* 2025 2024 * 2025 2024
Year ended 31 December US$m US$m US$m US$m US$m US$m
Europe, Middle East & Africa (EMEA)
UK
17.3
29.2
7.3
9.1
271.6
263.1
Rest of EMEA
266.5
273.1
236.1
236.7
173.6
160.9
Americas
USA
49.6
56.5
55.8
62.7
823.6
29.9
Rest of Americas
113.2
110.0
123.7
116.4
41.0
45.1
Asia
India
170.8
173.6
170.7
173.3
38.9
38.9
China and Hong Kong
285.8
276.9
227.9
242.0
258.1
259.3
Vietnam
262.8
232.1
246.8
213.7
47.1
34.8
Other
298.9
281.6
396.6
379.1
78.8
66.4
1,464.9
1,433.0
1,464.9
1,433.0
1,732.7
898.4
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
Non-current assets excludes derivative financial instruments, investments, pension surpluses,
pension loan receivable and deferred tax assets.
3 Revenue
An analysis of the Group’s revenue is as follows:
2025 2024*
Year ended 31 December US$m US$m
Goods transferred at a point in time
1,452.7
1,421.7
Software solutions services transferred over time
12.2
11.3
1,464.9
1,433.0
Finance income
11.0
3.1
1,475.9
1,436.1
The software solutions business is included in the Apparel segment.
Disaggregation of revenue
The following table shows revenue disaggregated by primary geographic markets which
reconciles with the Group’s reportable segments:
2025 2024 *
Year ended 31 December US$m US$m
Continuing operations:
Asia
1,018.3
964.2
Americas
162.8
166.5
EMEA
283.8
302.3
1,464.9
1,433.0
Continuing operations:
Apparel
768.7
769.8
Footwear
440.0
403.5
Performance Materials
256.2
259.7
1,464.9
1,433.0
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
The revenue of OrthoLite for the period from its acquisition on 29 October 2025 to 31 December
2025 of $42.6m is included in the amount above for the Footwear segment of which $42.1m is
included in Asia and $0.5m is included in EMEA.
The Group had no revenue from a single customer which accounts for more than 10% of the
Group’s revenue.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025133 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Exceptional items
Exceptional items charged to profit before taxation from continuing operations during the year
ended 31 December 2025 are set out below:
2025 2024*
Year ended 31 December US$m US$m
Exceptional items:
Strategic project costs:
–
Cost of sales
1.3
18.7
–
Distribution costs
0.2
–
–
Administration costs
0.1
4.3
1.6
23.0
Costs to deliver Footwear acquisitions integration synergies:
–
Distribution costs
0.2
0.5
–
Administration costs
–
0.8
0.2
1.3
UK pension scheme costs:
–
Administration costs
–
1.8
Total exceptional items charged to profit before taxation from
continuing operations
1.8
26.1
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
Strategic project costs – Strategic project initiatives commenced during 2022 to optimise the
Group’s portfolio and footprint and improve the overall cost base efficiency. These exceptional
strategic project activities were largely completed at the end of 2024. Exceptional restructuring
costs totalling $1.6m were incurred during the year ended 31 December 2025 (2024: $23.0m).
4 Exceptional and acquisition related items
The Group’s consolidated income statement format is presented before and after exceptional
and acquisition related items. Adjusted results exclude exceptional and acquisition related items
on a consistent basis with the previous reporting period to provide valuable additional information
for users of the financial statements in understanding the Group’s performance and reflects how
the performance of the business is managed and measured on a day-to-day basis. Further details
on alternative performance measures are set out in note 37.
Exceptional items may include significant restructuring associated with a business or property
disposal, litigation costs and settlements, profit or loss on disposal of property, plant and
equipment, non-actuarial gains or losses arising from significant one off changes to defined
benefit pension obligations, regulatory investigation costs and impairment of assets. Acquisition
related items include amortisation of acquired intangible assets, acquisition transaction costs,
contingent consideration linked to employment and adjustments to contingent consideration.
Judgement is used by the Group in assessing the particular items, which by virtue of their scale
and nature, are presented in the income statement and disclosed in the related notes as
exceptional items. In determining whether an event or transaction is exceptional, materiality is a
key consideration and qualitative factors, such as frequency or predictability of occurrence, are
also considered. This is consistent with the way financial performance is measured by management
and reported to the Board.
Total exceptional and acquisition related items charged to profit before taxation from continuing
operations for the year ended 31 December 2025 were $51.6m (2024: $47.4m) comprising
exceptional items for the year ended 31 December 2025 of $1.8m (2024: $26.1m) and acquisition
related items for the year ended 31 December 2025 of $49.8m (2024: $21.3m), which includes
amortisation charges of acquired intangible assets for the year ended 31 December 2025 of
$27.0m (2024: $21.3m). Taxation in respect of exceptional and acquisition related items is set
out in note 9.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025134 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Excluding amortisation of intangible assets acquired through business combinations and
recognised in accordance with IFRS 3 “Business Combinations” from adjusted results also ensures
that the performance of the Group’s acquired businesses is presented consistently with its
organically grown businesses. It should be noted that the use of acquired intangible assets
contributed to the Group’s results for the years presented and will contribute to the Group’s
results in future periods as well. Amortisation of acquired intangible assets will recur in future
periods. Amortisation of software is included within operating results as management consider
these cost to be part of the trading performance of the business.
5 Profit for the year (including discontinued operations)
2025 2024
Year ended 31 December US$m US$m
Profit for the year is stated after charging/(crediting):
Amortisation and impairment of intangible assets
28.5
26.2
Depreciation of owned property, plant and equipment
23.9
25.4
Depreciation of right-of-use assets
17.8
18.0
Impairment of property, plant and equipment and other assets
13.5
18.9
Profit on disposal of property, plant and equipment
(2.3)
(2.4)
Fees charged by EY LLP
Group audit fees:
–
Fees payable for the audit of the Company’s annual accounts
2.4
1.9
–
Fees payable for the audit of the Company’s subsidiaries
1.7
1.4
Fees payable to the Company’s auditor in respect of non-audit related services
1
0.4
0.5
Total fees charged by EY LLP
4.5
3.8
Research and development expenditure
6.1
5.7
Expected credit losses
0.9
3.6
Net foreign exchange losses/(gains)
3.7
(2.8)
Rental income from land and buildings
(0.1)
(0.1)
Inventory as a material component of cost of sales
575.3
602.3
Inventory write-downs to net realisable value
6.7
5.9
1. Includes assurance services provided by EY in relation to the Sustainability Report and the interim results review.
6 Finance income
2025 2024
Year ended 31 December US$m US$m
Income from investments
0.2
0.3
Net gain arising from hyperinflation accounting (see note 1)
2.0
0.3
Other interest receivable and similar income
8.8
2.5
11.0
3.1
4 Exceptional and acquisition related items continued
Costs to deliver Footwear acquisitions integration synergies – During the year ended 31 December
2025 exceptional costs of $0.2m (2024: $1.3m) were charged to the profit and loss account
relating to the integration of the Texon and Rhenoflex businesses, which were acquired in 2022.
UK Pension Scheme costs – There were no exceptional costs relating to the UK pension scheme
during the year ended 31 December 2025. Exceptional costs of $1.8m for the year ended
31 December 2024 related to the purchase of the bulk annuity policy (“buy-in”) in September
2024. As a result of the buy-in, all the financial and demographic risks relating to the scheme's
liabilities are fully hedged. This buy-in represented a significant step in Coats fully insuring its UK
pension obligations.
Acquisition related items
Acquisition related items are set out below:
2025 2024*
Year ended 31 December US$m US$m
Acquisition related items:
Administrative expenses:
Acquisition transaction costs
19.6
–
Amortisation of acquired intangible assets
27.0
21.3
46.6
21.3
Finance costs:
Acquisition transaction costs
3.2
–
Total acquisition related items charged to profit before taxation from
continuing operations
49.8
21.3
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
Acquisition transaction costs including legal and advisory fees charged to administrative expenses
during the year ended 31 December 2025 were $19.6m in connection with the acquisitions of
OrthoLite and Viz Reflectives. Acquisition transaction costs charged to finance costs during the
year ended 31 December 2025 of $3.2m relate to the $550.0m term loan facilities agreement
used to finance the acquisition of OrthoLite (see note 31).
Acquisition transaction costs and amortisation of intangible assets acquired through business
combinations are not included within adjusted operating profit and adjusted earnings per share.
These costs are acquisition related and management consider them to be capital in nature and are
not included in profitability measures by which management assess the performance of the Group.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025135 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
7 Finance costs
2025 2024 *
Year ended 31 December US$m US$m
Interest on bank and other borrowings
37.3
31.3
Interest expense on lease liabilities
4.1
4.0
Net interest on pension scheme assets and liabilities
2.3
(4.2)
Other finance costs including unrealised gains and losses on foreign
exchange contracts
8.4
0.4
52.1
31.5
Other finance costs for the year ended 31 December 2025 include acquisition related transaction
costs of $3.2m (2024: $nil) incurred in connection with the new $550.0m term loan facilities
agreement used to finance the acquisition of OrthoLite (see notes 4 and 31).
8 Staff costs
The average monthly number of employees was:
Year ended 31 December
2025
2024*
Continuing operations
1
:
Manufacturing
15,659
12,624
Other staff
3,475
2,890
19,134
15,514
Discontinued operations
93
364
Total number of employees
19,227
15,878
Comprising:
UK
95
75
Overseas
19,132
15,803
19,227
15,878
The total numbers employed at the end of the year were:
UK
100
90
Overseas
18,789
15,772
Discontinued operations
–
180
Total number of employees
18,889
16,042
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
1. The 2025 average number of employees for continuing operations includes the acquired OrthoLite business from the respective
acquisition date of 29 October 2025 through to 31 December 2025 (see note 32).
2025 2024*
Year ended 31 December US$m US$m
Employee aggregate remuneration comprised (including directors):
Wages and salaries
265.4
258.0
Social security costs
29.4
27.2
Other pension costs (note 10)
5.8
5.9
300.6
291.1
Discontinued operations
4.7
13.2
305.3
304.3
9 Tax on profit from continuing operations
2025 2024*
Year ended 31 December US$m US$m
Current tax charge
(70.5)
(72.6)
Deferred tax credit
5.6
1.1
Total tax charge
(64.9)
(71.5)
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
The current tax charge includes withholding tax charges for the year ended 31 December 2025
of $15.0m (2024: $16.7m) including withholding taxes arising from the repatriation of earnings
and payment of intra-group charges mainly to the United Kingdom. The United Kingdom current
corporation tax charge at 25% (2024: 25%) was $nil for the year ended 31 December 2025
and 2024.
For the year ended 31 December 2025 the tax credit in respect of exceptional and acquisition
related items was $8.5m (2024: charge of $1.5m). This includes tax credits in connection with
acquisition transaction costs of $1.3m (2024: $1.4m in connection with exceptional strategic
projects), an acquisition related tax credit totalling $7.2m (2024: $4.3m) relating to the unwinding
of deferred tax liabilities on the amortisation of acquired intangible assets, which in 2025 includes
OrthoLite, and an exceptional deferred tax charge on writing down deferred tax assets in Mexico
of $nil (2024: $7.2m).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025136 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
9 Tax on profit from continuing operations continued
The tax charge for the year can be reconciled as follows:
2025
2024*
Exceptional Exceptional
and and
acquisition acquisition
related related
Adjusted items Total Adjusted items Total
Year ended 31 December US$m US$m US$m US$m US$m US$m
Profit before tax
253.2
(51.6)
201.6
245.4
(47.4)
198.0
Expected tax charge/
(credit) at the UK
statutory rate of 25%
(2024:25%)
63.3
(12.9)
50.4
61.4
(11.9)
49.5
Differences between
overseas and UK
taxation rate
(5.9)
1.2
(4.7)
(6.2)
0.8
(5.4)
Non-deductible
expenses and other
adjustments
15.4
4.0
19.4
2.0
3.4
5.4
Non-taxable income
(2.5)
–
(2.5)
(1.2)
(0.1)
(1.3)
Local tax incentives
(3.2)
–
(3.2)
(2.3)
–
(2.3)
Utilisation of
unrecognised deferred
tax assets
(5.4)
–
(5.4)
(1.0)
–
(1.0)
Potential deferred tax
assets not recognised
4.8
–
4.8
5.0
9.3
14.3
Impact of changes in
tax rates
(1.9)
(1.9)
–
–
–
Prior year adjustments
(2.1)
1.1
(1.0)
(2.9)
–
(2.9)
Withholding tax on
remittances (net of
double tax credits)
9.0
–
9.0
15.2
–
15.2
Income tax charge/
(credit)
73.4
(8.5)
64.9
70.0
1.5
71.5
Effective tax rate
29%
(16)%
32%
29%
(3)%
36%
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
The Group’s adjusted effective tax rate is higher than the blended rate of the countries we
operate in primarily due to the impact of unrecognised tax losses and the impact of withholding
taxes on the repatriation of earnings and payment of intra-group charges to the UK.
Excluding exceptional and acquisition related items, the adjusted effective rate on pre-tax profits
was 29% (2024: 29%).
Pillar Two
For the year ended 31 December 2025 the tax charge in the income statement related to Pillar
Two income taxes was $0.9m (2024: $1.2m). This current tax charge mainly relates to profits
earned in Honduras, Hungary and Singapore, which either have statutory tax rates of less than
15% or where the Group is able to take advantage of a tax holiday. The acquisition of OrthoLite
had no material impact on the 2025 Pillar Two tax charge, and the Group continues to assess the
Pillar Two impact of the acquisition on its future financial performance. The Group has applied
the temporary exception issued by the IASB in May 2023 from the accounting requirements
for deferred taxes in IAS 12. Accordingly, the Group neither recognises nor discloses
information about deferred tax assets and liabilities related to Pillar Two income taxes for the
current financial year.
Uncertain tax positions
The Group’s tax liability includes a number of tax provisions, which together total $58.3m (2024:
$26.0m). The increase in the year is primarily due to $24.9m provisional assessment of uncertain
tax liabilities acquired with OrthoLite, and $7.2m arising from in-year reassessments of various
existing open tax positions, reflected in the 'Non deductible expenses and other adjustments' line
in the above tax reconciliation table reflected in the 'Non deductible expenses and other
adjustments' line in the above tax reconciliation table. These provisions relate to management’s
estimate of the amount of tax payable on open tax returns yet to be agreed with the local
tax authorities.
The final outcome on resolution of open issues with the relevant local Tax Authorities may vary
significantly due to the uncertainty associated with such tax items and the continual evolution
and development of local Tax Authorities. There is a wide range of possible outcomes and any
variances in the final outcome to the provided amount will affect the tax financial results in the
year of agreement.
The amount provided for uncertain tax positions has been made using the best estimate of the
tax expected to be ultimately paid, taking into account any progress on the discussions with local
Tax Authorities, together with expert in-house and third-party advice on the potential outcome
and recent developments in case law, Tax Authority practices and previous experience.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025137
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
9 Tax on profit from continuing operations continued
Taxation paid
During the year the Group made Corporate Income Tax payments in respect of continuing
operations (including withholding and dividend distribution taxes) of $70.8m (2024: $69.4m).
The amount of tax paid in each jurisdiction is as follows:
2025 2024
Year ended 31 December US$m US$m
Vietnam
18.0
12.4
UK
13.9
16.0
Indonesia
7.8
6.6
Hong Kong
6.1
6.8
China
5.2
4.8
India
4.4
5.5
Bangladesh
3.0
2.5
Pakistan
2.8
2.5
Others (26 countries each less than $2.5m)
9.6
12.3
Total Corporate Income Tax paid
70.8
69.4
The taxes paid in the UK are withholding taxes on royalties, group charges and dividends,
deducted and paid at source. In the year ended 31 December 2025 the Group paid withholding
taxes of $14.0m (2024: $16.8m).
10 Retirement and other post-employment benefit arrangements
a) Pension and other post-employment costs
Pension and other post-employment costs charged to operating profit for the year (continuing
and discontinued operations) were:
Year ended Year ended
31 December 31 December
2025 2024
US$m US$m
Defined contribution schemes
2.3
2.8
Defined benefit schemes – funded and unfunded schemes
3.5
3.2
Past service credit
(0.1)
(6.4)
Settlements
0.1
–
Administrative expenses for defined benefit schemes
0.6
11.9
6.4
11.5
Included in the above table for the year ended 31 December 2024 is a net exceptional charge
relating to the UK pension scheme of $1.8m. This consists of a provision for estimated
administration costs relating to the UK pension scheme of $8.5m, offset by an exceptional past
service credit of $6.7m which arose due to adjustments made to member benefits during the
year ended 31 December 2024.
b) Defined contribution schemes
The Group operates a number of defined contribution plans around the world to provide
pension benefits.
c) Defined benefit schemes
The Group operates various defined benefit pension and other post-employment arrangements
in most of the countries in which it operates. The most significant defined benefit pension
schemes are the Coats UK Pension Scheme and the Coats North America Pension Plan (US Plan),
both of which are closed to future accrual.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025138 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
10 Retirement and other post-employment benefit arrangements continued
Coats UK Pension Scheme
The Coats UK Pension Scheme (“the Scheme”) is administered by a trustee. Its assets are held in
funds that are legally separated from the Group and are subject to UK legislation with oversight
from the Pensions Regulator. It was formed in 2018 by bringing together three historic UK
schemes, the last of which closed to future accrual in 2016. The trustee board is composed of
representatives of both the Group and scheme members together with two independent
trustees. The trustee board is required by law and the Scheme’s rules to act in the interest of the
Scheme’s members and other stakeholders (for example the Group).
The sponsor of the Scheme is Coats Limited and the Company provides a guarantee to the Scheme.
The trustee board is responsible for setting the Scheme’s investment policy following consultation
with the wider Group.
The Scheme is subject to full actuarial valuations every three years using assumptions agreed
between the trustee board and the wider Group. In December 2024, the Group and the trustee
board agreed the latest actuarial valuation of the scheme with an effective date of 31 March
2024. The next triennial valuation will be as at 31 March 2027.
Buy-ins
Pensioner buy-in
In December 2022, the trustee board purchased a circa £350m bulk annuity policy from Aviva,
which insures all the benefits payable in respect of around 3,700 pensioner members (a “pensioner
buy-in”). This policy saw all financial and demographic risks, including those related to longevity,
covered for approximately 20% of Scheme members.
Additional buy-in
In September 2024, the trustee board purchased a circa £1.3bn bulk annuity policy from Pension
Insurance Corporation plc (“PIC”), which insures all the benefits payable in respect of the
remaining 80% of the scheme’s liabilities. As a result of the buy-in, all the financial and
demographic risks relating to the scheme’s liabilities are now fully hedged. This buy-in represents
a significant step in Coats’ fully insuring its UK pension obligations.
The agreement with PIC required up to c.£100m ($128m) of additional funding from the Group,
with Coats making a £70m ($90m) upfront cash contribution to the scheme and a further £30m
($38m) provided initially as a loan to the Scheme. As the insurance premium for the purchase of
the PIC policy was higher than the pension liabilities measured on an IAS 19 basis, an actuarial
loss arose, which for the year ended 31 December 2024 totalled $224.9m.
At 31 December 2025 the loan receivable from the UK pension scheme including accrued interest
was $43.6m (2024: $38.3m) which is included in the Group’s consolidated balance sheet within
non-current assets. The UK pension scheme has the equivalent amount payable to the Group
which is included in retirement benefit obligations within non-current liabilities and therefore
offsets overall in the Group’s consolidated balance sheet. The loan is due for repayment on
4 September 2029 or on winding up of the UK Pension Scheme, whichever is earlier, or at an
earlier date if agreed between the parties. The loan is expected to be recovered in full on or
before 4 September 2029. The interest rate on the loan is SONIA (Sterling Over Night Indexed
Average) plus 150 basis points per annum. The interest on the loan for the year ended
31 December 2025 was $2.3m (2024: $0.8m). The loan was made to the UK pension scheme in
connection with the premium payable to PIC in respect of the buy-in transaction and provides
the UK pension scheme with cash until certain long-term assets are realised. Excluding the loan
payable to the company, the UK Pension Scheme has a surplus of $18.4m as at 31 December
2025 (2024: $29.2m).
The two bulk annuity policies are assets of the Scheme and form part of the total Scheme assets
disclosed below. Under IAS 19 it is deemed a qualifying insurance policy, due to it exactly
matching the amount and timing of benefits payable by the Scheme to the covered members.
Under IAS 19, the value of the bulk annuity policy is therefore set equal to the corresponding IAS
19 liabilities for covered members; not the premium paid.
Coats North America Pension Plan
The Coats North America Pension Plan (Coats US) is a defined benefit scheme, the assets of
which are held in funds that are legally separated from the Group. The Plan closed to new hires
from 1 January 2020 and closed to future accrual from 1 January 2022.
Overall Group position
The UK and US schemes represent around 95% of the Group’s total defined benefit obligations.
Both these schemes are pre-funded, whereas the majority of the Group’s other arrangements
(most significantly in Germany) are unfunded and benefits are met on an ongoing basis by the
Group. The overall balance sheet position for the Group in respect of the retirement and other
post-employment defined benefit arrangements on an IAS 19 basis, was a net deficit of $11.1m
as at 31 December 2025, excluding a loan payable by the Coats UK Pension Scheme to the
Group of $43.6m. Including the loan of $43.6m as a liability of the Coats UK Pension Scheme
payable to the Group, the net deficit for the Group’s retirement and other post-employment
defined benefit, on an IAS 19 basis, was $54.7m as at 31 December 2025.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025139 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
10 Retirement and other post-employment benefit arrangements continued
The following disclosures are required in accordance with the requirements of IAS 19 and do not include information in respect of schemes operated by joint ventures. The information provided
below for defined benefit plans has been prepared by independent qualified actuaries based on the most recent formal actuarial valuations of the schemes (effective at 31 March 2024 and 1 January
2025 for the UK and US respectively), updated to take account of the valuations of assets and liabilities as at 31 December 2025.
i) Principal risks
The Group is exposed to actuarial and investment risks, the principal risks are:
Risk
Description
Commentary
Interest rate risk The present value of the defined benefit plan liabilities is calculated using a discount rate The impact of the movement in discount rates are shown on page 145. The Trustees of the UK
determined by reference to bond yields. A decrease in bond yield rates will increase defined and US schemes hedge these sensitivities through physical bonds, derivatives and insurance
benefit obligations. policies. The buy-ins for the Coats UK Pension Scheme means this risk is fully hedged in the UK.
Inflation The present value of the defined benefit liabilities are calculated by reference to assumed future The impact of the movement in inflation rates are shown on page 145. The Trustees of the UK
inflation rates. An increase in inflation rates will increase defined benefit obligations. and US schemes hedge these sensitivities through physical bonds, derivatives, real assets and
insurance policies. The buy-ins for the Coats UK Pension Scheme means this risk is fully hedged
in the UK.
Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best The impact of an increase in life expectancy is shown on page 145. The buy-ins for the Coats
estimate of member life expectancies. An increase in life expectancy will increase liabilities. UK Pension Scheme means this risk is fully hedged in the UK.
The UK funded scheme’s bought in status means investment risk is carried on the illiquid assets
still held whilst awaiting their redemption.
The US scheme is fully funded and has a significant proportion of fixed income. The fixed income
is invested directly to protect the funded status of the scheme. Trustees work with fixed income
managers to consider the liabilities (including key period durations, credit spread duration and
The scheme assets are shown on a mark-to-market basis. A decrease in asset values at a relevant convexity) and have created a custom fixed income benchmark to match the liabilities and
measurement date, to the extent assets do not hedge liabilities, would lead to an increased protect the funded status. In addition the schemes’ investment policies recognise the need to
Investment risk disclosed deficit or reduced surplus. generate cash flows to meet members’ benefits as they fall due.
The scheme needs available financial resources to meet obligations when they fall due. Not being The schemes’ investment policies recognise the need to generate cash flows to meet members’
able to sell assets in a timely manner for the expected valuation could lead to an increased benefits as they fall due. The buy-ins for the Coats UK Pension Scheme means income equal to
Liquidity risk disclosed deficit or reduced surplus. the benefits payable is being received on a monthly basis.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025140 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
iii) Amounts recognised in the consolidated income statement
Amounts recognised in income in respect of these defined benefit schemes are as follows:
Coats UK
Pension
Scheme Coats US Other Group
Year ended 31 December 2025 US$m US$m US$m US$m
Current service cost
–
–
(3.5)
(3.5)
Past service credit
–
–
0.1
0.1
Settlements
–
–
(0.1)
(0.1)
Administrative expenses
–
(0.6)
–
(0.6)
Interest on defined benefit obligations – unwinding
–
(0.6)
(3.5)
(4.1)
of discount
(90.1)
(1.4)
(4.8)
(96.3)
Interest income on pension scheme assets
89.6
5.4
0.7
95.7
Effect of asset ceiling
–
(1.7)
–
(1.7)
(0.5)
2.3
(4.1)
(2.3)
Coats UK
Pension
Scheme Coats US Other Group
Year ended 31 December 2024 US$m US$m US$m US$m
Current service cost
–
–
(3.2)
(3.2)
Past service credit/(cost)
6.7
–
(0.3)
6.4
Administrative expenses
(11.4)
(0.5)
–
(11.9)
(4.7)
(0.5)
(3.5)
(8.7)
Interest on defined benefit obligations – unwinding
of discount
(82.4)
(1.2)
(4.6)
(88.2)
Interest income on pension scheme assets
89.9
5.0
0.6
95.5
Effect of asset ceiling
(1.5)
(1.6)
–
(3.1)
6.0
2.2
(4.0)
4.2
10 Retirement and other post-employment benefit arrangements continued
ii) Principal assumptions
The principal assumptions for the UK and US schemes are as follows:
Coats UK
Pension
Scheme Coats US Other
Principal assumptions at 31 December 2025 % % %
Rate of increase in salaries
–
–
5.8
Rate of increase for pensions in payment
Various
–
1.7
Discount rate
5.4
5.5
6.7
Inflation assumption
2.9
–
4.8
Coats UK
Pension Scheme Coats US Other
Principal assumptions at 31 December 2024 % % %
Rate of increase in salaries
–
–
5.9
Rate of increase for pensions in payment
Various
–
1.7
Discount rate
5.4
5.6
6.7
Inflation assumption
3.3
–
5.0
The rate of increase for pensions in payment for members of the combined Coats UK Pension
Scheme vary in accordance with each member’s former scheme category and period of
membership. For former Coats UK plan members the increases for pensions in payment are
assumed to be at a rate of 2.8% (2024: 3.1%). For former Staveley scheme members, the
majority of the increases for pensions in payment fall within the range 2.2%–2.8% (2024: 2.3%–
3.1%). For former Brunel scheme members, the majority of the increases for pensions in payment
fall within the range 3.3%–4.0% (2024: 3.4%–4.0%).
The assumed life expectancy on retirement is:
Year ended 31 December 2025
Year ended 31 December 2024
Coats UK
Pension Coats UK
Scheme Coats US Pension Scheme Coats US
Years Years Years Years
Retiring today at age 60:
Males
25.2
25.1
24.8
25.0
Females
27.8
27.3
27.6
27.2
Retiring in 20 years at age 60:
Males
26.3
26.8
26.0
26.7
Females
28.9
28.9
28.8
28.8
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025141 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
v) Amounts recognised in the consolidated statement of financial position
The amounts included in the consolidated statement of financial position arising from the
Group’s defined benefit arrangements are as follows:
Coats UK
Pension
Scheme Coats US Other Total
Year ended 31 December 2025 US$m US$m US$m US$m
Cash and cash equivalents
23.9
1.2
3.2
28.3
Other scheme liabilities
(113.8)
–
–
(113.8)
Equity instruments:
US
0.6
13.9
–
14.5
UK
0.1
1.2
–
1.3
Eurozone
0.6
4.1
–
4.7
Other regions
–
8.1
2.1
10.2
Debt instruments:
Corporate bonds (Investment grade)
–
45.8
–
45.8
Corporate bonds (Non-investment grade)
9.6
1.7
–
11.3
Government/sovereign instruments
–
29.1
–
29.1
Global real estate
45.0
–
–
45.0
Assets held by insurance company:
Insurance contracts
1,734.1
–
1.0
1,735.1
Other
–
–
4.8
4.8
Total market value of assets
1,700.1
105.1
11.1
1,816.3
Actuarial value of scheme liabilities
(1,725.3)
(25.2)
(85.7)
(1,836.2)
Net asset/(liability) in the scheme
(25.2)
79.9
(74.6)
(19.9)
Adjustment due to asset ceiling
1
–
(34.8)
–
(34.8)
Recoverable net asset/(liability) in the scheme
(25.2)
45.1
(74.6)
(54.7)
1. The accounting surplus under IAS 19 for the Coats US pension scheme is presented net of tax on the consolidated statement of
financial position. Please see section viii for further details.
The other scheme liabilities for the Coats UK Pension Scheme in the above table include a $43.6m
loan payable to the Group and a $67.3m (2024: $86.8m) deferred premium balance payable to
PIC in respect of the buy-in transaction.
The insurance contract asset for the Coats UK Pension Scheme in the above table includes excess
insurance of $25.6m (2024: $16.3m), which will be subject to customary post-transaction data
reconciliations. This will be utilised during the buy-in transaction completion process, which will
include insuring the incremental defined benefit obligations arising as a result of the Guaranteed
Minimum Pension equalisation.
10 Retirement and other post-employment benefit arrangements continued
iv) Amounts recognised in the consolidated statement of comprehensive
income
Actuarial gains and losses were as follows:
Year ended Year ended
31 December 31 December
2025 2024
US$m US$m
Effect of changes in demographic assumptions
(6.7)
39.3
Effect of changes in financial assumptions
42.4
142.2
Effect of experience adjustments
(23.0)
(46.7)
Remeasurement on assets (excluding interest income)
(20.8)
(398.0)
Adjustment due to asset ceiling
(2.0)
38.1
Included in the statement of comprehensive income
(10.1)
(225.1)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025142
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
The amounts are presented in the consolidated statement of financial position as follows:
2025 2024
Year ended 31 December US$m US$m
Non-current assets:
Funded
48.7
44.0
Current assets:
Funded
1.5
1.5
Current liabilities:
Funded
(0.4)
(0.4)
Unfunded
(6.8)
(7.5)
Non-current liabilities:
Funded
(30.0)
(14.4)
Unfunded
(67.7)
(65.6)
(54.7)
(42.4)
The above overall net deficit balance for the Group’s retirement and other post-employment
defined benefit arrangements of $54.7m (2024: $42.4m) includes the $43.6m (2024: $38.3m)
loan payable by the Coats UK Pension Scheme to the Group.
Excluding the loan payable by the Coats UK Pension Scheme to the Group of $43.6m (2024:
$38.3m), the net deficit for the Group’s retirement and other post-employment defined benefit
arrangements was $11.1m as at 31 December 2025 (2024: $4.1m).
The schemes disclosed as part of the ‘other’ column in the tables above include surplus positions
of $5.0m (2024: $4.1m).
10 Retirement and other post-employment benefit arrangements continued
Coats UK
Pension Scheme Coats US Other Total
Year ended 31 December 2024 US$m US$m US$m US$m
Cash and cash equivalents
16.9
1.0
2.5
20.4
Other scheme liabilities
(129.9)
–
–
(129.9)
Equity instruments:
US
–
13.1
–
13.1
UK
2.2
1.2
–
3.4
Eurozone
0.5
3.9
–
4.4
Other regions
–
7.4
1.7
9.1
Debt instruments:
Corporate bonds (Investment grade)
–
44.4
–
44.4
Corporate bonds (Non-investment grade)
25.2
1.3
–
26.5
Government/sovereign instruments
–
25.5
–
25.5
Global real estate
78.1
–
–
78.1
Assets held by insurance company:
Insurance contracts
1,664.6
0.2
0.8
1,665.6
Other
(1.9)
–
2.2
0.3
Total market value of assets
1,655.7
98.0
7.2
1,760.9
Actuarial value of scheme liabilities
(1,664.8)
(25.4)
(82.0)
(1,772.2)
Net asset/(liability) in the scheme
(9.1)
72.6
(74.8)
(11.3)
Adjustment due to asset ceiling1
–
(31.1)
–
(31.1)
Recoverable net asset/(liability) in the scheme
(9.1)
41.5
(74.8)
(42.4)
1. The accounting surplus under IAS 19 for the Coats UK and US pension schemes is presented net of tax on the consolidated
statement of financial position. Please see section viii for further details.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025143
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
vi) Assets without a quoted price in an active market
For the Coats UK Pension Scheme, all assets in the table in section v of this note do not have a
quoted price in an active market. For the Coats US scheme, included in the table in section v of
this note are $45.8m (2024: $44.4m) of corporate bonds (Investment grade), $1.7m (2024:
$1.3m) of corporate bonds (Non-investment grade) and $0.2m (2024: $0.2m) of insurance
contracts without a quoted price in an active market. All other assets have a quoted price in an
active market.
vii) Basis of asset valuation
Under IAS 19, plan assets must be valued at the bid market value at the balance sheet date. For
the main asset categories:
– Equities and bonds listed on recognised exchanges are valued at closing bid prices;
– Other bonds are measured using a combination of broker quotes and pricing models making
assumptions for credit risk, market risk and market yield curves;
– Global real estate assets are valued on either a fair value approach as provided by the investment
manager or notional bid valuations provided by the investment managers due to investments
being held within a single priced pooled investment vehicle. Valuations are prepared in
accordance with the current RICS Valuation – Global Standards (1 July 2017) and the RICS
Valuation – Professional Standards UK January 2014 (revised April 2015);
– Certain unlisted investments, for example derivatives and insurance contracts, are valued using
a model based valuation such as a discounted cash flow; and
– Diversified investment funds are valued at fair value which is typically the Net Asset Value
provided by the investment manager.
viii) Recoverability of plan surplus
The recoverable surplus on the Coats US scheme has been recognised in line with the annual
refunds expected from the scheme to fund the US post-retirement medical scheme in accordance
with relevant US legislation, and the residual surplus recognised net of applicable US taxes. The
pension scheme was in a surplus position of $79.9m at 31 December 2025 of which a recoverable
surplus of $45.1m is recognised on the Balance Sheet.
10 Retirement and other post-employment benefit arrangements continued
Year ended Year ended
31 December 31 December
2025 2024
US$m US$m
Movements in the present value of defined benefit obligations were as follows:
At 1 January
(1,772.2)
(2,008.9)
Current service cost
(3.5)
(3.2)
Increase in liabilities on settlements
(0.1)
–
Past service credit
0.1
6.4
Interest on defined benefit obligations – unwinding of discount
(96.3)
(88.2)
Actuarial losses on obligations
12.7
134.8
Benefits paid
154.7
154.3
Net movement due to acquisitions and disposals of subsidiaries
(0.6)
–
Exchange difference
(131.0)
32.6
At 31 December
(1,836.2)
(1,772.2)
Movements in the fair value of scheme assets were as follows:
At 1 January
1,760.9
2,137.6
Interest income on scheme assets
95.7
95.5
Remeasurement on assets (excluding interest income)
(20.8)
(398.0)
Contribution from sponsoring companies
9.5
108.2
Benefits paid
(154.7)
(154.3)
Administrative expenses paid from plan assets
(0.6)
(0.5)
Exchange difference
126.3
(27.6)
At 31 December
1,816.3
1,760.9
Administrative expenses paid from plan assets excludes those expenses paid directly by the Group.
The reconciliation of the effect of the asset ceiling is as follows:
Unrecognised surplus at 1 January
31.1
65.9
Interest cost on unrecognised surplus
1.7
3.1
Changes in the effect of limiting a net defined benefit asset to the asset ceiling
(excluding interest)
2.0
(38.1)
Exchange difference
–
0.2
Unrecognised surplus at 31 December
34.8
31.1
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025144
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
In presenting the above sensitivity analysis, the present value of the defined benefit obligation
has been calculated using the projected unit credit method at the end of the reporting period,
which is the same as that applied in calculating the defined benefit obligation liability recognised
in the consolidated statement of financial position. There was no change in the methods and
assumptions used in preparing the sensitivity analysis from prior years.
Year ended Year ended
31 December 31 December
2025 2024
+1% -1% +1% -1%
US$m US$m US$m US$m
Sensitivity of medical schemes to medical cost trend
rate assumptions:
Effect on total service cost and interest cost
components of other schemes
–
–
–
–
Effect on defined benefit obligation of other schemes
0.6
(0.5)
0.5
(0.3)
xi) Expected contributions for 2026
The total estimated amount to be paid in respect of all of the Group’s retirement and other post-
employment benefit arrangements during the 2026 financial year (excluding administrative
expenses paid by the Company) is $6.1m.
d) United Kingdom Pension Benefits — High Court of Justice Ruling on
Actuarial Confirmations
In June 2023, the High Court ruled in the case between Virgin Media and the NTL Pension
Trustees II Limited (and others) that the absence of a “Section 37” certificate accompanying an
amendment to benefits in a contracted-out pension scheme would render the amendment void,
which could potentially lead to additional liabilities for some pension schemes and sponsors. The
appeal on the Virgin Media and the NTL Pension Trustees II Limited (and others) case was
dismissed on 25 July 2024.
The Trustee’s legal advisers have carried out a high-level due diligence exercise on the deeds of
amendment covering the most consequential changes since April 1997 (which all relate to the
historic Coats schemes which merged to form the Scheme) and have concluded that overall,
there appears to be a good indication of compliance with section 37.
On 5 June 2025, the Government announced that it will introduce legislation to give affected
pension schemes the ability to retrospectively obtain written actuarial confirmation that historic
benefit changes met the necessary standards. Given this, the Group’s current expectation is that
no adjustments to the Coats UK Pension Scheme defined benefit obligations will be required.
The Group and the Trustee of the Coats UK Pension Scheme will continue to keep this matter
under review.
10 Retirement and other post-employment benefit arrangements continued
ix) Duration of plan liabilities
The weighted average duration of benefit obligations is 10 years (2024: 10 years) for the Coats
UK scheme and 10 years (2024: 10 years) for the Coats US scheme.
x) Sensitivities
Sensitivities regarding the discount rate, inflation (which also impacts the rate of increases in
salaries and rate of increase for pension in payments assumptions for the UK scheme) and
mortality assumptions used to measure the liabilities of the principal schemes, along with the
impact they would have on the scheme liabilities, are set out below. Interrelationships between
assumptions might exist and the analysis below does not take the effect of these interrelationships
into account:
Year ended Year ended
31 December 31 December
2025 2024
+0.25% -0.25% +0.25% -0.25%
US$m US$m US$m US$m
Coats UK Pension Scheme discount rate
(40.9)
42.6
(39.5)
41.1
Coats US discount rate
(0.6)
0.6
(0.6)
0.6
Coats UK Pension Scheme inflation rate
28.4
(22.0)
26.1
(22.7)
Coats US inflation rate
–
–
–
–
An increase of 1.0% in the discount rate would result in the Coats UK Pension Scheme and the
Coats US scheme liabilities decreasing by $154.2m and $2.2m (2024: $149.1m and $2.3m).
A decrease of 1.0% in the discount rate would result in the Coats UK Pension Scheme and the
Coats US scheme liabilities increasing by $181.2m and $2.7m (2024: $175.3m and $2.7m)
respectively. The above sensitivity analysis (on a IAS 19 basis) considers the impact on the scheme
liabilities only and excludes any impacts on scheme assets from changes in discount and inflation
rates. As noted on page 140, the Coats UK Pension Scheme is currently fully bought in and so
changes in scheme liabilities due to movements in discount and inflation rates would have fully
offsetting impacts from the buy-in assets.
If members of the Coats UK Pension Scheme live one year longer the scheme liabilities will
increase by $60.6m (2024: $61.2m), however, there would be no balance sheet impact as the
buy-in asset would also increase by the same amount. If members of the Coats US scheme live
one year longer scheme liabilities will increase by $0.4m (2024: $0.4m), however, there would be
no overall impact on the recoverable surplus.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025145
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Year ended 31 December
2025
Number of
2024
Number of
shares shares
m m
Weighted average number of ordinary shares in issue for basic earnings per
share
1,750.6
1,604.5
Adjustment for share options and LTIP awards
10.6
20.1
Weighted average number of ordinary shares in issue for diluted
earnings per share
1,761.2
1,624.6
2025 2024*
Year ended 31 December cents cents
Continuing operations:
Basic earnings per ordinary share
6.79
6.66
Diluted earnings per ordinary share
6.75
6.58
Continuing and discontinued operations:
Basic earnings per ordinary share
5.91
4.99
Diluted earnings per ordinary share
5.87
4.93
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
12 Dividends
2025 2024
Year ended 31 December US$m US$m
2025 interim dividend paid – 1.0 cents per share
19.2
–
2024 final dividend paid – 2.19 cents per share
34.9
–
2024 interim dividend paid – 0.93 cents per share
–
14.8
2023 final dividend paid – 1.99 cents per share
–
31.7
54.1
46.5
The proposed final dividend of 2.28 cents per ordinary share for the year ended 31 December
2025 is not recognised as a liability in the consolidated statement of financial position in line with
the requirements of IAS 10 Events after the Reporting Period and, subject to shareholder approval,
will be paid on 28 May 2026 to ordinary shareholders on the register on 8 May 2026, with an
ex-dividend date of 7 May 2026.
11 Earnings per share
The calculation of basic earnings per ordinary share from continuing operations is based on the
profit from continuing operations attributable to equity shareholders and the weighted average
number of Ordinary Shares in issue during the year, excluding shares held by the Employee
Benefit Trust but including shares under share incentive schemes which are not contingently
issuable. The weighted average number of Ordinary Shares includes the capital raise during the
year ended 31 December 2025 (see note 26).
The calculation of basic earnings per ordinary share from continuing and discontinued operations
is based on the profit attributable to equity shareholders. The weighted average number of
ordinary shares used for the calculation of basic earnings per ordinary share from continuing and
discontinued operations is the same as that used for basic earnings per ordinary share from
continuing operations.
For diluted earnings per ordinary share, the weighted average number of ordinary shares in issue
is adjusted to include all potential dilutive ordinary shares. The Group has two classes of dilutive
potential Ordinary Shares: those shares relating to awards under the Group Deferred Bonus Plan
which have been awarded but not yet reached the end of the three year retention period and
those long-term incentive plan awards for which the performance criteria would have been
satisfied if the end of the reporting period were the end of the contingency period.
2025 2024*
Year ended 31 December US$m US$m
Profit from continuing operations attributable to equity shareholders
118.9
106.9
Profit from continuing and discontinued operations attributable to equity
shareholders
103.4
80.1
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
Profit from continuing operations attributable to equity shareholders for the year ended
31 December 2025 of $118.9m (2024: $106.9m) comprises the profit from continuing operations
for the year ended 31 December 2025 of $136.7m (2024: $126.5m) less non-controlling interests
for the year ended 31 December 2025 of $17.8m (2024: $19.6m) as reported in the income
statement.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025146
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
The carrying value of the Coats brand at 31 December 2025 and 31 December 2024 is $239.6m.
There is no foreseeable limit to the net cash inflows from royalties, which are generated from
continued sales of thread resulting from the Coats brand, and the brand is therefore assessed as
having an indefinite useful life, and as such, is reviewed for impairment annually. The recoverable
amount of the Coats brand has been estimated using the relief from royalty method to calculate
the fair value and is re-assessed annually by reference to the discounted cash flow arising from
the royalties generated by the Coats brand. The fair value measurement is categorised in its
entirety in line with level 3 of the fair value hierarchy. The valuation has been based on the latest
budget and Medium Term Plan approved by the Board, covering the period to 31 December
2028, applying a pre-tax discount rate of 10.8% (2024: 10.5%) and long-term growth of 2.6%
(2024: 2.5%). Management believes that no reasonable potential change in any of the above
key assumptions would cause the carrying value to exceed its recoverable amount. The Coats
brand is allocated to cash-generating units (CGUs) that are expected to benefit from the Coats
brand for the purposes of impairment testing of CGUs.
Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are
expected to benefit from that business combination. The Group completed two acquisitions
during the year obtaining control of OrthoLite and acquiring the trade and assets of Viz Reflectives
(see note 31). The provisional goodwill arising from these acquisitions has initially been allocated
to standalone Footwear Insoles and Viz Reflectives CGUs. These initial allocations will be reviewed
next year following further integration of Footwear Insoles and Viz Reflectives with the pre-
existing Coats Footwear and Apparel businesses.
The carrying amount of goodwill has been allocated as follows:
2025 2024
Year ended 31 December US$m US$m
Footwear Insoles
242.2
–
Footwear thread and structural components
103.2
98.6
Gotex
13.5
11.9
Coats Digital
8.8
8.2
Viz Reflectives
3.5
–
Other
1.7
1.7
372.9
120.4
13 Intangible assets
Acquired intangibles
Brands &
trade Customer Total Computer
Goodwill names Technology relationships acquired software Total
Cost US$m US$m US$m US$m US$m US$m US$m
At 1 January 2024
126.1
285.1
58.2
169.0
512.3
74.9
713.3
Currency translation differences
(3.1)
(1.0)
(1.6)
(3.7)
(6.3)
(1.0)
(10.4)
Additions
–
–
–
–
–
1.1
1.1
Disposals
–
–
–
–
–
(0.1)
(0.1)
At 31 December 2024
123.0
284.1
56.6
165.3
506.0
74.9
703.9
Currency translation differences
6.8
2.1
3.4
7.7
13.2
1.4
21.4
Acquisition of subsidiaries (see
note 31)
245.7
59.7
77.2
439.7
576.6
0.6
822.9
Additions
–
–
–
–
–
1.6
1.6
Disposals
(2.6)
(1.3)
(0.7)
–
(2.0)
(0.8)
(5.4)
At 31 December 2025
372.9
344.6
136.5
612.7
1,093.8
77.7
1,544.4
Cumulative amounts charged
At 1 January 2024
–
8.3
20.1
19.0
47.4
69.1
116.5
Currency translation differences
–
(0.2)
(0.7)
(0.6)
(1.5)
(1.1)
(2.6)
Amortisation charge for the
year
–
4.7
5.7
11.2
21.6
1.6
23.2
Impairment charge
2.6
–
0.4
–
0.4
–
3.0
Disposals
–
–
–
–
–
(0.1)
(0.1)
At 31 December 2024
2.6
12.8
25.5
29.6
67.9
69.5
140.0
Currency translation differences
–
0.6
1.9
1.6
4.1
1.6
5.7
Amortisation charge for the
year
–
5.1
6.6
15.3
27.0
1.5
28.5
Disposals
(2.6)
(1.3)
(0.7)
–
(2.0)
(0.4)
(5.0)
At 31 December 2025
–
17.2
33.3
46.5
97.0
72.2
169.2
Net book value at
31 December 2025
372.9
327.4
103.2
566.2
996.8
5.5
1,375.2
Net book value at
31 December 2024
120.4
271.3
31.1
135.7
438.1
5.4
563.9
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025147
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
13 Intangible assets continued
The carrying value of the provisional goodwill allocated to the Footwear Insoles and Viz Reflectives
CGUs, relating to the OrthoLite and Viz Reflectives businesses, which were acquired during the
second half of 2025 was tested for impairment at the year end. The original business case cash
flow forecasts which underpinned the amount of provisional goodwill recognised were reviewed,
factoring in management’s latest view of the future outlook. No material adjustments were
deemed necessary to the original business case cash flow forecasts, and therefore no impairment
issue was identified.
The carrying value of the goodwill allocated to the Footwear thread and structural components,
Gotex and Coats Digital CGUs has also been tested for impairment during the year by comparing
the carrying value of the CGU to their value in use.
The value in use calculations were based on projected cash flows, derived from the latest budgets
approved by the Board and factoring in the most recent trading activity. Projected cash flows are,
discounted at CGU specific, risk adjusted, discount rates to calculate the net present value.
The calculation of ‘value in use’ is most sensitive to the following assumptions:
– CGU specific operating assumptions that are reflected in the budget and Medium Term Plan
periods for the financial year to December 2028;
– discount rates; and
– growth rates used to extrapolate risk adjusted cash flows beyond the medium-term period.
CGU specific operating assumptions are applicable to the cash flows for the years 2026 to 2028
and relate to revenue forecasts and forecast operating margins. A short-term growth rate is
applied to the December 2028 plan to derive the cash flows arising in 2029–2030 and a long-
term rate is applied to 2030 to determine a terminal value.
The pre-tax discount rates applied to the cash flow forecasts are derived from the Group’s post-
tax weighted average cost of capital. The Group’s weighted average cost of capital is based on
estimations of the assumptions that market participants operating in similar sectors to Coats
would make, using the Group’s economic profile as a starting point and adjusting appropriately.
The pre-tax base discount rate of 10.8% (2024: 10.5%) has been adjusted for economic risks
that are not already captured in the specific operating assumptions. This results in the impairment
testing using a pre-tax discount rate of 11.6% for Footwear thread and structural components,
13.3% for Gotex and 14.7% for Coats Digital.
Revenue growth rate assumptions in 2029-2030 are 7.0-7.0% for Footwear thread and structural
components, 10.0-5.0% for Gotex, and 16.0-16.0% for Coats Digital, and terminal value growth
rate assumptions are 2.6% for Footwear, 1.7% for Gotex, and 2.6% for Coats Digital.
No reasonably possible changes to the above assumptions would lead to an impairment.
14 Property, plant and equipment
Vehicles and
Land and Plant and office
buildings equipment equipment Total
Cost US$m US$m US$m US$m
At 1 January 2024
131.0
458.9
51.9
641.8
Currency translation differences
(2.1)
(11.7)
(0.7)
(14.5)
Application of IAS 29 (see note 1)
–
1.5
–
1.5
Additions
4.8
22.4
1.9
29.1
Disposals
(1.2)
(3.5)
(2.1)
(6.8)
At 31 December 2024
132.5
467.6
51.0
651.1
Currency translation differences
0.2
4.3
0.7
5.2
Application of IAS 29 (see note 1)
–
1.4
–
1.4
Acquisition of subsidiaries (see note 31)
16.3
9.9
0.8
27.0
Transfer to non-current assets held for sale
(0.4)
–
–
(0.4)
Additions
4.9
22.5
2.0
29.4
Disposals
(5.5)
(16.5)
(2.0)
(24.0)
At 31 December 2025
148.0
489.2
52.5
689.7
Cumulative amounts charged
At 1 January 2024
60.7
293.3
44.6
398.6
Currency translation differences
(1.1)
(8.4)
(0.9)
(10.4)
Depreciation charge for the year
4.4
18.9
2.1
25.4
Impairment charge (see note 4)
2.5
14.6
0.1
17.2
Disposals
(0.5)
(3.8)
(1.7)
(6.0)
At 31 December 2024
66.0
314.6
44.2
424.8
Currency translation differences
1.2
1.9
0.9
4.0
Depreciation charge for the year
4.2
17.8
1.9
23.9
Impairment charge (see note 32)
1.1
4.3
–
5.4
Disposals
(2.5)
(12.9)
(1.7)
(17.1)
At 31 December 2025
70.0
325.7
45.3
441.0
Net book value at 31 December 2025
78.0
163.5
7.2
248.7
Net book value at 31 December 2024
66.5
153.0
6.8
226.3
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025148
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
14 Property, plant and equipment continued
2025 2024
Analysis of net book value of land and buildings 31 December US$m US$m
Freehold
63.9
54.5
Leasehold improvements:
Over 50 years unexpired
0.6
2.4
Under 50 years unexpired
13.5
9.6
78.0
66.5
The property, plant and equipment for the US and Mexico CGU has been reviewed for impairment
using the value in use method (including plant and machinery with a carrying amount of
approximately $15m). The revenue and margin growth assumptions used in the US and Mexico
CGU are sensitive to change. A change in these key assumptions could result in a change in the
assessed recoverable amount of the CGU. Revenue growth and operating margin improvement
assumptions in 2029–2030 for the US and Mexico CGU are as follows:
Operating Operating Terminal
Revenue Revenue margin margin value
growth growth improvement improvement growth
2029 2030 2029 2030 rate
% % % % %
US and Mexico
6.4
5.5
1.5
0.1
2.2
Operating margins improvements in 2026–2028 are expected to exceed the amounts shown
above with improvements reducing to these levels in 2029–2030.
The following isolated changes would result in headroom being completely eliminated in the US
and Mexico value in use impairment assessment:
– the discount rate increasing by 310 bps; or
– revenue CAGR for 2026–2030 decreasing to 3.1%; or
– Operating margin for 2030 and the terminal period decreasing by 250 bps.
These scenarios do not represent reasonably possible changes in key assumptions.
15 Leases
The Group leases several assets including buildings, plants, vehicles and office equipment. The
average lease term is 4 years (2024: 4 years). The Group’s consolidated balance sheet includes
the following amounts relating to leases:
Right-of-use assets
Vehicles and
Land and Plant and office
buildings equipment equipment Total
Net carrying amount US$m US$m US$m US$m
At 1 January 2025
59.0
4.4
5.5
68.9
At 31 December 2025
65.9
3.6
5.5
75.0
Depreciation expense for the year ended
31 December 2024*
13.3
1.0
2.7
17.0
31 December 2025
13.5
1.1
3.2
17.8
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
Additions to the right-of-use assets during the year ended 31 December 2025 were $18.9m
(2024: $18.3m).
Lease liabilities
2025 2024
Year ended 31 December US$m US$m
Current
21.2
16.6
Non-current
71.7
66.6
92.9
83.2
Undiscounted Undiscounted Discounted Discounted
2025 2024 2025 2024
Lease liability maturity analysis US$m US$m US$m US$m
Payable within one year
25.7
20.8
21.2
16.6
Payable between one and two years
22.6
17.7
18.8
14.0
Payable between two and five years
43.4
43.4
37.1
37.0
Payable after more than five years
19.3
19.3
15.8
15.6
At 31 December 2025
111.0
101.2
92.9
83.2
The net increase in lease liabilities during the year ended 31 December 2025 was $9.7m (2024:
decrease $3.6m) which includes lease liabilities of $11.4m relating to the OrthoLite acquisition. The
total cash outflow for leases in the year ended 31 December 2025 was $25.4m (2024: $24.3m).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
16 Non-current investments
2025 2024
Year ended 31 December US$m US$m
Interests in joint ventures (see below)
13.3
13.7
Investments in equity securities: Unlisted investments
0.5
0.6
13.8
14.3
Interests in joint ventures
US$m
At 1 January 2024
13.7
Dividends receivable
(1.7)
Share of profit after tax
1.3
At 31 December 2025
13.3
2025 2024
Year ended 31 December US$m US$m
Share of net assets on acquisition
10.6
10.6
Share of post-acquisition retained profits
2.7
3.1
Share of net assets
13.3
13.7
The following table provides summarised financial information on the Group’s share of its joint
ventures, relating to the period during which they were joint ventures, and excludes goodwill:
2025 2024
Year ended 31 December US$m US$m
Summarised income statement information:
Revenue
28.4
28.7
Profit before tax
1.8
2.5
Taxation
(0.5)
(0.6)
Profit after tax
1.3
1.9
2025 2024
Year ended 31 December US$m US$m
Summarised balance sheet information:
Non-current assets
4.7
5.2
Current assets
18.1
17.4
22.8
22.6
Liabilities due within one year
(9.5)
(8.9)
Net assets
13.3
13.7
15 Leases continued
The Group’s consolidated income statement includes the following amounts relating to leases:
2025 2024*
Year ended 31 December US$m US$m
Depreciation expense
17.8
17.0
Interest expense on lease liabilities
4.1
4.0
Expenses relating to short-term leases
0.3
0.2
Expenses relating to leases of low value assets
0.1
0.1
Expense relating to variable lease payments not included in the measurement of
the lease liability
1.9
1.8
Impairment of right-of-use assets (see note 32)
7.5
3.3
Income from subleasing right-of-use assets
(0.1)
(0.1)
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
The Group subleases some of its right-of-use assets. At the balance sheet date, the Group had
contracted with tenants for receipt of the following minimum lease payments:
2025 2024
Year ended 31 December US$m US$m
Receivable within one year
0.1
0.1
Receivable between one and two years
–
0.1
0.1
0.2
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
19 Trade and other receivables
2025 2024
Year ended 31 December US$m US$m
Non-current assets:
Trade receivables
3.7
6.5
Other receivables
11.2
13.7
Current income tax assets
1.6
2.4
Prepaid pension contributions
3.6
2.4
20.1
25.0
Current assets:
Trade receivables
269.5
245.7
Current income tax assets
5.7
2.8
Prepayments and accrued income
16.1
7.3
Derivative financial instruments
0.9
0.9
Prepaid pension contributions
0.5
2.2
Other receivables
43.6
33.3
336.3
292.2
The fair value of trade and other receivables is not materially different to the carrying value. Other
receivables includes VAT and other taxes receivable.
Interest charged in respect of overdue trade receivables is immaterial.
Included within trade receivables is $10.4m (2024: $14.8m) relating to software solutions revenue
contracts, for which performance obligations are fulfilled over a period of time (see note 21).
The Group applies the simplified approach to providing for expected credit losses prescribed by
IFRS 9, which requires the use of the lifetime expected loss provision for all trade receivables.
Credit risk is minimised due to the quality and short-term nature of the Group’s trade receivables
as well as the fact that the exposure is spread over a large number of customers. An allowance
has been made for expected losses on trade receivables of $9.7m (2024: $10.1m).
The Group monitors receivables for any significant increases in credit risk, and fully provides for
trade receivables which are more than 6 months overdue, unless there are specific circumstances
which would indicate otherwise. For all other trade receivables, when determining expected
losses, the Group takes into account the historical default experience and the financial position
of the counterparties, as well as the future prospects considering various sources of information.
Impairment has been considered for other receivables, and is considered not to be significant.
17 Deferred tax assets
The Group’s deferred tax assets are included within the analysis in note 24.
The movements in the Group’s deferred tax asset during the year were as follows:
2025 2024
US$m US$m
At 1 January
13.6
18.0
Currency translation differences
0.5
(0.3)
Acquisition of subsidiaries (note 31)
1.5
–
Credited/(charged) to the income statement
2.8
(3.5)
Credited/(charged) to other comprehensive income and expense
0.2
(0.6)
Charged to equity
(0.7)
–
At 31 December
17.9
13.6
18 Inventories
2025 2024
Year ended 31 December US$m US$m
Raw materials and consumables
95.1
93.8
Work in progress
8.6
17.0
Finished goods and goods for resale
69.8
65.3
173.5
176.1
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025151
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
21 Trade and other payables
The fair values of these financial instruments are calculated by discounting the future cash flows
to net present values using appropriate market interest and foreign currency rates prevailing at
the year end.
2025 2024
Year ended 31 December US$m US$m
Amounts falling due within one year:
Trade payables
194.6
167.2
Amounts owed to joint ventures
16.0
16.1
Other tax and social security payable
4.2
4.3
Other payables
37.0
23.9
Accruals
44.3
43.1
Contract liabilities
7.9
9.5
Derivative financial instruments
0.7
2.3
Employee entitlements
33.4
32.8
338.1
299.2
Amounts falling due after more than one year:
Contract liabilities
4.9
7.2
Employee entitlements
–
0.2
4.9
7.4
The fair value of trade and other payables is not materially different to the carrying value.
Interest paid to suppliers in respect of overdue trade payables is immaterial.
Contract liabilities amounting to $8.7m (2024: $7.2m) which were outstanding at 31 December
2024 were released to revenue during the year ended 31 December 2025, with the remainder
expected to be released in 2026.
19 Trade and other receivables continued
The loss allowance has been determined as follows:
1–3 months 3–6 months 6+ months Total
Current past due past due past due 2025
Expected loss rate
0.2%
2%
25%
85%
Gross carrying amount (US$m)
242.3
28.6
2.4
9.6
282.9
Loss allowance provision (US$m)
0.4
0.5
0.6
8.2
9.7
1–3 months 3–6 months 6+ months Total
Current past due past due past due 2024
Expected loss rate
0.2%
3%
35%
83%
Gross carrying amount (US$m)
226.6
23.0
3.1
9.6
262.3
Loss allowance provision (US$m)
0.4
0.6
1.1
8.0
10.1
The movements in the expected loss allowance are analysed as follows:
2025 2024
US$m US$m
At 1 January
10.1
7.3
Currency translation differences
–
(0.3)
Acquisition of subsidiaries
0.1
–
Charged to the income statement
0.9
3.6
Amounts written off during the year
(1.4)
(0.5)
At 31 December
9.7
10.1
As at 1 January 2024, trade receivables amounted to $241.0m (net of loss allowance of $7.3m).
20 Derivative financial instruments – assets
Derivative financial instruments within current assets comprise:
2025 2024
Year ended 31 December US$m US$m
Fair value through the income statement:
Forward foreign currency contracts
0.9
0.9
Amounts shown within current assets
0.9
0.9
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025152
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
In August 2024 the Group refinanced its bank facility and entered into a $420m three year bank
facility, with the ability for two one-year extensions. The facility bears interest at the risk free rate
plus a margin.
In February 2023, the Group completed the refinancing of the Texon acquisition term loan of
$240m, which had been fully drawn down in July 2022, via the US Private Placement (USPP)
market with $250m of notes. $150m 5.26% Series A Senior Notes are due on 16 February 2028
and $100m 5.37% Series B Senior Notes are due on 16 February 2030.
The Group also issued $100m of 4.07% Series B Senior Notes in December 2017, which are due
on 6 December 2027.
Interest on all Senior Notes is payable semi-annually in arrears. The Senior Notes are unsecured
and rank equally with all the Group’s other unsecured and unsubordinated indebtedness.
The currency and interest rate profile of the Group’s borrowings is included in note 34 on page 167.
24 Deferred tax liabilities
2025 2024
US$m US$m
At 1 January
58.0
63.9
Currency translation differences
2.3
(1.7)
Acquisition of subsidiaries
49.8
–
Credited to the income statement
(2.8)
(4.2)
Charged to other comprehensive income and expense
0.2
–
At 31 December
107.5
58.0
22 Derivative financial instruments – liabilities
Derivative financial instruments within current liabilities comprise:
2025 2024
Year ended 31 December US$m US$m
Fair value through the income statement:
Forward foreign currency contracts
0.7
2.3
Amounts shown within current liabilities
0.7
2.3
The fair values of these financial instruments are calculated by discounting the future cash flows
to net present values using appropriate market interest and foreign currency rates prevailing at
the year end.
23 Borrowings
2025 2024
Year ended 31 December US$m US$m
Bank overdrafts
0.1
0.2
Borrowings repayable within one year
0.4
–
Due within one year
0.5
0.2
Borrowing repayable between one and two years
400.0
–
Borrowings repayable between two and five years
496.9
246.8
Due after more than five years
149.3
348.3
Due after more than one year
1,046.2
595.1
Bank overdrafts
0.1
0.2
Series A and Series B Senior Notes
596.2
595.1
Bank and other borrowings
450.4
–
1,046.7
595.3
On 29 October 2025, the Group drew down $450m on a $550m term loan facilities agreement to
fund the purchase of OrthoLite (see note 31). The facilities consist of a one year $300m bridge loan
facility with the option for two six month extensions and a three year term loan of $150m with the
option of a one year extension. The facilities bear interest at the risk free rate plus a margin.
In December 2024, the Group completed the refinancing of the $125m Series A Senior Notes,
issued in 2017, via the US private placement (USPP) market with $250m of notes. $100m 5.36%
Series A Senior Notes are due on 4 December 2030, $100m 5.44% Series B Senior Notes are due
on 4 December 2031 and $50m 5.54% Series C Senior Notes are due on 4 December 2034.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025153
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
The amount of the UK deferred tax asset that can be recognised is dependent on the time period
over which the taxable temporary difference reverses, and in certain jurisdictions including the
UK, is impacted by the restriction on utilisation of brought forward tax losses, after utilisation of
current year tax attributes. For the purpose of deferred tax asset recognition the Group takes the
view that any future reversal of the taxable temporary difference on the Coats brand intangible
will take place over an extended period of time, and consequently any taxable income will be
fully offset by available losses and other tax attributes in each individual accounting period.
At 31 December 2025 the Group had approximately $2.4bn (2024: $1.9bn) of unused gross
revenue losses, approximately $1.5bn (2024: $1.4bn) of unused gross capital losses. A deferred
tax asset of $95.3m (2024: $59.6m) has been recognised in respect of $429.2m (2024: $251.2m)
of such income tax losses. No deferred tax asset has been recognised in respect of the remaining
losses due to lack of certainty regarding the availability of future taxable income.
The Group’s income tax losses can be analysed as follows:
2025 2024
US$m US$m
Expiring within 5 years
16.4
24.7
Expiring in more than 5 years
128.6
53.7
Available indefinitely
2,224.8
1,824.8
2,369.8
1,903.2
At 31 December 2025, the Group has not recognised a deferred tax asset in respect of other
gross deductible temporary differences of $111.9m (2024: $69.6m). These deferred tax assets
have not been recognised on the basis that their future economic benefit is uncertain. Timing
differences are only recognised in the financial statements to the extent that it is considered more
likely than not that sufficient future taxable profits will be available for offset.
At 31 December 2025, the aggregate amount of temporary differences associated with
undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised
is $19.4m (2024: $14.2m). Deferred tax on distribution of these profits of $238.5m at
31 December 2025 (2024: $184.7m) has not been provided on the grounds that the Group is
able to control the timing of the reversal of the remaining temporary differences and it is probable
that they will not reverse in the foreseeable future.
25 Provisions
2025 2024
Year ended 31 December US$m US$m
Provisions are included as follows:
Current liabilities
32.3
26.5
Non-current liabilities
19.6
25.1
51.9
51.6
24 Deferred tax liabilities continued
2025
2024
Provided/ Unprovided/ Provided/ Unprovided/
(recognised) (unrecognised) (recognised) (unrecognised)
US$m US$m US$m US$m
The Group’s net deferred tax liabilities/
(assets) are analysed asfollows:
Accelerated tax depreciation on tangible fixed assets
(2.0)
1.4
(1.3)
0.2
Other temporary differences
(17.3)
(21.1)
(20.6)
(8.8)
Revenue losses carried forward
1
(95.3)
(442.1)
(59.6)
(408.1)
Capital losses carried forward
–
(376.4)
–
(369.5)
Investment in subsidiaries
17.0
19.4
12.0
14.2
Acquired intangibles
179.6
–
107.1
–
Retirement benefit obligations
7.6
(8.8)
6.8
(10.9)
89.6
(827.6)
44.4
(782.9)
1. Revenue losses include restricted interest amounts available for future reactivation.
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the
deferred tax balances (after offset) for financial reporting purposes:
2025
2024
Provided/ Provided/
(recognised) (recognised)
US$m US$m
Deferred tax assets (note 17)
(17.9)
(13.6)
Deferred tax liabilities
107.5
58.0
89.6
44.4
The increase in the net deferred tax liability in the year is primarily due to $49.0m of deferred tax
acquired with OrthoLite (see note 31). The Group has recognised provisional values for deferred
tax assets and liabilities in respect of the US tax basis adjustments arising from the acquisition of
OrthoLite, including the step-up in the tax basis of certain intangible assets. These balances have
been measured using information available to management at the reporting date, including the
purchase accounting exercise and the tax basis analyses performed to date.
A deferred tax liability is recognised in respect of the taxable temporary difference on the Coats
brand intangible asset owned in the UK. This is fully offset by an equivalent deferred tax asset
recognised in respect of tax attributes in the same jurisdiction. These tax attributes are expected
to be utilised against the taxable income arising on a reversal of the taxable temporary difference
in respect of the brand. In the analysis of the Group’s deferred tax balances above, the amounts
are disclosed on a gross basis.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025154
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
satisfy awards under the Group's share based incentive plans. The number of shares held by the
Employee Benefit Trust at 31 December 2025 was 3,010,519 (2024: 4,905,769).
Details of share awards outstanding under the Group’s LTIP and Deferred Bonus Plans are set out
in note 35.
27 Reserves and non-controlling interests
Share Capital Non-
premium Own Translation reduction Other Retained controlling
account shares reserve reserve reserves loss interests
US$m US$m US$m US$m US$m US$m US$m
At 1 January 2025
111.4
(5.3)
(129.7)
59.8
246.3
(35.4)
32.5
Dividends
–
–
–
–
–
(54.1)
(14.7)
Currency translation
differences
–
–
17.5
–
–
–
–
Actuarial losses on
employee benefits
–
–
–
–
–
(10.1)
–
Acquisition of business
–
–
–
–
–
–
5.2
Issue of ordinary shares
300.9
–
–
–
–
–
–
Purchase of own shares
–
(9.0)
–
–
–
–
–
Movement in own
shares
–
11.1
–
–
–
(10.8)
–
Deferred tax on share
schemes
–
–
–
–
–
(0.7)
–
Share based payments
–
–
–
–
–
6.8
–
Profit for the year
–
–
–
–
–
103.4
17.8
At 31 December 2025
412.3
(3.2)
(112.2)
59.8
246.3
(0.9)
40.8
Other reserves of $246.3m in the above table relate to legacy non-distributable reserves, which
arose during the period when the Group was part of the Guinness Peat Group.
The table below shows financial information of non-wholly owned subsidiaries of the Group that
have non-controlling interests:
Profit allocated to Accumulated
non-controlling interests non-controlling interests
Year ended Year ended
31 December 31 December 31 December 31 December
2025 2024 2025 2024
US$m US$m US$m US$m
EMEA
0.3
–
1.4
1.4
Asia
17.5
19.6
39.4
31.1
17.8
19.6
40.8
32.5
The proportion of ownership interests and voting rights of non-wholly owned subsidiaries of the
Group held by non-controlling interests is set out on pages 200 to 207.
25 Provisions continued
Provisions are analysed as follows:
2025 2024
Year ended 31 December US$m US$m
Property related provisions
2.1
2.3
UK pension related provisions
9.0
14.5
Other provisions
40.8
34.8
51.9
51.6
Property UK pension
related related Other
provisions provisions provisions Total
US$m US$m US$m US$m
At 1 January 2025
2.3
14.5
34.8
51.6
Currency translation differences
0.1
1.0
0.9
2.0
Acquisition of subsidiaries (see note 31)
–
–
12.7
12.7
Charged to the income statement
0.2
0.3
9.9
10.4
Charged to other comprehensive income
–
0.3
–
0.3
Utilised in year
(0.5)
(7.1)
(17.5)
(25.1)
At 31 December 2025
2.1
9.0
40.8
51.9
Other provisions include amounts in relation to acquisition related costs and contingent
consideration of $9.0m, provisions in respect of discontinued operations of $5.4m, as well as
amounts set aside to cover certain legal and other regulatory claims, including $10.1m in respect
of the Lower Passaic River (see note 28 for further details), which are expected to be substantially
utilised within the next ten years.
26 Share capital
During the year ended 31 December 2025 the Company issued 319,562,076 Ordinary shares of
5p each in connection with a capital raise (2024: nil). The par value of the shares issued was
$21.4m and the amount credited to share premium, net of costs, was $300.9m. The proceeds
raised, net of costs, of $322.3m were used to fund the acquisition of OrthoLite (see note 31).
2025
2024
Number
US$m
Number
US$m
At 1 January
1,597,810,385
99.0
1,597,810,385
99.0
Issue of ordinary shares
319,562,076
21.4
–
–
At 31 December
1,917,372,461
120.4
1,597,810,385
99.0
The company has one class of Ordinary share of 5p each which carry no right to fixed income.
The own shares reserve of $3.2m at 31 December 2025 (2024: $5.3m) represents the cost of
shares in Coats Group plc purchased in the market and held by an Employee Benefit Trust to
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025155
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
28 Contingent liabilities and environmental matters
Environmental matters
As noted in previous reports, in 2009 the US Environmental Protection Agency (‘EPA’) identified
over 100 potentially responsible parties, including Coats & Clark, Inc. (‘CC’), under the US
Superfund law for investigation and remediation costs at the 17-mile Lower Passaic River Study
Area (‘LPR’) in New Jersey. The Group analysed alleged operations of CC’s predecessor facilities
in that area prior to 1950, and believes it has valid defences, including that it is not responsible
for the contaminants that are EPA’s primary focus. An EPA-appointed allocator agreed, placing
CC in the lowest tier with a de micromis share and correctly concluded that Occidental Chemical
Corporation (‘OCC’) and other parties are responsible for most of the remedial costs.
In 2022 CC and other parties entered into a cash-out settlement with EPA in which the settling
parties agreed to pay $150m toward remediation of the LPR in exchange for a release for those
matters addressed in the settlement. The District Court approved that settlement, and that
approval is presently on appeal by OCC. The settlement does not address claims for natural
resource damages by federal natural resource trustees; the Group believes that CC’s share, if any,
of such costs would be de micromis.
In 2018, OCC filed a separate lawsuit against approximately 120 defendants, including CC,
seeking recovery of past environmental costs and contribution toward future environmental costs.
That proceeding has been stayed while OCC appeals the District Court’s approval of the settlement.
In early 2026, OCC’s parent completed a series of transactions resulting in OCC’s assets being
sold and OCC’s LPR liabilities purportedly being transferred to a special purpose entity. Numerous
parties to the cash-out settlement, including CC, have filed a lawsuit requesting that the court
clarify the effect of the transactions, if any, on the LPR litigation.
In 2015, a provision totalling $15.8m was recorded for LPR remediation costs and the estimated
associated legal and professional defence costs. This charge to the income statement was stated
on a net present value basis. In 2018, an additional $8m provision was recorded to cover legal
and professional fees. Following the sale of CC in 2019, Coats North America Consolidated Inc.
(‘CNAC’) retains the control and responsibility for the eventual outcome of the ongoing LPR
environmental matters. At 31 December 2025, the remaining provision was $10.1m (31 December
2024: $11.2m). The remaining provision may be reduced if the courts approve the settlement
and bar further litigation against CC and other settling parties. However, additional provisions
may be recorded based on potential changes in the government’s position, further judicial
decisions, negotiations among the parties and other future events.
29 Capital commitments
As at 31 December 2025, the Group had commitments of $7.1m in respect of contracts placed
for future capital expenditure (2024: $5.0m).
30 Notes to the consolidated cash flow statement
a) Reconciliation of operating profit to cash generated from operations
2025 2024*
Year ended 31 December US$m US$m
Operating profit
1
241.4
224.5
Depreciation of owned property, plant and equipment
23.9
24.3
Deprecation of right-of-use assets
17.8
17.0
Amortisation and impairment of intangible assets
28.5
22.9
Impairment of property, plant and equipment and other assets
1.4
8.7
Decrease/(increase) in inventories
13.7
(7.2)
Decrease/(increase) in debtors
9.2
(18.1)
Increase in creditors
9.0
25.4
Provisions and pension movements
(22.4)
(95.8)
Foreign exchange and other non-cash movements
6.1
2.1
Discontinued operations
2.2
(7.1)
Cash generated from operations
330.8
196.7
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
1. Refer to the consolidated income statement for a reconciliation of profit before taxation to operating profit from continuing
operations.
In September 2024 the Group and the UK pension scheme Trustees agreed to purchase a bulk
annuity policy (“buy-in”), which insured the remaining 80% of the UK scheme’s pension liabilities.
In connection with the buy-in, additional funding was provided to the UK pension scheme in the
year ended 31 December 2024 totalling $127.8m. The Group made a $89.5m (£70m) upfront cash
contribution to the scheme and a further $38.3m (£30m) was provided to the scheme as a loan. The
upfront cash contribution was included in cash generated from operations in the consolidated
statement of cash flows for the year ended 31 December 2024. The cash paid to the scheme as a
loan was included in cash absorbed in investing activities in the consolidated statement of cash flows
for the year ended 31 December 2024. Cash generated from operations and net cash from
operations (after interest and tax paid) for the year ended 31 December 2024 was $286.2m and
$185.3m respectively excluding the upfront cash contribution to the UK pension scheme.
b) Interest paid
2025 2024*
Year ended 31 December US$m US$m
Interest paid
(34.2)
(30.3)
Discontinued operations
(1.1)
(1.2)
(35.3)
(31.5)
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
For financial covenant purposes under the Group’s borrowing arrangements, the Group’s
leverage is calculated on the basis of net debt without IFRS 16 lease liabilities and at the Coats
Group Finance Company Limited level. Net debt excluding IFRS 16 lease liabilities at the Coats
Group Finance Company Limited level at 31 December 2025 for covenant purposes was $818.7m
(31 December 2024: $454.3m).
The components of net debt and movements during the periods are set out below:
Series A
and Series Total Cash
B financing at bank
Senior Bank Lease activity Bank and in
Notes loans liabilities liabilities overdrafts hand Net debt
US$m US$m US$m US$m US$m US$m US$m
At 1 January 2024
(472.3)
(23.3)
(86.8)
(582.4)
(20.9)
132.4
(470.9)
Financing cash flows
(123.7)
28.0
19.2
(76.5)
–
–
(76.5)
Other cash flows
–
–
5.2
5.2
20.7
9.8
35.7
Non-cash movements
0.9
(4.7)
(18.2)
(22.0)
–
–
(22.0)
Foreign exchange
–
–
(2.6)
(2.6)
–
3.8
1.2
At 31 December 2024
(595.1)
–
(83.2)
(678.3)
(0.2)
146.0
(532.5)
Financing cash flows
–
(201.4)
20.2
(181.2)
–
–
(181.2)
Other cash flows
–
–
5.2
5.2
0.1
50.9
56.2
Acquisition of subsidiaries
(see note 31)
–
(248.6)
(11.4)
(260.0)
–
33.7
(226.3)
Non-cash movements
(1.5)
–
(21.6)
(23.1)
–
–
(23.1)
Foreign exchange
–
–
(2.1)
(2.1)
–
1.4
(0.7)
At 31 December 2025
(596.6)
(450.0)
(92.9)
(1,139.5)
(0.1)
232.0
(907.6)
The non-cash movement during the year ended 31 December 2025 of $21.6m (2024: $18.2m)
within lease liabilities relates to the following: the unwind of lease liabilities of $5.2m (2024:
$5.2m) and the impact of entering into new leases, disposals and modification of existing leases
of $16.4m (2024: $13.0m).
Total interest paid during the year ended 31 December 2025 was $35.3m (2024: $31.5m), which
primarily relates to the above Senior Notes, bank loans and overdrafts and lease liabilities. Total
interest charged to the profit and loss account for the year ended 31 December 2025 for the
above Senior Notes, bank loans and overdrafts and lease liabilities was $41.4m (2024: $35.3m).
30 Notes to the consolidated cash flow statement continued
c) Taxation paid
2025 2024*
Year ended 31 December US$m US$m
Overseas tax paid
(70.8)
(67.5)
Discontinued operations
–
(1.9)
(70.8)
(69.4)
d) Investment income
2025 2024
Year ended 31 December US$m US$m
Dividends received from joint ventures
1.7
1.0
e) Capital expenditure and financial investment
2025 2024 *
Year ended 31 December US$m US$m
Purchase of property, plant and equipment and intangible assets
(32.1)
(25.7)
Proceeds from disposal of property, plant and equipment
0.9
3.0
Discontinued operations
1.7
(1.3)
(29.5)
(24.0)
f) Acquisitions and disposals of businesses
2025 2024
Year ended 31 December US$m US$m
Acquisition of businesses
(552.0)
–
Disposal of discontinued business
13.1
–
(538.9)
–
g) Summary of net debt
2025 2024
Year ended 31 December US$m US$m
Cash and cash equivalents
232.0
146.0
Bank overdrafts
(0.1)
(0.2)
Net cash and cash equivalents
231.9
145.8
Borrowings (see note 23)
(1,046.6)
(595.1)
Net debt excluding lease liabilities
(814.7)
(449.3)
Lease liabilities (see note 15)
(92.9)
(83.2)
Total net debt
(907.6)
(532.5)
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
those of the Group and as the acquisition was made in the last quarter of the year and given
OrthoLite’s global footprint, the fair values presented below are provisional as the assessment
will be completed within 12 months from the acquisition date.
The provisional fair values of the identifiable assets and liabilities of OrthoLite as at the date of
acquisition are as follows:
Provisional
fair values
recognised on
acquisition of
OrthoLite
US$m
Assets
Acquired intangible assets
–
Customer relationships
437.4
–
Brands and trade names
59.3
–
Technology
72.4
569.1
Computer software
0.6
Property, plant and equipment
26.9
Right-of-use-assets
11.3
Deferred tax assets
1.5
Inventories
23.6
Trade and other receivables
47.3
Cash and cash equivalents
33.7
714.0
Liabilities
Trade and other payables
(54.0)
Deferred tax liabilities
(50.5)
Borrowings
(248.6)
Lease liabilities
(11.4)
Provisions
(6.0)
(370.5)
Non-controlling interests
(5.2)
Total identifiable net assets acquired at provisional fair values
338.3
Goodwill recognised on acquisition (provisional)
242.2
Total net assets acquired at provisional fair values
580.5
Cash purchase consideration paid
581.7
Completion and other adjustments
(1.2)
Total consideration payable
580.5
30 Notes to the consolidated cash flow statement continued
Total net debt is presented in the consolidated statement of financial position as follows:
2025 2024
Year ended 31 December US$m US$m
Current assets:
Cash and cash equivalents
232.0
146.0
Current liabilities:
Bank overdrafts and other borrowings
(0.5)
(0.2)
Lease liabilities
(21.2)
(16.6)
Non-current liabilities:
Borrowings
(1,046.2)
(595.1)
Lease liabilities
(71.7)
(66.6)
Total net debt
(907.6)
(532.5)
31 Acquisitions
On 16 July 2025 the Group announced it had signed a definitive agreement to acquire OrthoLite
Holdings LLC (‘OrthoLite’), the global market leader of premium insoles, for an initial enterprise
value of $770m.
The acquisition strengthens the product portfolio and capabilities of the existing Coats footwear
business through expansion into the attractive, high growth premium insole market segment.
OrthoLite is highly complementary, with significant overlap in customers, route to market and
operational footprint, and provides opportunities to accelerate growth through innovation and
cross-selling.
On 29 October 2025 the acquisition was completed and the Group obtained control acquiring
the entire share capital of OrthoLite for cash consideration of $581.7m. On completion, the
Group immediately settled OrthoLite’s external bank debt of $247.6m such that the total cash
outflow was $829.3m. The acquisition of OrthoLite was funded through an equity raise of
$322.3m net of costs and a new $550.0m term loan facilities agreement of which $450m was
drawn down.
The acquisition of OrthoLite has been accounted for as a business combination using the
acquisition method in accordance with IFRS 3 ‘Business Combinations.’ A provisional assessment
of the fair values of identified assets acquired and liabilities assumed has been undertaken with
assistance provided by external valuation specialists.
In the provisional accounting, adjustments are made to the book values of the net assets acquired
to reflect their provisional fair values to the Group. Previously unrecognised assets and liabilities
at acquisition are included. As part of this exercise, material accounting policies are aligned with
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Provisional goodwill of $242.2m represents the premium attributable to purchasing an established
business with an assembled workforce, opportunities for synergies and exploitation of the
general technological capabilities and knowledge base. The total amount of provisional goodwill
that is expected to be deductible for tax purposes is approximately $198m.
Goodwill is not amortised but tested annually for impairment. For the purposes of annual
impairment testing the provisional goodwill has initially been allocated to a new Footwear Insoles
cash generating unit. This initial allocation will be reviewed during 2026 following integration of
OrthoLite with the pre-existing Coats footwear business.
Provisional goodwill and intangible assets acquired totalled $811.3m. From the date of acquisition
of OrthoLite to 31 December 2025, amortisation charges for acquired intangible assets amounted
to $5.7m.
From the date of acquisition, the contribution by OrthoLite to revenues in the year to 31 December
2025 was $42.6m. The contribution to operating profit excluding exceptional items and
amortisation of acquired intangible assets in the year to 31 December 2025 was $10.5m. The
profit after taxation in the year to 31 December 2025 (after exceptional items and amortisation
of acquired intangible assets) was $3.1m.
If the acquisition had taken effect at the beginning of the reporting period (1 January 2025), the
Group’s revenues for the year ended 31 December 2025 would have been $231.5m higher and the
Group’s profit after tax would have been $19.7m higher based on unaudited management accounts.
Under the terms of the transaction, contingent consideration of up to $10m is payable based on
full year 2025 performance. The fair value of this contingent consideration at the acquisition date
was $nil and based on 2025 performance no contingent consideration is payable. The final cash
consideration is subject to customary completion adjustments. The final cash consideration
payable is subject to customary completion adjustments.
31 Acquisitions continued
The fair value assessed for intangible customer relationship assets was $437.4m. This will be
amortised over a twenty year useful economic life. As fair value level one observable market
prices are not available for these assets, management engaged external professional valuation
advisors to assist in identifying and valuing these assets. The excess earnings method was used
to value these customer relationships which considers the use of other assets in the generation
of projected cash flows to isolate the economic benefit generated by the relationships.
The fair value assessed for brands and trade names was $59.3m and for technology was $72.4m.
The relief from royalty method was used to value both the technology and the trade names
which will be amortised over a useful economic life of fifteen and ten years respectively. The relief
from royalty method looks at the savings from owning the trade name and technology compared
to paying royalties for their use based on comparable market royalty rates.
Provisional fair value adjustments were also made which reduced property, plant and equipment
by $8.7m and inventories by $3.7m. Right-of-use assets and lease liabilities were recognised in
accordance with IFRS 16. The fair value of receivables acquired shown above approximate to the
gross contractual amounts receivable. The amount of gross contractual receivables not expected
to be recovered is not material and there are no material contingent liabilities recognised in
accordance with paragraph 23 of IFRS 3.
The total net assets acquired at provisional fair values include adjustments made relating to the
deferred tax impact of the fair values recognised for acquired intangible assets, US tax attributes
and other fair value adjustments at the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that were enacted or substantively enacted.
Adjustments were also made to provide for uncertain tax positions on a provisional basis utilising
expert in-house and third-party advice on potential outcomes, tax authority practices and
previous experience. Corporation tax liabilities, deferred tax assets and deferred tax liabilities
recognised in relation to these and other items as a result of the acquisition totalled $24.3m,
$1.5m and $50.5m respectively as at the acquisition date.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
31 Acquisitions continued
The purchase consideration was paid in cash with the amounts included in the statement of
consolidated cash reconciled as follows:
US$m
Purchase consideration paid to previous owners
581.7
Cash and cash equivalents acquired
(33.7)
Acquisition of businesses – investing cash flows
548.0
External bank borrowings settled on completion – financing cash flows
247.6
Total cash out flow on the acquisition date
795.6
The repayment of the external bank borrowings of OrthoLite on the completion date of the
acquisition is presented as a financing cash flow.
Acquisition of Viz Reflectives
On 6 October 2025 the Group completed the small acquisition of the trade and certain assets of
Viz Reflectives for an initial cash consideration of $4.0m with further contingent consideration of
up to $8.4m payable based on certain milestones and performance.
The unique VizLite phosphorescent (glow-in-the-dark) technology of the business can be used in
combination with Coats’ existing retro-reflectivity and fluorescent colour capabilities, to offer a
third layer of visibility for environments with reduced or no light. This combination has life-saving
attributes for fire-fighting and other applications. The acquisition will accelerate the Group’s PPE
fabrics strategy.
The acquisition of Viz Reflectives has been accounted for as a business combination using the
acquisition method in accordance with IFRS 3 ‘Business Combinations.’ A provisional assessment
of the fair values of identified assets acquired has been undertaken.
The fair values assessed for technology, brand and trade names and customer relationships were
$4.8m, $0.4m and $2.3m respectively. The relief from royalty method was used to value both
the technology and the trade names which will be amortised over a useful economic life of ten
and five years respectively. The excess earnings method was used to value customer relationships
which will be amortised over a useful economic life of ten years.
The provisional fair value of acquired property, plant and equipment and inventories was $0.1m
and $0.2m respectively. No liabilities were assumed. As a result the total identifiable net assets
acquired at provisional fair values was $7.8m.
A provision of $7.3m has been made for the expected contingent consideration payable.
Provisional goodwill of $3.5m represents the premium attributable to purchasing the business
with opportunities for synergies as part of the Group’s safety fabrics strategy. The total amount
of provisional goodwill that is expected to be deductible for tax purposes is approximately $3.5m.
Goodwill is not amortised but tested annually for impairment. For the purposes of annual
impairment testing the provisional goodwill has initially been allocated to a single standalone
cash generating unit. This initial allocation will be reviewed during 2026 following integration of
Viz Reflectives with the pre-existing Coats business.
Provisional goodwill and intangible assets acquired totalled $11.0m. From the date of acquisition
of Viz Reflectives to 31 December 2025, amortisation charges for acquired intangible assets
amounted to $0.2m.
From the acquisition date, the contribution of Viz Reflectives to revenues in the year to
31 December 2025 was $0.6m. The contribution to operating profit excluding exceptional items
and amortisation of acquired intangible assets in the year to 31 December 2025 was $0.3m. For
the year to 31 December 2025, the financial results of Viz Reflectives are included in the
Performance Materials segment.
Cash outflows for the acquisition of OrthoLite and Viz Reflectives including
transaction costs
Transaction costs totalling $22.8m relating to the acquisitions of OrthoLite and Viz Reflectives
have been expensed and are included in the consolidated income statement (see note 4).
Transaction costs of $19.6m have been charged to administrative expenses and $3.2m has been
charged to finance costs relating to the $550.0m term loan facilities agreement for the acquisition
of OrthoLite. In addition costs of $7.5m were incurred in connection with the equity raise to
finance the acquisition of OrthoLite which have been charged to the share premium reserve.
Transaction costs paid in the year ended 31 December 2025 relating to the acquisitions was
$8.5m and is included in cash flows generated from operating activities in the consolidated cash
flow statement.
The total cash outflow for the acquisitions of OrthoLite and Viz Reflectives in the year ended
31 December 2025 was $808.1m comprising the total cash outflow on the acquisition dates of
$799.6m plus transaction costs paid of $8.5m.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
32 Discontinued operations
Strategic exit from the Americas Yarns business
In December 2024 the Group closed its Performance Materials Division facility in Toluca, Mexico
and in April 2025 announced the full exit from the non-core US Yarns business based in Kings
Mountain, North Carolina. The sale of the Kings Mountain plant was completed in June 2025.
This followed a strategic review of the Americas Yarns business which started in Q4 2024. The
strategic review concluded that the Americas Yarns business did not fit with Coats' future
strategy and the exit allowed management to focus on driving forward and growing other parts
of the Group's attractive portfolio.
The results of the Americas Yarns business has been presented as a discontinued operation in the
consolidated income statement for the year ended 31 December 2025. Amounts for the year ended
31 December 2024 in the consolidated income statement have been represented to reclassify the
results of the Americas Yarns business from continuing operations to discontinued operations.
The results of the discontinued Americas Yarns business are presented below:
2025 2024*
Year ended 31 December US$m US$m
Revenue
26.3
67.9
Cost of sales
(40.6)
(84.9)
Gross profit
(14.3)
(17.0)
Distribution costs
(1.0)
(3.6)
Administrative expenses
(2.1)
(4.1)
Other operating income
1.2
–
Operating loss
(16.2)
(24.7)
Finance costs
–
(1.2)
Loss before taxation
(16.2)
(25.9)
Taxation
0.7
(0.4)
Loss from discontinued operations
(15.5)
(26.3)
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
The operating profit before exceptional and acquisition related items of the Americas Yarns
business for the year ended 31 December 2025 was $0.5m (2024: loss of $2.3m). Exceptional
and acquisition related items for the year ended 31 December 2025 charged to operating loss
from discontinued operations was $16.7m (2024: $22.4m). As a result the operating loss of the
Americas Yarns business for the year ended 31 December 2025 was $16.2m (2024: $24.7m).
Exceptional and acquisition related items of the Americas Yarns business (charged)/credited to
loss from discontinued operations are set out below:
2025 2024*
Year ended 31 December US$m US$m
Costs of exiting Americas Yarns business
–
Cost of Sales
(16.0)
(15.3)
–
Administrative expenses
(1.9)
–
(17.9)
(15.3)
Strategic project costs:
–
Cost of sales
–
(2.8)
–
Distribution costs
–
(1.0)
–
(3.8)
Administrative expenses:
Acquired intangible assets – amortisation and impairment charges
–
(3.3)
Other Operating income:
Profit on disposal of property
1.2
–
Total exceptional and acquisition related items – discontinued
operations
(16.7)
(22.4)
Exceptional costs of exiting the Americas Yarns business includes non-cash impairment charges
of property, plant and equipment and right-of-use leased assets of $12.1m for the year ended
31 December 2025 (2024: $9.7m).
Exceptional administrative costs charged to the loss from discontinued operations for the year
ended 31 December 2024 in addition to the above were $0.5m relating to businesses disposed
in prior years.
The tax credit in respect of exceptional and acquisition related items for the year ended
31 December 2025 was $0.8m (2024: tax charge of $0.3m).
Exceptional and acquisition related items, net of tax, for the year ended 31 December 2025 in
total were $15.9m (2024: $23.2m).
Loss per ordinary share from discontinued operations
The loss per ordinary share from discontinued operations is as follows:
2025 2024*
Year ended 31 December Cents Cents
Loss per ordinary share from discontinued operations:
Loss per ordinary share
(0.88)
(1.67)
Diluted loss per ordinary share
(0.88)
(1.65)
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
32 Discontinued operations continued
Cash flows from discontinued operations
2025 2024*
Year ended 31 December US$m US$m
Net cash inflow/(outflow) from operating activities
1.1
(10.2)
Net cash inflow/(outflow) from investing activities
14.8
(1.3)
Net cash outflow from financing activities
(1.2)
(1.8)
Net cash flows from discontinued operations
14.7
(13.3)
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
The cash consideration, net of transaction costs, received from the sale in June 2025 of the Kings
Mountain, US business, property, plant and equipment and inventories amounted to $13.1m
which is included in cash flow from investing activities for the year ended 31 December 2025.
33 Related party transactions
Remuneration of key management personnel
The Group Executive Team and Non-Executive Directors are deemed to be the key management
personnel of the Group. The remuneration of the Group Executive Team and Non-Executive
Directors, is set out below in aggregate for each of the categories specified in IAS 24 Related
Party Disclosures. Further information regarding the remuneration of individual directors is
provided on pages 86 to 98 in the audited part of the Directors’ Remuneration Report.
2025 2024
Year ended 31 December US$m US$m
Short-term employee benefits
9.8
8.7
Share based payments
3.0
3.9
12.8
12.6
33 Related party transactions
Trading transactions
Transactions between the Company and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note. Transactions between the Group
and its joint ventures are disclosed below.
During the year, Group companies entered into the following transactions with related parties
who are not members of the Group:
Sale of goods
Purchase of goods
2025 2024 2025 2024
US$m US$m US$m US$m
Joint ventures
0.9
1.9
63.3
63.2
Amounts owing by/(to) joint ventures at the year end are disclosed in notes 19 and 21. All
transactions with joint ventures are at an arm’s length and payment terms are consistent with
normal trading terms with third parties.
34 Derivatives and other financial instruments
The Group’s main financial instruments comprise:
Financial assets:
– cash and cash equivalents;
– trade and other receivables that arise directly from the Group’s operations; and
– derivatives, including forward foreign currency contracts and interest rate swaps.
Financial liabilities:
– trade, other payables and certain provisions that arise directly from the Group’s operations;
– bank borrowings and overdrafts; and
– derivative forward foreign currency contracts.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Fair value of financial assets and liabilities
The fair value of the Group’s financial assets and liabilities is summarised below:
Year ended 31 December
2025
2024
Book value Fair value Book value Fair value
US$m US$m US$m US$m
Primary financial instruments:
Cash and cash equivalents
232.0
232.0
146.0
146.0
Trade receivables
273.2
273.2
252.2
252.2
Loan receivable
43.6
43.6
38.3
38.3
Other receivables
21.1
21.1
15.3
15.3
Other investments
0.5
0.5
0.6
0.6
Trade payables
(194.6)
(194.6)
(167.2)
(167.2)
Amounts owed to joint ventures
(16.0)
(16.0)
(16.1)
(16.1)
Other financial liabilities and provisions
(82.2)
(82.2)
(67.7)
(67.7)
Borrowings
(1,046.7)
(1,046.7)
(595.3)
(595.3)
Derivative financial instruments:
Forward foreign currency contracts
0.2
0.2
(1.4)
(1.4)
Net financial liabilities
(768.9)
(768.9)
(395.3)
(395.3)
Unlisted investments are stated at fair value. For floating rate financial assets and liabilities, and for
fixed rate financial assets and liabilities with a maturity of less than 12 months, it has been assumed
that fair values are approximately the same as book values. Fair values for forward foreign currency
contracts have been estimated using applicable forward exchange rates at the year end. All other
fair values have been calculated by discounting expected cash flows at prevailing interest rates.
34 Derivatives and other financial instruments
Financial assets
The Group’s financial assets are summarised below:
2025 2024
Year ended 31 December US$m US$m
Financial assets carried at amortised cost:
Cash and cash equivalents
232.0
146.0
Trade receivables (note 19)
273.2
252.2
Loan receivable (note 10)
43.6
38.3
Other receivables (note 19), net of non-financial assets $33.7m (2024: $31.7m)
21.1
15.3
569.9
451.8
Financial assets carried at fair value through the income statement:
Derivative financial instruments (note 20)
0.9
0.9
0.9
0.9
Other financial assets carried at fair value through the statement of
comprehensive income:
Other investments (note 16)
0.5
0.6
0.5
0.6
Total financial assets
571.3
453.3
Financial liabilities
The Group’s financial liabilities are summarised below:
2025 2024
Year ended 31 December US$m US$m
Financial liabilities carried at amortised cost:
Trade payables (note 21)
194.6
167.2
Amounts owed to joint ventures (note 21)
16.0
16.1
Other financial liabilities
73.9
67.0
Provisions
8.3
0.7
Lease liabilities (note 15)
92.9
83.2
Borrowings (note 23)
1,046.7
595.3
1,432.4
929.5
Financial liabilities carried at fair value through the income statement:
Derivative financial instruments (note 22)
0.7
2.3
Total financial liabilities
1,433.1
931.8
Other financial liabilities include other payables, other than taxation, contract liabilities, employee
entitlements, advances and other statutory liabilities.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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34 Derivatives and other financial instruments continued
Fair value measurements recognised in the statement of financial position
The following tables provide an analysis of financial instruments that are measured subsequent
to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the
fair value is observable:
– Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities;
– Level 2 fair value measurements are those derived from inputs other than quoted prices that
are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
– Level 3 fair value measurements are those derived from valuation techniques which include
inputs for the asset or liability that are not observable market data (unobservable inputs).
Financial assets measured at fair value
Total Level 1 Level 2 Level 3
Year ended 31 December US$m US$m US$m US$m
2025
Financial assets measured at fair value through
the income statement:
Trading derivatives
0.9
–
0.9
–
Financial assets measured at fair value through
the statement of comprehensive income:
Other investments
0.5
–
–
0.5
2024
Financial assets measured at fair value through
the income statement:
Trading derivatives
0.9
–
0.9
–
Financial assets measured at fair value through
the statement of comprehensive income:
Other investments
0.6
–
–
0.6
Financial liabilities measured at fair value
Total Level 1 Level 2 Level 3
Year ended 31 December US$m US$m US$m US$m
2025
Financial liabilities measured at fair value
through the income statement:
Trading derivatives
(0.7)
–
(0.7)
–
Contingent consideration provision
(7.3)
–
–
(7.3)
(8.0)
–
(0.7)
(7.3)
2024
Financial liabilities measured at fair value
through the income statement:
Trading derivatives
(2.3)
–
(2.3)
–
Level 2 financial instruments are measured by discounted cash flow. For foreign exchange
contracts future cash flows are estimated based on forward exchange rates (from observable
forward exchange rates at the end of the reporting period) and contract forward rates, discounted
at a rate that reflects the credit risk of the various counterparties.
The contingent consideration provision classified in level 3 of the fair value hierarchy relates to
the Viz Reflectives acquisition (see note 31). The fair value of contingent consideration is
determined considering the expected payments under the terms of the acquisition agreement.
The main risks arising from the Group’s financial instruments are as follows:
– currency risk;
– interest rate risk;
– capital risk;
– market price risk;
– liquidity risk; and
– credit risk.
The Group’s policies for managing those risks are described on pages 164 to 170 and, except as
noted, have remained unchanged since the beginning of the year to which these financial
statements relate.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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34 Derivatives and other financial instruments continued
Currency risk
The income and capital value of the Group’s financial instruments can be affected by exchange rate
movements as a significant portion of both its financial assets and financial liabilities are denominated
in currencies other than US Dollars, which is the Group’s presentational currency. The accounting
impact of these exposures will vary according to whether or not the Group company holding such
financial assets and liabilities reports in the currency in which they are denominated.
The Board recognises that the Group’s US Dollar statement of financial position will be affected
by short-term movements in exchange rates, particularly the value of Sterling, Euro and Indian
Rupee. The Group’s investments reflect the requirements of its customers, which results in
investments in potentially more volatile developing market currencies. However, as a diverse
global business, there are many natural offsets within the Group that tend to mitigate the risk
associated with any individual currency volatility.
The Group uses forward foreign currency contracts to mitigate the currency exposure that arises
on business transacted by group companies in currencies other than their functional currency.
Such foreign currency contracts are only entered into when there is a commitment to the
underlying transaction. The contracts used to hedge future transactions typically have a maturity
of between three months and one year.
Interest rate risk
In 2025, the Group financed its operations through shareholders’ funds, bank borrowings,
Senior Notes and overdrafts. The Group’s trading subsidiaries use a mixture of fixed and floating
rate debt. The Group also has access to committed bank facilities amounting to some $420.0m,
of which $nil had been drawn down at year end, $450.0m of term loan facilities and $600.0m
of Senior Notes (see note 23).
Interest rate risk is managed by maintaining an appropriate mix between fixed and floating rate
borrowings using interest rate swap contracts. Interest rate swaps are accounted for as fair value
or cash flow hedges, depending on initial designation. Hedging activities are evaluated regularly
to align with interest rate views and risk appetite. In order to achieve hedge effectiveness, when
entering into interest rate swap contracts, the cash flows, interest rate references and maturity
of the underlying exposure of the hedged item are considered so as to match the hedging
instrument. The ratio of fixed to floating rate hedging is established according to Group policy
which prescribes a banded range for the fixed to floating ratio. The ratio of fixed to floating will
decrease over a rolling 5-year period.
As at 31 December 2025 the Group did not have any interest rate swap contracts designated as
fair value or cash flow hedges.
The Group’s interest income does not vary significantly from the returns it would generate
through investing surplus cash at floating rates of interest since the interest rates are re-set on a
regular basis.
A reasonably possible change of one per cent in market interest rates would reduce profit before
tax by approximately $0.1m (2024: $0.8m), and would reduce shareholders’ funds by
approximately $0.1m (2024: $0.8m). If interest rates fluctuate by a different rate, the
aforementioned approximate impact can be linearly interpolated.
Trade and other receivables and trade and other payables are excluded from the following
disclosure (other than the currency disclosures) as there is limited interest rate risk.
Capital risk management
The Group manages its capital so as to ensure that the Company and the Group will be able to
continue as a going concern.
The Group’s capital structure comprises cash and cash equivalents and borrowings (see summary
of net debt on page 158), and share capital and reserves attributable to the equity shareholders
of the Company.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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34 Derivatives and other financial instruments continued
Currency exposure
The table below shows the extent to which Group companies have financial assets and liabilities,
excluding forward foreign currency contracts, in currencies other than their functional currency.
Foreign exchange differences arising on retranslation of these assets and liabilities are taken to
the Group income statement. The table excludes loans between Group companies that form part
of the net investment in overseas subsidiaries on which the exchange differences are dealt with
through reserves, but includes other Group balances that eliminate on consolidation.
Net foreign currency financial assets/(liabilities)
Sterling US dollars Euro Indian Rupees Other Total
Functional currency 2025 US$m US$m US$m US$m US$m US$m
Sterling
–
(0.7)
3.3
–
–
2.6
United States dollars
(20.0)
–
(3.1)
2.0
(13.1)
(34.2)
Euros
0.1
(9.3)
–
–
0.1
(9.1)
Indian Rupees
–
3.4
–
–
–
3.4
Other currencies
(0.2)
16.7
6.1
–
12.2
34.8
(20.1)
10.1
6.3
2.0
(0.8)
(2.5)
Net foreign currency financial assets/(liabilities)
Sterling US dollars Euro Indian Rupees Other Total
Functional currency 2024 US$m US$m US$m US$m US$m US$m
Sterling
–
2.5
2.9
–
–
5.4
United States dollars
(16.4)
–
(1.8)
0.9
6.4
(10.9)
Euros
–
(3.4)
–
–
0.4
(3.0)
Indian Rupees
–
3.2
(0.5)
–
–
2.7
Other currencies
(1.7)
12.8
3.9
–
8.6
23.6
(18.1)
15.1
4.5
0.9
15.4
17.8
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
The following table shows the impact on pre-tax profit and shareholders’ funds of reasonably
possible changes in exchange rates against each of the major foreign currencies in which the
Group transacts:
Indian
Sterling Euro Rupees
2025 US$m US$m US$m
Increase in US dollar exchange rate
10%
10%
10%
(Decrease)/increase in profit before tax
(2.2)
0.6
(0.1)
Increase in shareholders’ funds
3.7
7.4
6.1
Sterling Euro Indian Rupees
2024 US$m US$m US$m
Increase in US dollar exchange rate
10%
10%
10%
Decrease in profit before tax
(2.1)
0.2
(0.2)
Increase in shareholders’ funds
6.8
4.3
6.5
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34 Derivatives and other financial instruments continued
Currency profile of financial assets
The currency profile of the Group’s financial assets was as follows:
2025
2024
Cash and cash Trade and other Derivative financial Cash and cash Trade and other Derivative financial
Investments equivalents receivables instruments Total Investments equivalents receivables instruments Total
31 December US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Currency:
Sterling
–
0.1
47.7
15.9
63.7
–
–
42.1
–
42.1
United States dollars
–
136.5
171.1
(52.5)
255.1
–
81.7
138.1
10.5
230.3
Euros
–
5.2
29.8
(0.4)
34.6
0.1
3.9
26.4
(12.6)
17.8
Indian Rupees
0.5
29.1
28.1
–
57.7
0.5
17.8
29.9
–
48.2
Other currencies
–
61.1
61.2
37.9
160.2
–
42.6
69.3
3.0
114.9
Total financial assets
0.5
232.0
337.9
0.9
571.3
0.6
146.0
305.8
0.9
453.3
The investments included above comprise unlisted investments in shares and bonds. Trade and other receivables in the above table include the pension loan receivable.
Currency and interest rate profile of financial liabilities
The currency and interest rate profile of the Group’s financial liabilities was as follows:
2025
2024
Derivative Derivative
financial financial
Floating rate Fixed rate Interest free Lease liabilities instruments Total Floating rate Fixed rate Interest free Lease liabilities instruments Total
31 December US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Currency:
Sterling
–
–
22.7
1.9
0.1
24.7
–
–
2.1
2.7
(11.3)
(6.5)
United States dollars
450.0
596.2
119.3
28.6
12.4
1,206.5
–
595.1
115.1
23.9
58.0
792.1
Euros
0.2
–
20.7
9.4
(10.9)
19.4
0.2
–
17.5
8.5
(0.2)
26.0
Indian Rupees
0.3
–
36.5
5.7
(2.8)
39.7
–
–
34.3
5.8
–
40.1
Other currencies
–
–
93.6
47.3
1.9
142.8
–
–
82.0
42.3
(44.2)
80.1
Total financial liabilities
450.5
596.2
292.8
92.9
0.7
1,433.1
0.2
595.1
251.0
83.2
2.3
931.8
The benchmark for determining floating rate liabilities in the UK is the risk-free rate for both sterling and US$ amounts.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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34 Derivatives and other financial instruments continued
Details of fixed and non interest-bearing liabilities (excluding derivatives and trade and other
payables) are provided below:
2025
2024
Financial Financial
liabilities liabilities
Fixed rate on which Fixed rate on which
financial no interest financial no interest
liabilities is paid liabilities is paid
Weighted Weighted
Weighted average Weighted Weighted average Weighted
average period for average average period for average
interest which rate period until interest which rate period until
rate is fixed maturity rate is fixed maturity
Year ended 31 December % (months) (months) % (months) (months)
Currency:
Sterling
–
–
18
–
–
18
United States dollars
5.15
49
–
5.15
61
–
Weighted average
5.15
49
18
5.15
61
18
Currency profile of foreign exchange derivatives
Assets
Liabilities
2025 2024 2025 2024
Year ended 31 December US$m US$m US$m US$m
Currency:
Sterling
15.9
11.3
(0.1)
–
United States dollars
22.2
18.8
(63.7)
(66.4)
Euros
–
0.2
(12.8)
(12.6)
Indian Rupee
2.8
–
–
–
Other currencies
45.7
52.8
(9.8)
(5.5)
86.6
83.1
(86.4)
(84.5)
Market price risk
The Group has equity investments at 31 December 2025 of $0.5m (2024: $0.6m) held for
strategic rather than trading purposes. The Group does not actively trade these investments and
is not materially exposed to price risk.
The sensitivity analyses below have been determined based on the exposure to reasonably
possible price changes for the investments held at the year end.
2025 2024
Year ended 31 December US$m US$m
Impact of a 10% increase in prices:
Increase in pre-tax profit for the year
–
–
Increase in equity shareholders’ funds
0.1
0.1
Liquidity risk
The Group typically holds cash balances in deposits with a short maturity. Additional resources
can be drawn through committed borrowing facilities at operating subsidiary level. During the
year the Group has complied with all externally imposed capital requirements.
The Group had the following undrawn committed borrowing facilities in respect of which all
conditions precedent had been met at the year-end:
2025 2024
Year ended 31 December US$m US$m
Expiring between two and five years
420.0
420.0
Maturity of undiscounted financial assets (excluding derivatives)
The expected maturity of the Group’s financial assets, using undiscounted cash flows, was
as follows:
2025 2024
Year ended 31 December US$m US$m
In one year or less, or on demand
518.7
403.0
In more than one year but not more than two years
51.1
10.5
In more than two years but not more than five years
–
38.3
In more than five years
0.5
0.6
570.3
452.4
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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34 Derivatives and other financial instruments continued
Maturity of undiscounted financial liabilities (excluding derivatives)
The expected maturity of the Group’s financial liabilities, using undiscounted cash flows, was
as follows:
2025 2024
Year ended 31 December US$m US$m
In one year or less, or on demand
314.7
271.6
In more than one year but not more than two years
422.6
17.7
In more than two years but not more than five years
543.4
293.4
In more than five years
171.1
370.6
1,451.8
953.3
The above table comprises the gross amounts payable in respect of borrowings (including interest
thereon), lease liabilities, trade and other non-statutory payables and certain provisions, over the
period to the maturity of those liabilities.
Maturity of undiscounted financial derivatives
The maturity of the Group’s financial derivatives (on a gross basis), which include interest rate
and foreign exchange swaps, using undiscounted cash flows, was as follows:
Assets
Liabilities
2025 2024 2025 2024
Year ended 31 December US$m US$m US$m US$m
In one year or less, or on demand
86.6
83.0
(86.4)
(84.4)
86.6
83.0
(86.4)
(84.4)
Credit risk
2025 2024
Year ended 31 December US$m US$m
The Group considers its maximum exposure to credit risk to be
as follows:
Cash and cash equivalents
232.0
146.0
Derivative financial instruments
0.9
0.9
Trade receivables (net of impairment provision)
273.2
252.2
Loan receivable
43.6
38.3
Other receivables
21.1
15.3
570.8
452.7
Financial assets considered not to have exposure to credit risk:
Other investments
0.5
0.6
Total financial assets
571.3
453.3
Analysis of trade receivables over permitted credit period:
Trade receivables up to 1 month over permitted credit period
21.6
15.3
Trade receivables between 1 and 2 months over permitted credit period
5.1
5.2
Trade receivables between 2 and 3 months over permitted credit period
1.4
1.9
Trade receivables between 3 and 6 months over permitted credit period
1.8
2.0
Trade receivables in excess of 6 months over permitted credit period
1.4
1.6
Total trade receivables (net of impairment provision) in excess of permitted
credit period
31.3
26.0
Trade receivables within permitted credit period
241.9
226.2
Total net trade receivables
273.2
252.2
Analysis of trade receivables impairment provision:
Trade receivables up to 1 month over permitted credit period
0.5
0.5
Trade receivables between 1 and 2 months over permitted credit period
0.2
0.1
Trade receivables between 2 and 3 months over permitted credit period
0.2
0.4
Trade receivables between 3 and 6 months over permitted credit period
0.6
1.1
Trade receivables in excess of 6 months over permitted credit period
8.2
8.0
Total impairment provision
9.7
10.1
Trade receivables consist of a large number of customers, spread across diverse geographical
areas and industries.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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34 Derivatives and other financial instruments continued
Customers requesting credit facilities are subject to a credit quality assessment, which may include
a review of their financial strength, previous credit history with the Group, payment record with
other suppliers, bank references and credit rating agency reports. All active customers are subject
to an annual, or more frequent if appropriate, review of their credit limits and credit periods.
The Group applies the simplified approach to providing for expected credit losses prescribed
by IFRS 9, which requires the use of the lifetime expected loss provision for all trade receivables
(see note 19).
When determining expected losses for trade receivables, the Group takes into account the
historical default experience and the financial position of the counterparties, as well as the future
prospects considering various sources of information.
The Group does not have a significant credit risk exposure to any single customer.
Hedges
During 2025, the Group has hedged the following exposures:
– currency risk – using forward foreign currency contracts.
At 31 December 2025, the fair value of forward foreign currency contracts was a net asset of
$0.2m (2024: net liability $1.4m).
35 Share-based payments
The total cost recognised in the consolidated Income Statement in respect of equity settled share-
based payment plans was as follows:
2025 2024
Year ended 31 December US$m US$m
Long Term Incentive Plan (LTIP)
5.9
7.0
Deferred bonuses
0.9
0.9
6.8
7.9
The average share price for the year ended 31 December 2025 was 80.7p (2024: 86.4p).
LTIP
Under the terms of the Coats Group LTIP, executive directors and key senior executives may be
awarded each year conditional entitlements over ordinary shares in the Company in the form of
nil cost options. The vesting of awards is usually subject to the satisfaction of a three year
performance period, determined by the Remuneration Committee at the time of grant. Where
performance conditions have applied, these include both market and non-market based measures.
Details of options outstanding under equity settled awards:
2025 2024
Options Options
Outstanding at 1 January
32,955,479
35,570,376
Granted during the year
11,493,763
11,317,541
Vested during the year
(1,931,972)
(432,103)
Lapsed during the year
(2,157,385)
(4,474,341)
Exercised during the year
(8,137,938)
(9,025,994)
Outstanding at 31 December
32,221,947
32,955,479
Exercisable at 31 December
5,419,006
5,731,656
The options outstanding at 31 December 2025 had a weighted average remaining contractual
life of 7.7 years (2024: 7.6 years).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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35 Share-based payments continued
The fair value of the market-based component of these awards was calculated using the Monte
Carlo simulation method to reflect the likelihood of the market-based Total Shareholder Return
(TSR) performance condition, which attach to 25% (2024: 25%) of the award, being met, using
the following assumptions:
2025
2024
Vesting period
3 Years
3 Years
Share price at valuation date
81.7p
78.8p
Exercise price
Nil
Nil
Risk free rate
4.02%
3.93%
Expected dividend yield
0%
0%
Expected volatility
30.81%
34.16%
Fair value per share
41.8p
49.2p
Deferred bonuses
Under the terms of the Coats Group Deferred Bonus Plan, any bonuses awarded to executive
directors and key senior management will be the subject of a mandatory 25% to 50% deferred
into shares, to be held for a three year retention period. Annual bonuses will be determined by
reference to performance, in the normal course measured over one financial year. Awards are
normally exercisable after three years.
The options outstanding at 31 December 2025 had a weighted average remaining contractual
life of 8.1 years (2024: 7.9 years).
36 Post balance sheet events
There are no material post balance sheet events requiring adjustment or disclosure.
37 Alternative performance measures
This Annual Report contains both statutory measures and alternative performance measures
which, in management’s view, provide valuable additional information for users of the financial
statements in understanding the Group’s performance.
The Group’s alternative performance measures and key performance indicators are aligned to the
Group’s strategy and together are used to measure the performance of the business. A number
of these measures form the basis of performance measures for remuneration incentive schemes.
Alternative performance measures are non-GAAP (Generally Accepted Accounting Practice)
measures and provide supplementary information to assist with the understanding of the Group’s
financial results and with the evaluation of operating performance for all the periods presented.
Alternative performance measures, however, are not a measure of financial performance under
United Kingdom adopted international accounting standards (‘IFRS’) and should not be
considered as a substitute for measures determined in accordance with IFRS. As the Group’s
alternative performance measures are not defined terms under IFRS they may therefore not be
comparable with similarly titled measures reported by other companies. A reconciliation of
alternative performance measures to the most directly comparable measures reported in
accordance with IFRS is provided below.
a) Organic growth on a constant exchange rate (CER) basis
Organic growth measures the change in revenue and operating profit before exceptional and
acquisition related items after adjusting for acquisitions. The effect of acquisitions is equalised by:
– removing from the year of acquisition, their revenue and operating profit; and
– in the following year, removing the revenue and operating profit for the number of months
equivalent to the pre-acquisition period in the prior year.
The effects of currency changes are removed through restating prior year revenue and operating
profit at current year exchange rates. The principal exchange rates used are set out in note 1.
Organic revenue growth on a CER basis measures the ability of the Group to grow sales by
operating in selected geographies and segments and offering differentiated cost competitive
products and services.
Adjusted organic operating profit growth on a CER basis measures the profitability progression
of the Group.
Adjusted operating profit is calculated by adding back exceptional and acquisition related items
(see note 4 for further details).
2025 2024* %
Year ended 31 December US$m US$m Growth
Revenue from continuing operations
1,464.9
1,433.0
2%
Constant currency adjustment
–
(9.3)
Revenue on a CER basis
1,464.9
1,423.7
3%
Revenue from acquisitions
1
(43.3)
–
Organic revenue on a CER basis
1,421.6
1,423.7
–
1. Revenue and operating profit from acquisitions relates to the acquisitions of the OrthoLite and Viz Reflectives businesses (see
note 31).
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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37 Alternative performance measures continued
2025 2024 * %
Year ended 31 December US$m US$m Growth
Operating profit from continuing operations
2
241.4
224.5
8%
Exceptional and acquisition related items (note 4)
48.4
47.4
Adjusted operating profit from continuing operations
289.8
271.9
7%
Constant currency adjustment
–
(1.8)
Adjusted operating profit on a CER basis
289.8
270.1
7%
Operating profit from acquisitions
1
(10.8)
–
Organic adjusted operating profit on a CER basis
279.0
270.1
3%
1. Revenue and operating profit from acquisitions relates to the acquisitions of the OrthoLite and Viz Reflectives businesses (see
note 31).
2. Refer to the consolidated income statement for a reconciliation of profit before taxation to operating profit from continuing
operations.
b) Adjusted EBITDA
Adjusted EBITDA is presented as an alternative performance measure to show the operating
performance of the Group excluding the effects of depreciation of property, plant and equipment
and right-of-use, amortisation and impairments and excluding exceptional and acquisition
related items.
Operating profit from continuing operations before exceptional and acquisition related items and
before depreciation of property, plant and equipment and right-of-use assets and amortisation
(Adjusted EBITDA) is as set out below:
2025 2024 *
Year ended 31 December US$m US$m
Profit before taxation from continuing operations
201.6
198.0
Share of profit of joint ventures
(1.3)
(1.9)
Finance income (note 6)
(11.0)
(3.1)
Finance costs (note 7)
52.1
31.5
Operating profit from continuing operations
1
241.4
224.5
Exceptional and acquisition related items (note 4)
48.4
47.4
Adjusted operating profit from continuing operations
289.8
271.9
Depreciation of owned property, plant and equipment
23.9
24.3
Amortisation of intangible assets
1.5
1.6
Adjusted EBITDA including IFRS 16 depreciation of right-of-use assets (Pre-IFRS
16 basis)
315.2
297.8
Depreciation of right-of-use assets
17.8
17.0
Adjusted EBITDA
333.0
314.8
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
1. Refer to the consolidated income statement for a reconciliation of profit before taxation to operating profit from continuing
operations.
Net debt including lease liabilities under IFRS 16 at 31 December 2025 was $907.6m (2024:
$532.5m).
This gives a leverage ratio of net debt including lease liabilities to adjusted EBITDA at 31 December
2025 of 2.7 (2024: 1.7).
Net debt excluding lease liabilities under IFRS 16 at 31 December 2025 was $814.7m (2024:
$449.3m).
This gives a leverage ratio on a pre-IFRS 16 basis at 31 December 2025 of 2.6 (2024: 1.5).
The Group’s proforma leverage on a pre-IFRS 16 basis at 31 December 2025 is 2.2 after adjusting
EBITDA to include OrthoLite and Viz Reflectives as if the acquisitions had taken effect at the
beginning of the reporting period (1 January 2025).
For the definition and calculation of net debt including and excluding lease liabilities see note 30 (g).
For financial covenant purposes under the Group’s borrowing arrangements, leverage is
measured at the Coats Group Finance Company consolidated level under frozen accounting
standards and excludes the effects of IFRS 16 and includes the results of acquisitions from the
beginning of the reporting period. Leverage for covenant purposes at 31 December 2025 was
2.2 (2024: 1.6). The financial covenant under the Group’s borrowing arrangements is for leverage
to be less than 3.0 and this covenant was met at 31 December 2025 and 31 December 2024.
c) Adjusted effective tax rate
The adjusted effective tax rate removes the tax impact of exceptional and acquisition related
items to arrive at a tax rate based on the adjusted profit before taxation.
2025 2024 *
Year ended 31 December US$m US$m
Profit before taxation from continuing operations
201.6
198.0
Exceptional and acquisition related items (note 4)
51.6
47.4
Adjusted profit before taxation from continuing operations
253.2
245.4
Taxation charge from continuing operations
64.9
71.5
Tax credit/(charge) in respect of exceptional and acquisition related items
8.5
(1.5)
Adjusted tax charge from continuing operations
73.4
70.0
Adjusted effective tax rate
29%
29%
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025172
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
37 Alternative performance measures continued
d) Adjusted earnings per share
The calculation of adjusted earnings per share is based on the profit from continuing operations
attributable to equity shareholders before exceptional and acquisition related items as set out
below. Adjusted earnings per share growth measures the progression of the benefits generated
for shareholders.
2025 2024 *
Year ended 31 December US$m US$m
Profit from continuing operations
136.7
126.5
Non-controlling interests
(17.8)
(19.6)
Profit from continuing operations attributable to equity
shareholders
118.9
106.9
Exceptional and acquisition related items net of non-controlling
interests (note 4)
51.6
47.4
Tax (credit)/charge in respect of exceptional and acquisition
related items
(8.5)
1.5
Adjusted profit from continuing operations
162.0
155.8
Weighted average number of Ordinary Shares
1,750,596,612
1,604,461,401
Adjusted earnings per share (cents)
9.26
9.71
Adjusted earnings per share (decline %)
(5%)
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
The weighted average number of Ordinary Shares used for the calculation of adjusted earnings
per share for the year ended 31 December 2025 is 1,750,596,612 (2024: 1,604,461,401), the
same as that used for basic earnings per ordinary share from continuing operations (see note 11).
e) Adjusted free cash flow
Net cash generated by operating activities, a GAAP measure, reconciles to changes in net debt
resulting from cash flows (free cash flow) as set out in the consolidated cash flow statement. A
reconciliation of free cash flow to adjusted free cash flow is set out below.
Consistent with previous periods, adjusted free cash flow is defined as cash generated from
continuing activities less capital expenditure, interest, tax, dividends to minority interests and
other items, and excluding exceptional and discontinued items, acquisitions, purchase of own
shares by the Employee Benefit Trust and payments to the UK pension scheme.
Adjusted free cash flow measures the Group’s cash generation that is available to service
shareholder dividends, pension obligations and acquisitions.
2025 2024 *
Year ended 31 December US$m US$m
Change in net debt resulting from cash flows (free cash flow)
(364.2)
(57.6)
Acquisition of businesses
808.1
–
Issue of ordinary shares in connection with the acquisition of OrthoLite
(322.9)
–
Disposal of business and net cash flow from discontinued operations
(14.7)
13.3
Dividends paid to equity shareholders
53.6
46.2
Free cash flow pre-shareholder dividends and M&A
159.9
1.9
Net cash flows in respect of exceptional items
15.4
21.7
Purchase of own shares by Employee Benefit Trust
9.0
8.7
Payment to UK pension scheme in connection with pension buy-in
–
127.8
Tax inflow in respect of adjusted cash flow items
–
(2.0)
Adjusted free cash flow
184.3
158.1
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025173
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
37 Alternative performance measures continued
f) Adjusted return on capital employed
Adjusted return on capital employed (ROCE) is defined as operating profit before exceptional and
acquisition related items adjusted for the full year impact of acquisitions divided by period end
capital employed as set out below. Adjusted ROCE measures the ability of the Group’s assets to
deliver returns.
2025 2024 *
Year ended 31 December US$m US$m
Operating profit from continuing operations before exceptional and acquisition
related items adjusted for full year impact of acquisitions
1
344.6
271.9
Non-current assets:
Acquired intangible assets
1,128.3
317.2
Property, plant and equipment
248.7
212.3
Right-of-use assets
75.0
58.9
Trade and other receivables
20.1
25.0
Current assets:
Inventories
173.5
162.8
Trade and other receivables
336.3
286.5
Current liabilities:
Trade and other payables
(338.1)
(290.7)
Lease liabilities
(21.2)
(15.3)
Non-current liabilities
Trade and other payables
(4.9)
(7.4)
Lease liabilities
(71.7)
(54.4)
Capital employed
1,546.0
694.9
Adjusted ROCE
22%
39%
1. Operating profit from continuing operations before exceptional and acquisition related items for the year ended 31 December
2025 has been adjusted to include OrthoLite and Viz Reflectives as if the acquisitions had taken effect at the beginning of the
reporting period (1 January 2025). Including full year proforma results, rather than the actual consolidated results of these
acquired businesses, better reflects the return from the capital position at the period end. Therefore this provides reliable and more
relevant information on the financial performance of the Group to a user of the financial statements. Refer to note 4 for details
of exceptional and acquisition related items.
* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1). Amounts for non-
current assets, current assets, current liabilities and non-current liabilities at 31 December 2024 exclude the discontinued Americas
Yarns business.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Coats Group plc Annual Report and Accounts 2025174
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
COMPANY BALANCE
SHEET
COMPANY STATEMENT OF
CHANGES IN EQUITY
31 December Notes
2025
US$m
2024
US$m
Fixed assets:
Investments 4 1,676.3 1,354.0
Current assets:
Trade and other receivables 1.6 1.1
Cash at bank and in hand 0.1 0.1
1.7 1.2
Creditors: amounts falling due within one year:
Loans from subsidiary undertakings (0.9) –
Trade and other payables (1.6) (1.1)
Net current (liabilities)/assets (0.8) 0.1
Net assets 1,675.5 1,354.1
Capital and reserves:
Share capital 5 120.4 99.0
Share premium account 412.3 111.4
Capital redemption reserve 14.1 14.1
Share options reserve 18.5 18.5
Capital reduction reserve 59.8 59.8
Own shares 5 (3.2) (5.3)
Profit and loss account 1,053.6 1,056.6
Shareholders’ funds 1,675.5 1,354.1
The Company reported a profit for the financial year ended 31 December 2025 of $55.5m
(2024:$54.1m).
David Paja Hannah Nichols
Group Chief Executive Officer Group Chief Financial Officer
Approved by the Board 4 March 2026
Company Registration No.103548
Share
capital
US$m
Share
premium
account
US$m
Capital
redemption
reserve
US$m
Share
options
reserve
US$m
Capital
reduction
reserve
US$m
Own
shares
US$m
Profit and
loss
account
US$m
Total
equity
US$m
1 January 2024 99.0 111.4 14.1 18.5 59.8 (6.1) 1,049.9 1,346.6
Profit and total
comprehensive expense for
theyear – – – – – – 54.1 54.1
Dividends to equity
shareholders – – – – – – (46.5) (46.5)
Purchase of own shares – – – – – (8.7) – (8.7)
Movement in ownshares – – – – – 9.5 (0.9) 8.6
31 December 2024 99.0 111.4 14.1 18.5 59.8 (5.3) 1,056.6 1,354.1
Profit and total
comprehensive expense for
theyear – – – – – – 55.5 55.5
Isssue of ordinary shares 21.4 300.9 – – – – – 322.3
Dividends to equity
shareholders – – – – – – (54.1) (54.1)
Purchase of own shares – – – – – (9.0) – (9.0)
Movement in ownshares – – – – – 11.1 (4.4) 6.7
31 December 2025 120.4 412.3 14.1 18.5 59.8 (3.2) 1,053.6 1,675.5
Coats Group plc Annual Report and Accounts 2025175
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1 Accounting policies
The principal accounting policies of the Company are summarised below. They have all been
applied consistently throughout the year and to the preceding year.
a) General information and basis of accounting
The financial statements have been prepared under the historical cost convention, modified to
include certain items at fair value, and in accordance with Financial Reporting Standard 102 (FRS
102) as issued by the Financial Reporting Council. The going concern basis is set out in note 1 of
the Group consolidated financial statements. The Company is deemed a qualifying entity under
FRS 102, and so may take advantage of the reduced disclosures permitted under the standard.
As a result, the following disclosures have not been provided:
– A statement of cash flows and related disclosures under Section 7 Statement of Cash Flows
and Section 3 Financial Statement Presentation paragraph 3.17(d); and
– Disclosures about share-based payments under Section 26 (paragraphs 26.18(b), 26.19 to
26.21 and 26.23) of FRS 102 have not been provided as equivalent disclosures are included in
the consolidated financial statements of Coats Group plc.
Functional currency
The functional currency of the Company continued to be United States dollars (USD) during the
year ended 31 December 2025.
b) Fixed assets – investments
Investments in subsidiary undertakings are reflected at cost less provisions for any impairment.
c) Financial assets and liabilities
Financial assets and financial liabilities are recognised when the Company becomes a party to the
contractual provisions of the instrument. All financial assets and financial liabilities are initially
measured at transaction price. If an arrangement constitutes a financing transaction, the financial
asset or financial liability is measured at the present value of future payments discounted at a
market rate of interest for a similar debt instrument.
d) Impairment of assets
Assets, other than those measured at fair value, are assessed for indicators of impairment at each
balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised
in the profit and loss and the assets is reduced to its recoverable amount. The recoverable amount
is the higher of its fair value less costs to sell and its value in use.
e) Share-based payments
Cash-settled
Cash-settled share-based payments are measured at fair value (excluding the effect of non
market-based vesting conditions) at each reporting date. The fair value is expensed on a straight-
line basis over the vesting period, with a corresponding increase in liabilities.
Equity-settled
The Group operates an equity-settled Long Term Incentive Plan for executives and senior
management, settlement is in the form of Coats Group plc shares. Awards under this plan are
subject to both market-based and non-market-based vesting criteria.
The fair value at the date of grant is established by using an appropriate simulation method to
reflect the likelihood of market-based performance conditions being met. As the Long Term
Incentive Plan relates to employees of a subsidiary, when there is no recharge of the cost, the fair
value is charged to Investments on a straight-line basis over the vesting period, with appropriate
adjustments being made during this period to reflect expected vesting for non market-based
performance conditions and forfeitures. The corresponding credit is to shareholders’ funds.
To satisfy awards under this Plan, shares may be purchased in the market by an Employee Benefit
Trust (EBT) over the vesting period. Coats Group plc is the sponsoring employer of the EBT and
its activities are considered an extension of the Company’s activities. Therefore the shares
purchased by the EBT are included as a deduction from shareholders’ funds and other assets and
liabilities of the EBT are recognised as assets and liabilities of Coats Group plc.
f) Taxation
Provision is made for taxation assessable on the profit or loss for the year as adjusted for
disallowable and non-taxable items. Deferred taxation isprovided in full in respect of timing
differences which have arisen but not reversed at the balance sheet date, except that deferred
tax assets (including those attributable to tax losses carried forward) are only recognised if it is
considered more likely than not that they will be recovered. Deferred taxation is measured on a
non-discounted basis.
g) Dividends
Dividends proposed are recognised in the period in which they are formally approved for payment.
Coats Group plc Annual Report and Accounts 2025176
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
5 Share capital and reserves
There are 1,917,372,461 Ordinary Shares of 5p issued and fully paid at 31 December 2025
(2024:1,597,810,385).
The own shares reserve at 31 December 2025 of $3.2m (2024: $5.3m) represents the cost of
shares in Coats Group plc purchased inthemarket and held by an Employee Benefit Trust to
satisfy awards under the Group’s share based incentive plans. The number of shares heldbythe
Employee Benefit Trust at 31December 2025 was 3,010,519 (2024: 4,905,769).
As at 31 December 2025 the Company had distributable profits of $287.9m (2024: $288.7m).
6 Related party transactions
Amounts due from and to other Group companies are disclosed on the face of the Balance Sheet
on page175.
h) Critical accounting judgements and key sources of estimation uncertainty
Carrying value of investments:
The carrying values of investments are assessed annually for indicators of impairment. If an
impairment review is required judgement is involved incalculating the recoverable amount. No
indicators of impairment were identified during the year ended 31 December 2025.
There are no sources of estimation uncertainty at the balance sheet date, that may have a
significant risk of causing material adjustment to the carrying amounts of assets and liabilities
within the next financial year.
2 Result for the year
The Company has not presented its own profit and loss account as permitted by section 408 of
the Companies Act 2006. The profit for the yearattributable to shareholders was $55.5m (2024:
$54.1m). Fees paid for the audit of the Company’s annual accounts are disclosed on page 135.
Details of directors’ remuneration are set out on pages 86 to 98 within the Remuneration Report
and form part of these financial statements.
3 Dividends
Dividends amounting to $54.1m in respect of the year ended 31 December 2025 were payable
to CoatsGroup plc shareholders(2024: $46.5m). Details of the proposed final dividend for the
year ended 31 December 2025 are set out in note 12 of the consolidated financialstatements.
4 Investments
Investments in
subsidiary
undertakings
US$m
At 1 January 2025 1,354.0
Additions (see note 26) 322.3
At 31 December 2025 1,676.3
The carrying value of investments at 1 January 2024 was $1,354.0m.
Coats Group plc Annual Report and Accounts 2025177
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
Introduction
We are pleased to present our
2025 report in response to the
Task Force on Climate-related
Financial Disclosure (TCFD)
recommendations. This report
addresses our approach to
climate change governance,
outlining how Coats integrates
climate-related risks and
opportunities into the Group’s
risk management framework,
strategic planning, and
decision-making processes.
These efforts are aligned with
our net zero targets and our
transition plan, as detailed on
page 195 of this report.
Our TCFD Report outlines how climate considerations are embedded into our risk management, strategic planning and decision making,
alignedwith our net zero ambition, and we regularly review the financial impacts of our climate related risks and opportunities.
This report covers the four disclosure pillars as detailed in the adjacent table.
Recommendation Recommended disclosures Reference Compliant
Governance
Disclose the organisation’s governance around
climate-related risks and opportunities
a) Describe the Board’s oversight of climate-related risks
and opportunities
Page 179
b) Describe management’s role in assessing and managing climate-
related risks and opportunities
Page 179
Risk management
Disclose how the organisation identifies, assesses, and
manages climate-related risks
a) Describe the organisation’s processes for identifying and assessing
climate-related risks
Page 180
b) Describe the organisation’s processes for managing climate-
related risks
Page
180-181
c) Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organisation’s overall risk
management
Page 181
Strategy
Disclose the actual and potential impacts of
climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial
planning where such information is material
a) Describe the climate-related risks and opportunities the organisation
has identified over the short, medium and long term
Page
183-194
b) Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy and financial planning
Page
183-194
c) Describe the resilience of the organisation’s strategy, scenarios,
including a 2
o
C or lower scenario taking into consideration different
climate-related risks
Page 194
Metrics and targets
Disclose the metrics and targets used to assess and
manage relevant climate-related risks and
opportunities where such information is material
a) Disclose the metrics used by the organisation to assess climate-
related risks and opportunities in line with its strategy and risk
management process
Page 195
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse
gas (GHG) emissions, and the related risks
Page
101,183-194
c) Describe the targets used by the organisation to manage climate-
related risks and opportunities and performance against targets
Page 195
Coats Group plc Annual Report and Accounts 2025178 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Basis of preparation
The report has been prepared
with reference to TCFD
All Sector Guidance and
Supplemental Guidance for
Non-Financial Groups.
The Board has noted recommendations in
relation to the mandatory disclosures of
climate-related financial risk arising from FCA
Listing Rule 6.6.6R. In complying with the
requirements of the Listing Rule on climate-
related disclosures, we consider our
disclosure to be consistent with all of the
Task Force on Climate-related Financial
Disclosures (TCFD) Recommendations and
Recommended Disclosures as detailed in
‘Recommendations of the Task Force on
Climate-related Financial Disclosures’, 2017,
with use of additional guidance from
“Implementing the Recommendations of
theTask Force on Climate-related Financial
Disclosures”, 2021. A quantitative
assessment of climate-related risks and
opportunities related to the October 2025
acquisition of OrthoLite has not been
undertaken; instead, a qualitative assessment
of applicable risks and opportunities has
been included with further detail provided in
the strategy section. A wider assessment of
OrthoLite risks and opportunities will be
included with our 2026 disclosures.
In this report references are made to other
sections in this Annual Report and Accounts
(ARA) and in our Sustainability Report (SR).
To make it easier to locate these references
they are always shown in the following
formats: (ARA page X) and (SR page X).
Governance
The Board of Directors of Coats oversees and
is ultimately responsible for the evaluation of
our sustainability strategy, the management
of climate-related risks and opportunities,
and progress against our sustainability
targets, including our interim and long-term
net zero targets and net zero transition plan.
At management level, the Group Executive
Team (GET) is responsible for climate-related
deliverables, with the Board receiving regular
progress updates during the year (3 updates
provided to the Board in 2025). The GET is
responsible for operational delivery of the
Group’s sustainability strategy, including
day-to-day management of operations and
responsibility for monitoring detailed
performance of all related aspects of the
Group’s business, and monitoring of our
emission reduction (Scope 1, 2 and 3) plan
including costs and investment related to our
materials transition strategy.
Two Board sub-committees have important
roles to play in managing climate-related risks
and opportunities: the Sustainability Committee
and the Audit and Risk Committee.
The Sustainability Committee is responsible
for the sustainability strategy and
governance, including on climate-related
issues, and receives updates on KPI
performance from the GET including on
mitigating actions related to climate change.
In 2025, the composition of the Sustainability
Committee was reviewed in line with
changes to our organisational structure.
Reflecting the importance of sustainability
toCoats, the Group Chair remains as Chair,
and this year our Chief Financial Officer
joined the Committee to facilitate greater
integration of the financial impacts of
climate-related risks and opportunities.
Othermembers include our Group Chief
Executive, two Non-Executive Directors, our
two Divisional Chief Executives and our
Group Sustainability Director. The Audit and
Risk Committee monitors and reviews the
effectiveness of climate-related risk
management systems and relevant internal
controls, and approves reporting statements.
In addition, the GET provides updates on the
progress of agreed actions directly to the
Board, the Sustainability Committee, and the
executive Group Risk Management
Committee (GRMC) as deemed appropriate.
The GRMC is responsible for formulating risk
management strategies and monitoring and
refining risk management processes and
metrics for all risks, including climate-related
risks specifically, and convenes on a quarterly
basis. The Sustainability Director is
responsible for the delivery of climate-related
risk assessment work which is reported into
the GRMC quarterly as a short update with
afull report to the GET annually.
In addition, our cross-divisional and cross-
functional TCFD working group (consisting of
senior management across areas like finance,
procurement and risk) works closely with
theGroup Sustainability Director who is
responsible for assessing the impact of
climate risks and opportunities on our
business. Monitoring of progress on agreed
actions is reported to the GET on a bi-
monthly basis. The collection of climate-
related data for the timely reporting of
progress is largely achieved through an
internal cloud-based reporting system that
collects data from every operating unit on a
monthly basis and is reported automatically
to multiple internal stakeholders including
the GET via dashboards.
The overall governance structure for
climate- related risks and opportunities
isillustrated in the attached graphic
onthenext page.
Coats Group plc Annual Report and Accounts 2025179 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Risk Management
Coats is committed to effectively managing
climate-related risks and opportunities that
may affect our business, customers,
suppliers, and stakeholders.
Climate-related risks and opportunities are
ofstrategic, long-term importance to the
Group and are assessed and prioritised using
the existing Group risk tolerance structure
and ensuring integration into the Group risk
management framework (see page 44 of this
Annual Report).
We assess risks and opportunities across our
own operations and value chain, across three
climate scenarios and short-, medium-, and
long-term time horizons as detailed further
inthe strategy section of this report.
All physical and transition risk categories,
aswell as current regulatory requirements,
are taken into account by Coats when
weevaluate the climate-related risks and
opportunities that may affect us. We look
athow these risks may impact our own
operations, or the Group’s upstream and
downstream activities, and whether they may
first arise in the short- (< 10 years), medium-
(~20 years) or long-term (~ 45 years) time
frames. These time frames are selected
because they correspond roughly to the
average remaining life of production assets
(short-term), the typical life span of
technologies (medium-term) and the possible
plant renewal cycle (long-term), as well as
aligning to key milestones identified in
climate science projections.
Coats Board
Overall responsibility for setting strategic direction, overseeing strategic implementation – including sustainability strategy and
delivery – and for overseeing effectiveness of climate risk management and controls, reviewing Group’s climate risk profile and
setting risk tolerance.
Sustainability Committee
Primary responsibility is for sustainability strategy and
governance including on climate-related issues. As part
of its role in governance it receives updates on KPI
performance from the Group Executive Team and
these include our mitigating actions related to
climate change.
TCFD Working Group
Cross-divisional and cross-function working
groups are responsible for assessment of
climate-related risks and opportunity as well
as evaluation and reporting on their impact.
Group Executive Team
Responsible for operational delivery of Group’s sustainability strategy, including day-to-day
management of operations and responsibility for monitoring detailed performances of all
related aspects of Group’s business. Necessarily, this includes many elements of practical
climate-related risk management.
Group Risk Management Committee
Responsible for formulating risk management
strategies and monitoring and refining risk
management activities, metrics and profiles for climate-
related risks across the Group.
Audit and Risk Committee
Monitors and reviews effectiveness on climate-related
risk management systems and internal controls, as well
as approving reporting statements on those internal
controls and climate-related risk management.
Report for evaluation
Key
Direct and monitor
Coats Group plc Annual Report and Accounts 2025180 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
While short- and medium-term time frames remain the same for physical and transition risks
and opportunities, our physical risk categories adopt a longer-term time frame of ~75 years
tocoincide with the outputs from our geospatial risk intelligence tool (see Strategy section
page 189).
Our approach to assessing climate-related risks is scenario-based. Our approach involves
developing impact models for the various identified risks. Prioritisation of climate risks
isbasedon the overall impact across our 3x3 matrix of scenarios and time horizons.
In line with our risk management framework, we quantify risk in line with the following
financial materiality:
Impact Low Medium High
Financial
Impact or opportunity of
<$15m
Impact or opportunity of
$15-30m
Impact or opportunity of
>$30m
The Board reviewed the climate-related risk trend in the light of the external environment and
the actions being taken by the company, including delivery on targets during the year, and
determined that the risk trend should continue to be noted as ‘stable’.
Further details of the Group’s risk assessment process are on page 38 of this Annual Report
(Principal Risks & Uncertainties).
Climate risks and opportunities are typically long-term, and the change is gradual.
Weperiodically review our scenario database to ensure if it remains in line with the latest
scientific consensus and the last review of this was conducted in 2024. Our mitigation actions
span across both short- and long-term time horizons. The immediate agreed mitigating actions
are reported to the GRMC on a quarterly basis and form part of our company strategy and are
built into operational plans for the year. Our primary mitigating actions relate to continued
focus on energy intensity reduction, transition to renewable sources of electricity, and materials
transition to preferred raw materials, all of which are reported to the GET on a bi-monthly basis
and largely form the basis of our SBTi Net Zero journey. In 2025, a supplier engagement
programme was launched to improve transparency in emissions reporting and to accelerate
their Scope 1 and 2 emissions reduction. Additionally, in 2025, Coats developed a
comprehensive net zero transition plan which outlines a detailed roadmap on the action
areasthat will ensure delivery of our 2050 SBTi validated Net Zero target.
Climate change has been identified as a Principal Risk within the company’s risk management
system. As a result, it is a permanent item for review and assessment at quarterly GRMC
meetings. The Board further reviews sustainability KPIs at every Board meeting, including KPIs
relating to climate issues where appropriate. Through these mechanisms, climate-related risks
continue to be fully integrated into the company’s risk management system.
Strategy
At Coats, we recognise the significance of climate-related risks and opportunities and integrate
them into our business strategy to strengthen operational resilience and ensure long-term value
creation. Climate change mitigation and adaptation remain central to shaping our broader
strategic direction.
The Task Force on Climate-related Financial Disclosures (TCFD) framework guides our approach
to identifying, assessing, and managing climate-related risks and opportunities that could
impact future financial performance.
No quantitative assessment of climate-related risks and opportunities has been completed for
OrthoLite due to lack of available data, however, a qualitative assessment has been provided
where considered applicable.
Given the slow-changing nature of physical risks, we have retained last year’s physical risk
assessment using an external geospatial modelling tool which leverages one of the world’s
most comprehensive databases for natural disasters and hazard modelling under varying
climate scenarios. It provides detailed evaluations of climate-related risks across multiple
scenarios and timelines for defined geographic locations, supporting robust and informed
decision-making.
Climate-related impacts on our business are assessed by our TCFD working group in
collaboration with subject matter experts, considering different climate scenarios and time
horizons. For each identified risk and opportunity, we have developed a bespoke financial
impact model which is reviewed annually and updated as appropriate to ensure it remains
accurate and relevant.
CO
2
e
emissions
level
SSP
used Scenario name
Global Temperature increase over
pre-industrial levels
2030 2045 2070
Low SSP1 Sustainability ‘Taking the Green Road’ 1.47°C 1.56°C 1.49°C
Medium SSP3 Regional Rivalry ‘A Rocky Road’ 1.52°C 2.03°C 2.91°C
High SSP5 Fossil-Fuelled Development ‘Taking the High Road’ 1.60°C 2.25°C 3.50°C
Coats Group plc Annual Report and Accounts 2025181 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Consistent with previous reports, we applied
scenario analysis to deepen our understanding
of how different climate outcomes influence
risk behaviour and business resilience.
Bothphysical and transition risks, as well
asrelated opportunities, were assessed using
the below three climate scenarios based
ontheShared Socioeconomic Pathways (SSPs)
across threetime horizons as developed
bytheIntergovernmental Panel on Climate
Change (IPCC) and referenced in its Sixth
Assessment Report.
In our assessment of transitional risk (TR),
thetime horizons correspond to 2030, 2045
and 2070 respectively, however for physical
risk (PR), the time horizons have been
slightlyextended to 2030, 2050 and 2100.
Therationale for selection of these time
horizons is as follows;
Short term 2030 (TR and PR): this aligns
with our near-term transitional strategy.
Medium term 2045(TR) or 2050(PR):
thisis broadly aligned to our net zero
commitment and is at the longer end of our
machinery asset lifespan. We also see clear
divergence of physical climate impacts
across the different scenarios at that point.
Long term 2070(TR) or 2100(PR): is
beyond the lifespan of our current asset
base, and allows us to model the long-term
impacts.
Our transitional risks and opportunities are
primarily linked to the low-carbon scenario
and are expected to have a greater potential
impact in the short term. In contrast, physical
risks become more pronounced under
high-carbon scenarios, with their potential
impact increasing over time. The materiality
of these risks and opportunities has been
assessed by considering financial impact,
likelihood, and the relationship of the impact
to the lifespan of affected assets. To ensure
clarity, we differentiate risks based on their
drivers, with transition risks arising from
policy, market, and technology shifts, and
physical risks stemming from acute and
chronic climate-related events.
Each year, our internal finance team reviews
the scenarios, underlying assumptions, and
associated financial models, with particular
attention to any changes from the previous
year, to ensure accuracy and relevance.
In 2025, we conducted further work on
thematerials transition risk. We also added
anew opportunity in 2025 to reflect the
opportunities from our Coats Digital business
to help underpin decarbonisation efforts of
downstream manufacturers in the apparel
industry. The ability of our Coats Digital
solutions to drive resource efficiency in
apparel manufacturing makes it a good
candidate for inclusion in climate-related
transition opportunities.
Coats Group plc Annual Report and Accounts 2025182 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Risks and Opportunities
TCFD category Potential Financial Impact
Potential materiality
Mitigation and strategic response Related Metrics and Targets
<10 years
(short term)
~25 years
(medium term)
~75 years
(long term)
Transition:
Current and
Emerging
Regulation
Risk 1: Introduction of
carbon taxes leading to
increased energy prices
foruse in own operations.
SSP1 The strategy that the company has in place to implement
itsNet Zero transition plan means wecontinually focus
onreducing the embodied carbon in our supply chain.
Where possible, the cost ofincreased carbon taxes will
bepassed on toconsumers.
Metric
Scope 1 and 2 GHG emissions (Tonnes)
Target
46.2% reduction in Scope 1 and 2 GHG
emissions by2030from our 2019 baseline
SSP3
SSP5
Transition:
Market
Opportunity 1: Increased
market share with apparel
and footwear brands
through our commitment
toreduce embodied
carbon.
SSP1 Delivery of targets on operational sustainability
metricsviewed favourably by brands
Metric
Scope 1, 2 and 3 GHG emissions (Tonnes)
Target
46.2% reduction in Scope 1 and 2 GHG
emissions by2030from our 2019 baseline.
33% reduction in Scope 3 emissions by 2030
from2019baseline.
SSP3
SSP5
Transition:
Market,
Technology
andReputation
Risk 2: Declining sales
dueto shifting customer
sentiment towards more
environmentally friendly
product options.
SSP1 The strategy that the company has in place to implement
itsNet Zero transition plan means we continually focus
onreducing the embodied carbon inour supply chain.
In2024, we received SBTi validation of our Net Zero
targets. We work closely with brands to ensure new
products are designed tomeet changing customer
requirements.
Metric
Scope 1, 2 and 3 GHG emissions (Tonnes)
Target
46.2% reduction in scope 1 and 2 GHG
emissions by2030from our 2019 baseline.
33% reduction in Scope 3 emissions by 2030
from2019baseline.
SSP3
SSP5
Transition:
Market and
Technology
Opportunity 2: Growth
inlight-weighting
products in telecom and
energy markets, enabling
increase in market share.
SSP1 – – We consider this risk to be largely remediated by our
current plans for transitioning to renewable electricity,
including reducing reliance on the grid through solar
panelsas well as the use of renewable energy contracts
where available.
SSP3 – –
SSP5 – –
Key to financial materiality
Risks: Opportunities:
Low financial materiality Low financial materiality
Medium financial materiality Medium financial materiality
High financial materiality High financial materiality
Coats Group plc Annual Report and Accounts 2025183 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
TCFD category Potential Financial Impact
Potential materiality
Mitigation and strategic response Related Metrics and Targets
<10 years
(short term)
~25 years
(medium term)
~75 years
(long term)
Transition:
Regulation
andTechnology
Risk 3: Inability to source
sufficient renewable
energy to meet emissions
reduction targets.
SSP1 Investment in technology and product development
isalready covered by our innovation roadmap.
Metric
% renewable electricity
Target
100% renewable electricity by 2030
SSP3
SSP5
Transition:
Regulation and
Technology
Opportunity 3: Cost
benefits from
transitioning from fossil
fuel generated to
renewable electricity
SSP1 Our commitment to transition to 100% renewable
electricity by 2030 will deliver cost opportunities as well as
delivering reductions in carbon emissions. At the end of
2025, we have transitioned to 62% of renewable certified
electricity across the Group.
Metric
% renewable electricity
Target
100% renewable electricity by 2030
SSP3
SSP5
Transition:
Policy and
Technology
Risk 4: Inability to source
sufficient recycled raw
material at commercial
price points impacting
costs and ability to fully
transition to a low carbon
product range and hence
achieve the SBTi targets.
SSP1 We have continued to increase the number of approved
suppliers of recycled polyester and other preferred materials
and we envisage no supply constraint impacting delivery of
our 2026 target of 60% materials transition to non-virgin
oil-based materials.
We expect that new EU Green Deal regulations will drive
increased availability of new non-virgin oil-based materials
and we are seeing many of the brands that we serve
committing to volume offtake agreements with new
materials start-up companies, enabling the acceleration of
scaled production capacity which is expected to drive price
down in future.
Metric
% raw materials from non-virgin oil-based
sources.
Target
100% of raw materials from non-virgin
oil-based sources by 2030
SSP3
SSP5
Physical:
Acute
Risk 5: Flood risk causing
damage to assets.
SSP1 – – – Our existing robust business continuity plans (BCPs) which
are regularly updated and refined assist in ensuring that we
have robust contingency plans in place. Sites in areas of
potential current risk have been assessed through local
intelligence; all sites are mitigated against flooding through
a combination of determination of proximity to river
courses and flood defence systems, along with raising the
height of infrastructure.
SSP3
SSP5
Key to financial materiality
Risks: Opportunities:
Low financial materiality Low financial materiality
Medium financial materiality Medium financial materiality
High financial materiality High financial materiality
Coats Group plc Annual Report and Accounts 2025184 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
TCFD category Potential Financial Impact
Potential materiality
Mitigation and strategic response Related Metrics and Targets
<10 years
(short term)
~25 years
(medium term)
~75 years
(long term)
Physical:
Chronic
Risk 6: Drought stress
which could lead to
disruption of water supply
in some units.
SSP1 – – – Plans are in place to gradually invest in further water
recycling capability as one of our key sustainability goals.
This will focus first on the high water stress units, so the
remediation of this issue is now in progress. Contingency
plans are in place to relocate production output if required.
In addition, a full business continuity plan enhancement
and climate mitigation programme will be completed
in2026
Metric
% Water Recycling
Target
33% increase in water recycling rate by 2026
from 2022 baseline
SSP3
SSP5
Physical:
Chronic
Risk 7: Extreme heat
stress leading to possible
need for plant relocation
to those with favourable
temperature regulation.
SSP1 Sites currently operating in areas of extreme or very high
heat risk are mitigated through adequate ventilation and
cooling systems, ensuring no loss of business or impact
tooperations. Investment in continually improving such
systems mitigates against further rises in external
temperatures, and, in addition, a full business continuity
plan enhancement and climate mitigation programme
willcomplete in 2026.
SSP3
SSP5
Physical:
Acute
Risk 8: Precipitation
Stress risk causing
damage to assets.
SSP1 The use of geospacial climate modelling data has identified
precipitation stress as a current and future risk. Several sites
are currently located in areas identified as extreme and very
high risk; however, local intelligence outlines in most
instances that risk is mitigated through adequate drainage
and continuous preventative maintenance on roofing.
Future risk can be mitigated through investment in
increased drainage and flood defence systems, which will
be referenced during our BCP enhancement and climate
mitigation programme, due for completion in 2026.
SSP3
SSP5
* SSP1 data not available under geospacial flood risk models.
** SSP2 data adopted in substitute of SSP3, as SSP3 data not available geospacial drought risk models.
Key to financial materiality
Risks: Opportunities:
Low financial materiality Low financial materiality
Medium financial materiality Medium financial materiality
High financial materiality High financial materiality
Coats Group plc Annual Report and Accounts 2025185 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Transitional Risks
Risk 1) Emerging Regulation:
Introduction of carbon taxes leading
toincreased energy prices for use
inownoperations.
Expanding the scope and level of carbon
pricing through emerging regulations may
affect both our input materials and
conversion costs, as carbon-related expenses
become incorporated into energy, water,
waste management, transportation,
andrawmaterial costs. Our low-carbon
scenario anticipates that carbon taxes
willdrive decarbonisation of energy
andindustrial products and processes.
Our scenario assessment predicts a high
taxin the short term that drops over the
medium- and long-term time horizons.
Inourlow carbon SSP1 scenario, taxes
couldbe introduced soon, rising quickly
until2030, before stabilising. High-carbon
scenarios (SSPs 3 and 5) do not include
anycarbon taxes.
In 2025, we reviewed updated carbon tax
models and confirmed that our existing tax
range remains suitable for risk modelling.
TheEU’s Carbon Border Adjustment
Mechanism (CBAM), targeting carbon
leakage, is likely to prompt a UK CBAM from
January 2027; this will begin with carbon-
intensive goods and lead to EU and UK
Emissions Trading Schemes with defined
trading costs. We are monitoring these
changes to improve Coats’ impact modelling.
Our annual assessment projects carbon taxes
of $90–$160 per tonne of CO
2
e under SSP1,
relevant to Scope 1 and Scope 2 emissions.
These estimates are based on Wood
Mackenzie’s analyses for limiting global
warming to 1.5°C and research from
theInternational Energy Agency’s
NetZeroScenario.
The risk impact associated with the
implementation of a carbon tax on our
upstream Scope 3 emissions would be
significant. However, we consider that this
increased cost will be spread across the value
chain and we do not expect this to have
adirect impact on Coats.
We updated our 2025 carbon tax model
toreflect Coats’ strong progress in reducing
Scope 1 and 2 emissions from the 2019
baseline. Our 2025 emissions already sit
below the 2030 SBTi target, ensuring we
remain on track even under conservative
scenarios. With the potential for a further
10% reduction in Scope 1 and 2 emissions
ina best case outlook, our revised modelling
shows a lower projected financial exposure
to future carbon taxes than reported in 2024.
Initial assessments of OrthoLite show that
their energy consumption represents less
than 5% of Coats Group consumption, and
therefore we do not expect their inclusion to
have a financially material impact on this risk.
Mitigation:
Coats is committed to our Net Zero
target which requires a reduction in
Scope 1 and 2 by 46% in 2030 (which
has already been achieved) and 90%
in2050.
These targets and our achievements
sofar highlight Coats’ commitment to
lowering our carbon footprint, reducing
exposure to carbon pricing, and
strengthening our competitive standing
in the growing low-carbon economy.
We are continuing to reduce our
Scope 1 and 2 emissions through
targeted energy efficiency programmes
and a structured transition to renewable
electricity. By using smart energy
metering and plant level energy audits
across our largest sites, we are
identifying and scaling efficiency
improvements group-wide. In parallel,
we are progressively shifting our
electricity consumption to renewable
sources, prioritising the development of
new renewable assets, then existing
renewable generating capacity and
finally energy attribute markets where
needed. This flexible, country-specific
approach is delivering strong results by
2025, 62% of our group electricity was
green certified, up from 29% in 2022 -
as we continue our journey towards
100% renewable electricity by 2030
Our TCFD working group has reviewed the
financial effects of climate-related risks and
opportunities across three different scenarios
and over short-, medium-, and long-term
periods. Overall, we believe that our risk
mitigation measures, sustainability initiatives,
and ambitious targets make our business
well prepared for the challenges
ofclimatechange.
In our review for 2025, we found that
short-term opportunities and risks are
generally balanced and we acknowledge that
physical risks from higher carbon emissions
increase over the medium and long term.
We will update our analysis as we assess new
data, and we continue to monitor climate
risks and action plans using Coats’ risk
management framework and governance
system. New opportunities identified will
bedeveloped to align with our strategy
andgoals.
Coats Group plc Annual Report and Accounts 2025186 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Risk 2) Market, Technology &
Reputation: Declining sales due
toshifting customer sentiment
towardsmore environmentally
friendlyproduct options.
Consumer awareness of carbon footprints
continues to rise, driving increased demand
for brands that offer low-carbon or
sustainable product options. Our analysis
indicates that approximately 95% of our
sales to global brands and retailers are to
organisations with Science Based Targets
initiative (SBTi) emissions reduction
commitments, emphasising the importance
that our key customers place on emissions
reduction programmes and requiring them
tocollaborate with suppliers aligned to their
decarbonisation journey.
Our teams have worked on reducing this
riskby meeting supplier targets and brand
standards, including lowering emissions
andusing reduced-carbon materials in thread
and footwear components.
In our updated 2025 model for this risk, we
have recognised Coats’ progress in materials
transition to preferred lower carbon materials
along with broader emissions reduction
efforts. We have also reflected our
experience that in the last year many brands
have reduced the priority placed on low-
emission materials due to geopolitical and
cost pressures, and this has led us to reduce
thepotential sales loss risk compared
toassessments in previous years.
Given the sizeable overlap in the brands
served by Coats and OrthoLite, we do not
expect the future inclusion of OrthoLite
toresult in a different level of financial
materiality for this risk.
Mitigation:
We maintain ongoing engagement
withcustomers who have established
climate-related goals, ensuring that our
strategies and objectives remain aligned
with their expectations.
In 2025, we advanced our commitment
to sustainability by increasing the use of
non-virgin oil-based materials, with 52%
of our primary raw materials now
meeting this standard. Additionally, we
launched our supplier decarbonisation
programme to further reduce embedded
emissions in our raw materials,
establishing it as a key strategy for Coats
in driving down Scope 3 emissions. This
will be a primary focus area to underpin
future emissions reduction.
Risk 3) Regulation and Technology:
Inability to source sufficient
renewableenergy to meet
emissionsreduction targets.
Several countries where we operate continue
toexperience regulatory issues in the energy
sector, which currently hinder the shift to
renewable electricity. To manage this risk, we
assess the alternative cost of purchasing Energy
Attribute Certificates (EACs) when direct access
to certified renewable energy is not possible.
While the financial impact of acquiring EACs
islikely to remain, we expect these regulatory
challenges will decrease significantly in the
medium to long-term as more countries
establish viable renewable energy markets.
The financial materiality associated with this risk
for OrthoLite is expected to be insignificant
given that their energy consumption represents
less than 5% of Coats Group.
Mitigation:
Our approach to managing this risk is
based on our ongoing shift towards
renewable energy, aiming for 100%
renewable electricity usage by 2030.
Werecognise that in some key countries,
such as Turkey and Vietnam, current
regulations do not yet support offsite
renewable electricity supply.
We will continue installing rooftop
solarpanels at our sites through power
purchase agreements with energy
suppliers; however, this will only cover
asmall portion of our total energy
needs. To improve energy efficiency
across our locations, we are leveraging
insights from our growing smart energy
metering program, which is already
active at several important
manufacturing facilities. Major energy
efficiency initiatives include upgrading
compressed air and steam systems
andimproving machine motors with
inverter technology.
If regulatory issues delay our switch to
renewable electricity, we will use Energy
Attribute Certificates (EACs) to meet our
emissions goals. Currently the costs of
EACs at key sites (in the range of $0.32/
MWh to $3.50/MWh), means this
remains of low financial materiality, but
we closely review EAC pricing trends.
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TCFD CONTINUED
Risk 4) Policy & Technology: Inability to
source sufficient recycled raw material
atcommercial price points impacting
costs and ability to achieve 100%
materials transition and hence
achievethe SBTi targets.
Currently, we source recycled high tenacity
polyester mainly from PET bottles. As drinks
companies recycle more of their own bottles
to meet regulations, this reduces the
availability of this feedstock for textile
enduse. This will require supplementary
development of chemically recycled and
bio-based alternatives, and currently, due to
lack of scale, many of these are not available
at a commercial price point.
In 2022, we set a target to have 60% of our
raw materials sourced from non-virgin
oil-based sources by 2026. By 2025, we had
already shifted 52% of our sourcing to these
alternatives. Despite this good progress,
however, we are approaching the limit of
customer appetite for recycled products due
to the price premium. This primarily arises
from the higher cost of recycled raw
materials due to limited supply and growing
demand, and the insufficient scale of
emerging low-carbon technologies, and may
result in a high financial materiality for Coats
if we continue to push forward with full
transition without being able to pass on
higher prices to customers.
When setting our SBTi Scope 3 emissions
reduction targets in 2022, a complete shift to
non-virgin oil-based materials was identified
as the key driver to reduce our purchased
goods-related emissions. However, continued
research conducted in 2025 has enhanced
our insight; we now recognise that Supplier
Decarbonisation offers a greater potential for
overall Scope 3 emissions reduction than
focusing solely on materials transition.
With this greater potential for Scope 3
emissions reduction coming from Supplier
Decarbonisation, we consider that the
inclusion of OrthoLite will not change the
financial materiality associated with this risk.
Mitigation:
The emphasis of reducing our Scope 3
emissions has expanded to include
accelerating decarbonisation initiatives
with our suppliers alongside the
transition away from virgin oil-based
materials. In 2025, we joined Cascale
(formerly known as the Sustainable
Apparel Coalition) to advance
decarbonisation initiatives throughout
our upstream supply chain using a
comprehensive strategy. Cascale
manages the Higg Index suite, which
equips suppliers to quantitatively assess
environmental performance across
multiple domains, including energy,
water, materials, and greenhouse
gasemissions. Additionally, Cascale
hasintroduced an Industry
Decarbonisation Roadmap, developed
with the Apparel Impact Institute and
RESET Carbon, designed to guide
strategic emissions reduction efforts
among high-impact suppliers.
During 2025, we identified our key
strategic suppliers who significantly
contribute to the carbon embedded
within our raw materials and convened
our inaugural decarbonisation workshop.
We outlined Coats’ climate commitments
and emphasised the necessity of a
collaborative approach from our principal
suppliers to achieve emissions reductions
across our broader value chain. All
participating suppliers were encouraged
to enrol in the Higg Facility Environmental
Module (FEM) to enhance transparency
regarding their emissions profiles and to
establish targets for reducing emissions
through the adoption of renewable
electricity and the implementation of
energy efficiency programmes. Suppliers
were also asked to provide Cradle to Gate
Life Cycle Impact Assessments for the
main raw materials supplied to Coats.
Supplier engagement in this initiative has
been highly positive, and we plan to
expand this methodology to Scope 3
decarbonisation efforts through 2026
andbeyond.
In the longer term we expect that new
EU Green Deal regulations will drive
increased availability of new non-virgin
oil-based materials. We are seeing many
of the brands that we serve committing
to volume offtake agreements with new
materials start-up companies, enabling
the acceleration of scaled production
capacity which is expected to drive price
down in future.
Materials transition will continue to
bepart of our longer-term strategy,
however, we will only drive this where
itmakes commercial sense to do so.
Looking ahead, we anticipate that
forthcoming EU Green Deal regulations
will increase the availability of non-virgin,
oil-based materials, making their supply
more cost competitive. While
transitioning to alternative materials
willremain integral to our long-term
NetZero decarbonisation strategy,
wewill pursue these opportunities
onlywhere they present clear
commercial advantages.
Coats Group plc Annual Report and Accounts 2025188 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Physical Risks
We continue to use an external geospatial
risk intelligence tool in 2025 to assess current
and future physical climate-related risks to
our operations, covering a total of 38
separate geographical locations. The tool
assesses current natural hazards based on
historic events, and uses climate models to
forecast future physical risks, as described in
the Strategy section on page 182. The
physical climate-related natural hazards
covered by the tool include floods, storms,
sea level rise, drought, wildfires, and
precipitation stress.
Physical risk mitigation for extreme weather
events is managed at local site level. In the
short-term, risks are mainly transitional and
linked to the company’s low carbon (SSP1)
scenario. The adopted strategy, which
focuses on achieving Net Zero by 2050 via
the transition to renewable electricity and
decarbonisation of materials and suppliers,
provides a comprehensive response to these
risks. Medium- to long-term risks are
primarily physical and are more closely
related to higher carbon scenarios
(SSPs3and 5)
Geo-location assessments have not yet been
conducted for OrthoLite operation sites,
however given their geographic proximity
toCoats operational sites in China, Vietnam
and Indonesia, we expect the physical climate
risk profile to be similar to that of Coats.
Risk 5) Acute: Flood damage risk
Two sites (Dhaka, Bangladesh and
Samutsakorn, Thailand) are currently at very
high river flood risk. A further four sites are
at high river flood risk. The impact of
flooding remains a reduction in revenue and
increased expenditure due to repairs beyond
those which are covered by our corporate
insurance policy. In addition, three sites
(onein Thailand, and two in China), are
considered to be in areas of storm surge risk,
although their specific geographical
locations, and surrounding flood defence
infrastructure, mitigate such risk. Sites
located in areas where current river flooding
risk is identified are sufficiently protected due
to distances from water courses, raised
infrastructure, and municipal flood defences.
Our geospatial tool models an increase in
flood risk in scenario SSP5, where three
further sites are classified as high risk;
however, the financial impact remains low.
Mitigation:
All of our operational facilities maintain
alocal business continuity plan (BCP)
which is continuously reviewed. In 2025,
we commenced a Group-wide BCP
enhancement programme to provide
specific reference and mitigating activities
relating to current- and future- relating
climate events, including increases in the
risk of severe flooding. The enhancement
program is ongoing, and completion is
expected in 2026. In conjunction with
local BCP enhancement, our spread of
regional and global supply chains provides
resilience and further reduces the impact
of local disruption from any one site being
flooded, hence we believe we are able to
manage this risk with negligible impact.
Coats Group plc Annual Report and Accounts 2025189 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
River Flooding Heat Stress Precipitation Stress Drought Stress Water Stress
Headquarters
Manufacturing sites
Presence in market
Bogor, Indonesia
Sofia, Bulgaria
Cairo, Egypt
Casablanca, Morocco
Chittagong, Bangladesh
Choloma, Honduras
Dhaka, Bangladesh
Dongguan, China
Faridabad, India
Hanoi, Vietnam
Horana, Sri Lanka
Karachi, Pakistan
Lahore, Pakistan
Madurai, India
Panoli, India
Pereira, Colombia
Qingdao, China
Samutsakorn, Thailand
Shenzhen, China
Tlaxcala, Mexico
Montemurlo, Italy
Ripatransone, Italy
TCFD CONTINUED
Locations of Current Physical Risk
Coats Group plc Annual Report and Accounts 2025190 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Risk 6) Chronic: Drought stress which
could lead to disruption of water supply
in some units.
In 2025, our risk assessment tool identified
significant drought stress at multiple
locations, with most risks projected over
thelong term. Currently, the 10
th
of
Ramadan City site in Egypt faces a very high
risk. Underthe SSP5 high-carbon scenario,
by2050, drought stress is expected to
intensify, placing sites in 10
th
of Ramadan
City, Morocco, and Tunisia at ‘extremely
high’ risk, along with several other sites at
very high risk. To address these escalating
risks, we continually review capital
investment in mitigation strategies, which
include the expansion of water recycling
initiatives to reduce our reliance on
freshwater extraction.
Related to drought stress, we also monitor
water stress risk using the World Resources
Institute Aqueduct Tool to determine current
stress levels. At present, 46% of the water
used in sites considered to be at medium to
extremely high water stress risk was recycled
in 2025.
Mitigation:
Our approach to mitigating financial loss
relating to business disruption in the
short- to medium-term remains focussed
on reducing our reliance on freshwater
extraction. This is achieved through
process water recycling and reducing our
process water intensity (the volume of
water required to produce our finished
goods). In 2025, we completed a new
water recycling installation in Bogor,
Indonesia, and have new recycling
capacity being installed in Chittagong,
Banglasdesh which will come online in
H22026. We have prepared a Group-
wide strategy to further drive down water
intensity in 2026 through the delivery
ofunique water-saving initiatives.
Inaddition, drought stress mitigation
isextending into our BCP enhancement
programme, where activities to source
and plan for the provision of alternative
water supplies will ensure our facilities will
remain functional in the event of instances
of water shortage. Our financial risk
assessment indicates low risk associated
with drought stress, across all timeframes
and climate scenarios.
Risk 7) Chronic: Extreme heat stress
leading to possible need for plant
relocation to locations with favourable
temperature regulation.
In 2025, our climate risk models continue to
project rising global temperatures across all
scenarios (SSP1, SSP3, SSP5), with 55% of
our sites classified as facing high, very high,
or extreme heat stress risk. The proportion of
sites at extreme risk is expected to increase in
the medium and long term. Currently, four
sites (one in Pakistan, and three in India)
experience maximum annual temperatures
exceeding 44°C, and under the SSP3
scenario, these could surpass 47.5°C by
2100. Despite these challenging conditions,
operations remain stable due to effective
mitigation measures. However, ongoing
temperature increases are likely to drive up
costs, particularly for air-conditioning and
indoor climate control. In addition,
productivity and operational efficiency losses
could be experienced as extended rest
schedules are administered. In the most
severe cases, extreme heat could force a halt
to manufacturing activities if conditions
become unworkable.
Mitigation:
Contingency planning is in place for
therealignment of plant capacities
intheevent of extreme weather events,
and will be strengthened during the BCP
enhancement program where required.
As noted, air conditioning and ventilation
systems currently allow normal business
operation at sites with extreme heat
stress; further investment in cooling and
ventilation is reflected in our financial
impact models to mitigate against rising
temperatures in future scenarios. The
associated financial impact risk remains
low across all carbon scenarios in short to
medium timeframes, and only increasing
in the longer term (by 2100) to medium
risk for SSP3, and high risk in SSP5.
Coats Group plc Annual Report and Accounts 2025191 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Risk 8) Acute: Precipitation Stress
Climate change and rising global temperatures
can lead to an intensification of high-
precipitation events and an alteration of the
frequency of such events, which can cause
damage to buildings and infrastructure.
Equally, climate change can reduce average
precipitation levels as locations become more
arid. Our models indicate that ten out of 38
sites currently operate in areas of extremely
high precipitation stress risk, with a further six
sites at very high risk. The geospatial model
suggests only marginal future risk increases in
a total of four sites (two in Indonesia, one in
China and one in India) in the longer term
2100, high carbon scenarios.
Mitigation:
Current and future measures to address
the impact of high precipitation events
include upgrades to site drainage
systems, installation of high-capacity
pumps for rapid water removal, and
reinforcement of flood barriers and
perimeter walls to prevent water ingress.
In addition, our site-level preventative
and corrective maintenance strategies
are continuously reviewed to ensure a
swift response to both acute and
persistent precipitation events.
Precipitation stress risk has been formally
integrated into our BCP enhancement
programme, ensuring that all facilities
are prepared to manage and recover
from extreme rainfall scenarios as part of
our broader climate resilience strategy.
Opportunities
Opportunity 1) Increased market
sharewith apparel and footwear
brandsthrough our commitment
toreduce embodied carbon.
We expect to increase our market share
among brand customers by remaining
committed to supporting their environmental
goals and working closely with our suppliers
to ensure robust transition plans are in place
for Coats to achieve Net Zero by 2050.
Coats’ commitment to reducing embedded
emissions in our thread and footwear
components through supplier decarbonisation,
transition to renewable energy sources and
reductions in energy intensity for finished
goods conversion, will support our customers
in delivering on their climate commitments.
We anticipate becoming a preferred supplier
for brands aiming to reduce the carbon
footprint of their supply chain to achieve their
Net Zero targets. Our reputation is enhanced
by our commitments to transition to lower
carbon thread and footwear component
rawmaterials in line with our wider SBTi
climate targets.
Over time, we expect to see some other
market players becoming less able to meet
these commitments, consequentially giving
riseto market share growth opportunities
forCoats.
Given the sizeable overlap in the Brands
served by Coats and OrthoLite, we consider
this as an opportunity area for OrthoLite and
qualitative assessment will be conducted in
2026 to determine financial materiality.
Strategy to realise opportunity:
In the apparel and footwear industries,
we continue to achieve market share
growth, thanks in part to our strong
sustainability efforts.
We have developed a strong
sustainability-led innovation capability,
with engineers and technicians working
on development of new reduced carbon
products and processes. Key innovations
include the development of new thread
products such as Epic and Gramax, Textile
to Textile, EcoCycle, and EcoVerde as well
as the development of new formulations
for structural footwear components
which contain a groundbreaking level of
70% recycled polymers and newly
impregnated composite materials with
reduced content of virgin oil-based
latex dispersions.
In 2025, our recycled polyester thread
sales grew 43% to US$554m, up from
US$387m in 2024.
Coats Group plc Annual Report and Accounts 2025192 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Opportunity 2) Growth
in light-weighting products,
enablingincreaseinmarket share.
At Coats we aim to supply products that
enable our customers to reduce the carbon
intensity of their processes. Coats’ Gotex
Xtru composite tapes support light-weighting
in the energy sector by extending the life of
flexible oil and gas pipelines which in turn
enables a shift away from corrosion prone
steel pipes. Moving to lower weight flexible
pipes reduces the energy required for
installation and reduces maintenance
through the life of the pipe. These three
factors together aid reduction of the carbon
intensity for oil production.
This year, we advanced the qualification
ofacarbon fibre-reinforced tape for
deep-water applications and expanded
volumes of aramid anti-bird cage layer tapes.
Our portfolio continues to grow through
innovation that blends textile engineering
and polymer science to deliver customised
tape solutions.
In telecoms infrastructure, our products
enable thinner, lighter, and more resilient
fibre optic cables that reduce deployment
costs. During the year, we developed an
aramid reinforced pultruded rod for data
centre cable applications, and saw strong
momentum for StremX, which is increasingly
replacing traditional strength members.
Following extensive testing, StremX secured
multiple customer approvals with programme
orders extending into 2026.
This opportunity is not applicable to the
OrthoLite business.
Strategy to realise opportunity:
Coats continues to pursue this
opportunity through targeted initiatives
and sustained investment in R&D, and
new product development across our
Gotex (Spain) and Turkey innovation
teams, enabling close collaboration with
customers. Following an investment in
astate-of-the-art extrusion line in 2024,
we expanded capacity with the addition
of a second line to support growing
customer demand. Customer
engagement has progressed through
qualification and early commercialisation
stages, with anticipated requirements
for further capacity expansion from
2026 onwards, subject to future
customer commitments and associated
capital expenditure.
Opportunity 3) Transition
torenewableelectricity
In line with our commitment to transition
tosourcing 100% of our electricity from
renewable sources by 2030, we are focussed
on installing rooftop solar arrays and long
term power purchase agreements (PPAs) and
have observed a decrease in the unit cost per
kilowatt-hour in US dollars. Consequently,
this presents an opportunity for overall
energy cost reduction during the transition
period leading up to 2030. This initiative is
projected to reduce our market-based Scope
2 emissions from 167,000 tonnes in FY2022
to zero by FY2030 at the latest.
Given that OrthoLite consumes less than 5%
of Coats Group energy, the opportunity for
savings in this space are considered of low
financial materiality.
Strategy to realise opportunity:
By investing in a range of renewable
energy initiatives, we can lower
bothcosts and carbon emissions.
Ourobjective is to secure long-term,
lowest-cost contracts for renewable
energy and, where available, work
withsuppliers backed by Energy
Attribute Certificates.
The anticipated reduction in energy
procurement costs as a result of this
transition is estimated to be between
US$5 million and US$6 million in 2030.
Coats Group plc Annual Report and Accounts 2025193 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
TCFD CONTINUED
Opportunity 4) Driving supply chain
efficiency, transparency, and social
compliance.
The global apparel and footwear industry
isbeing reshaped by regulation and brand
commitments demanding reductions in
Scope 3 supply chain emissions. Coats
Digital’s suite of software solutions provides
the essential digital infrastructure to meet
these environmental requirements. Following
a strategic review in 2025, this is considered
a new opportunity for Coats and has been
added to our TCFD disclosures.
At the core of our offering is GSDCost,
theinternationally recognised standard for
method-time-cost analysis. By scientifically
establishing the time required for every
manufacturing task, GSDCost typically
improves factory efficiency by 10%.
Byproducing more units in less time,
manufacturers significantly lower the energy
intensity and carbon emissions attributed
toeach garment.
Our other software targets broader supply
chain emissions. FastReactPlan, our
production planning solution, optimises
factory capacity to improve On-Time Delivery
Performance by an average of 30%. This
reliability is critical for decarbonisation as it
minimises the need for emergency air freight
– a costly mode of transport with a carbon
footprint significantly higher than standard
sea freight. It also ensures factories avoid the
energy spikes associated with unplanned
overtime and inefficient production
changeovers.
Strategy to realise opportunity:
We will continue to invest significantly in
the Coats Digital ecosystem, strategically
leveraging the mandatory industry shift
towards digitised, traceable, and
compliant supply chains.
We are scaling the deployment
ofGSDCost and FastReactPlan
tocement their status as the global,
de-facto industry standards for their
respective areas.
This expansion is underpinned by
continuous feature development and
innovation, exemplified by our new
AI-driven solution, GSDQuest. GSDQuest
enables brands and manufacturers to
instantly generate detailed insights on
labour needs, fair-wage compliance, and
sustainable sourcing options - derived
from just a single garment image. This
compresses the pre-production cycle
dramatically, turning early concepts into
fully compliant costings within seconds.
Other opportunities
The acquisition of OrthoLite in October 2025
provides further opportunities for sustainability-
linked sales and EBIT growth, attributable to
itsinnovative low-carbon, biodegradable,
andcompostable Cirql mid-sole technology.
Aspart of our post-acquisition integration
efforts, we are currently evaluating strategic
options related to this technology and intend
toincorporate these developments into our
2026 TCFD review.
Additionally, we continue to monitor
improvements in process technology to drive
further opportunities in reducing water and
energy intensity. Dyeing textile substrates is
highly energy- and water-intensive. Current
nylon and polyester dyeing methods consume
about 60% of our energy and 90% of our
water at Coats. Reducing water usage and
energy for heating will lower our carbon
footprint and water demands. We continue to
work with key suppliers on developing future
technologies to deliver step changes in the
water and energy intensity required for
colouration of fibres and filaments, however,
due to the technology barriers that exist in this
area, delivery of yields from this focus are likely
to be more long-term in nature.
Resilience
Resilience is reflected throughout our risk
mitigation strategies outlined in this report.
Adiversified and broad supply base with
broad geographic reach increases our
resilience. Serving more than 25,000
customers across different regions also
strengthens our customer resilience,
asnosingle customer accounts for more
than 10% of our annual revenue.
Our global standardisation of ERP systems,
master data, and product lines enables
ustomaintain strong resilience if any
manufacturing site faces extreme weather
events, allowing us to quickly shift
production between facilities and minimise
disruptions to customers.
In 2025, we integrated Physical Climate Risk
findings into our Business Continuity
Planning, updating 37 continuity plans
throughout the year for locations identified
as high-risk for floods, heavy precipitation,
orextreme heat.
Our analysis indicates that overall climate risk
to our business is low. Current and future
mitigation actions suggest the Group remains
financially robust and strategically prepared
for climate change. Any impacts will be
managed through regular operations, so
there are no anticipated major changes to
business strategy or budgets. Furthermore,
there are no effects of climate-related
matters reflected in the judgements and
estimates applied in our financial statements.
Coats Group plc Annual Report and Accounts 2025194 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Metrics and targets
Coats has reviewed TCFD guidance
andselected metrics that suit our business
needs. After assessing potential risks,
wedetermined that assets-at-risk is not
arelevant metric for us.
Coats regularly monitors and reports on its
greenhouse gas (GHG) emissions for Scopes
1, 2, and key Scope 3 categories, as well as
our energy use and intensity. We calculate
these emissions following the Greenhouse
Gas Protocol Corporate Accounting and
Reporting Standard, with results disclosed
separately in this report on page 101 and in
more detail in our Sustainability Report at
coats.com/sustainability. Senior
management’s compensation is tied to
important sustainability goals, including
emissions reductions; further details are
available in the Remuneration Report on
page 88.
We track our monthly energy mix and
certified renewable electricity share, as well
as energy and water intensity metrics, and
regularly report these to our Group Executive
Team and Board.
Our principal metric for managing Scope 3
emissions is the overall transition from virgin
oil-based raw materials to preferred raw
materials. In 2022 we set an interim target
tosource 60% preferred raw materials,
byvolume, by 2026 and have a longer-term
target to transition fully to preferred raw
materials by 2030. Through the course of
2026 we will introduce new metrics and
targets related to supplier decarbonisation
which further support delivery of our Scope 3
emissions reduction targets.
Coats has near-term Science Based Targets
validated by the SBTi, covering Scope 1, 2
and 3 emissions and aligned to the 1.5°C
pathway through to 2030, and a net zero
target for 2050. These targets represent our
most comprehensive approach to climate
mitigation and are essential for managing
customer expectations and transition risk
exposure. Components of this target include:
– A commitment to reduce absolute Scope
1 and 2 GHG emissions 46.2% by 2030
from a 2019 base year, and absolute
Scope 3 emissions by 33% by 2030.
– Increase sourcing of renewable electricity
to 100% by 2030.
– Validation of Net Zero targets for our
Scope 1, 2 & 3 emissions for 2050
(seebelow)
At the point of setting our near-term SBTi
targets, we also set internal enabling targets
to ensure delivery of our emissions reduction
targets as follows:
– Increase renewable energy to 70%
by2030
– No virgin oil-based primary raw materials
by 2030
– Transition to 60% preferred raw materials
by 2026. We classify preferred raw
materials as those which are non-virgin
oil-based.
As detailed in the strategy section of this
report and further elaborated upon in the
materials section of our Sustainability Report,
we have expanded our priorities to include
supplier decarbonisation initiatives alongside
our existing material transition activity in our
approach to meeting our SBTi Scope 3
emissions reduction target.
Coats’ Net Zero targets were re-baselined
in2025, and were successfully validated
bySBTi. Post-delivery of our 2030 near-term
emissions reduction targets, the key elements
that will require continued abatement are the
heat energy used in dyeing, the emissions
from energy used by our suppliers, and the
emissions coming from product and people
transportation. In 2025 we have completed
our Net Zero Transition Plan aligned to the
Transition Plan Taskforce guidelines. This
provides a structured roadmap for how Coats
will achieve its long-term climate
commitments. Its purpose is to translate
ambition into actionable steps, outlining
themeasures, timelines, and investments
required to reduce greenhouse gas emissions
across operations and the value chain.
Theplan supports compliance with emerging
regulatory and disclosure requirements,
aligns with global frameworks such as the
Greenhouse Gas Protocol and SBTi, and
demonstrates accountability to our investors,
customers, and other stakeholders. By
integrating decarbonisation into business
strategy, it helps manage climate-related
risks, drives resilience and operational
efficiencies, and maintains competitiveness
ina rapidly evolving low-carbon economy.
Full details on the progress we are
making towards these targets can be
seen on the following pages of our
Sustainability Report at
coats.com/sustainability
Emissions and Science Based Targets –
Pages 24
Energy source mix and renewable
electricity – Page 29
Energy Intensity metric – Pages 29
Water Intensity and water recycling
metric – Pages 38
Material transition metric – Pages 33
In 2025, we completed public limited
assurance on the full-year performance of
our core seven sustainability targets against
their 2022 baseline.
The main risks linked to these emissions
arethose that could hinder the company
from meeting its reduction goals aligned
withthe 1.5°C Pathway and achieving
NetZero by 2050. The most significant
challenges include limited access to
renewable electricity and an inconsistent
supply of recycled raw materials.
Nonetheless, the company has strong
programmes in place to address
andmanagethese risks.
TCFD CONTINUED
Coats Group plc Annual Report and Accounts 2025195
OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT LIMITED ASSURANCE REPORT
INDEPENDENT LIMITED ASSURANCE
REPORT TO THE DIRECTORS OF
COATS GROUP PLC ON COATS
GROUP PLC’S 2025 ANNUAL REPORT
AND ACCOUNTS
Ernst & Young LLP (‘EY’) was engaged
byCoats Group plc (‘the Company’)
toperform a limited assurance engagement
in accordance with International Standard
onAssurance Engagements (ISAE) 3000
(Revised) and ISAE 3410: Assurance
Engagements on Greenhouse Gas
Statements, to report on Coats Group Plc
(Appendix A) selected sustainability (the
‘Subject Matter’) presented in Appendix A.
Inpreparing the Subject Matter, the
Company applied the basis of reporting
asset out on Coats’ website (the ‘Criteria’).
The Subject Matter is listed in Appendix A.
Other than as described in the preceding
paragraph we did not perform assurance
procedures on any other information
included in the Annual Report and Accounts,
andaccordingly, we do not express an
opinion or conclusion on any information,
other than the sustainability metrics listed
inAppendix A.
Conclusion
Based on the procedures performed and
evidence obtained, nothing has come to our
attention that causes us to believe that the
Subject Matter is not prepared, in all material
respects, in accordance with the Criteria.
Emphasis of matter – exclusion
ofOrthoLite sustainability data
As disclosed in the ‘Sustainability KPIs’ page
the reporting of sustainability KPIs, excludes
information relating to the newly acquired
business, OrthoLite Holdings LLC.
Accordingly, the KPIs within EY’s assurance
scope does not represent the performance
ofthe entire Coats Group plc group
asof31 December 2025.
Our conclusion is not modified in respect
ofthis matter.
Basis for our conclusion
We conducted our engagement in
accordance with International Standard on
Assurance Engagements 3000 (Revised),
Assurance Engagements Other than Audits
or Reviews of Historical Financial Information,
as promulgated by the International Auditing
and Assurance Standards Board (IAASB)
andthe terms of our engagement letter
dated 23 July 2025 as agreed with Coats
Groupplc.
In performing this engagement,
wehaveapplied International Standard
onQuality Management (‘ISQM’) 1 Quality
Management for Firms that Perform Audits
or Reviews of Financial Statements, or Other
Assurance or Related Services engagements,
which requires that we design, implement
and operate a system of quality management
including policies or procedures regarding
compliance with ethical requirements,
professional standards and applicable
legaland regulatory requirements.
We have maintained our independence
andother ethical requirements of the
Institute ofChartered Accountants of
England and Wales (‘ICAEW’) Code of Ethics
(which includes the requirements of the
Code of Ethics for Professional Accountants
issued bythe International Ethics Standards
Board for Accountants (‘IESBA’)). We are the
independent auditor of the Company and
therefore we will also comply with the
independence requirements that are relevant
to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as
applied to listed public interest entities.
Coats Group plc Annual Report and Accounts 2025196 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Responsibilities of the Company
The Subject Matter needs to be read and
understood together with the Criteria.
Thedirectors of the Company are solely
responsible for:
– the selection of the Subject Matter
tobeassured;
– selecting suitable Criteria against which
the Subject Matter is to be evaluated
andensuring the Criteria is relevant
andappropriate;
– preparing and presenting the Subject
Matter in accordance with the
Criteria; and
– designing and implementing internal
controls and other processes they
determine is necessary, to enable
theSubject Matter to be free from
material misstatement, whether due
tofraud orerror.
Responsibilities of Ernst &
YoungLLP
It is our responsibility to:
– plan and perform the engagement to
obtain limited assurance in respect of
whether the Subject Matter has not been
prepared in all material respects in
accordance with the Criteria;
– form an independent conclusion on the
basis of the work performed and evidence
obtained; and
– report our conclusion to the directors
ofthe Company.
Our approach
We conducted our engagement in
accordance with International Standard
onAssurance Engagements 3000 (Revised),
Assurance Engagements Other than Audits
or Reviews of Historical Financial Information
and ISAE 3410, Assurance Engagements on
Greenhouse Gas Statements, as promulgated
by the International Auditing and Assurance
Standards Board (IAASB).
Those standards require that we plan
andperform our engagement to express
aconclusion on whether we are aware
ofany material modifications that need
tobemade to the Subject Matter in order
forit to be in accordance with the Criteria,
and to issue areport.
The procedures performed in a limited
assurance engagement vary in nature
andtiming from, and are less in extent than
for, areasonable assurance engagement.
Consequently, the level of assurance
obtained in a limited assurance engagement
is substantially lower than the assurance that
would have been obtained had a reasonable
assurance engagement been performed.
Ourprocedures were designed to obtain
alimited level of assurance on which to base
our conclusion and do not provide all the
evidence that would be required to provide
areasonable level of assurance.
Although we considered the effectiveness
ofmanagement’s internal controls when
determining the nature and extent of our
procedures, our assurance engagement
wasnot designed to provide assurance
oninternal controls. Our procedures did
notinclude testing controls or performing
procedures relating to checking aggregation
or calculation of data within IT systems.
The Green House Gas quantification process
is subject to scientific uncertainty, which
arises because of incomplete scientific
knowledge about the measurement of
GHGs. Additionally, GHG procedures are
subject to estimation (or measurement)
uncertainty resulting from the measurement
and calculation processes used to quantify
emissions within the bounds of existing
scientific knowledge.
INDEPENDENT LIMITED ASSURANCE REPORT CONTINUED
Coats Group plc Annual Report and Accounts 2025197 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT LIMITED ASSURANCE REPORT CONTINUED
A limited assurance engagement consists
ofmaking enquiries, primarily of persons
responsible for preparing the Subject Matter
and related information and applying
analytical and other appropriate procedures.
Because a limited assurance engagement
cancover a range of assurance, the detail
ofthe procedures we have performed
isincluded below, so that our conclusion
canbe understood in the context of the
nature, timing and extent of procedures
weperformed:
1 Interviewing a selection of the Group’s
management to understand the processes
of data collection through to reporting for
each KPI within the public assurance
scope, as well as to understand the ESG
performance during the reporting year.
2 Performing analytical testing on the
Subject Matter and carried out the
following activities to assess the
SubjectMatter:
a Undertaking analytical review
procedures to understand the
appropriateness of the data.
b Performing testing, on a risk-based
sample basis, against underlying source
information to check the accuracy and
completeness of the data and the
appropriate application of the Criteria.
3 Understanding the assumptions used
bymanagement, obtaining explanations
for the rationale and assess whether the
assumptions used are appropriate and
have been consistently applied in the
preparation of the Subject Matter.
4 Conducted on-site visits at the most
material locations to obtain an
understanding of the local data collection
and reporting environment, observe key
controls in operation, perform
walkthroughs of end-to-end data flows,
engage with site management to assess
the application of Group reporting
guidelines, and verify the traceability
ofselected data points to underlying
source records.
5 We also performed such other procedures
as we considered necessary in the
circumstances.
Inherent limitations
Non-financial information is subject to
moreinherent limitations than financial
information, given the characteristics of the
underlying subject matter. Because there is
not yet a large body of established practice
upon which to base measurement and
evaluation techniques, the methods used
formeasuring or evaluating non-financial
information, including the precision
ofdifferent techniques, can differ,
yetbeequally acceptable. This may
affectthecomparability between entities,
and overtime.
Our conclusion is based on historical
information and the projection of any
information or conclusions in the attached
report to any future periods would
beinappropriate.
Use of our report
This report is produced in accordance with
the terms of our engagement letter dated
23 July 2025 and the addendum to the
engagement letter dated 13 February 2026,
solely for the purpose of reporting to the
directors of Coats Group plc in connection
with the Subject Matter for the period ended
31 December 2025.
Those terms permit disclosure on Coats’
website, solely for the purpose of Coats
Group plc showing that it has obtained an
independent assurance report in connection
with the Subject Matter.
To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone
other than the Company and the Company’s
directors as a body, for our work, for this
report, or for the conclusions we have
formed. This engagement is separate to,
anddistinct from, our appointment as the
auditor to the Company.
Ernst & Young LLP
Luton
04 March 2026
Coats Group plc Annual Report and Accounts 2025198 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
INDEPENDENT LIMITED ASSURANCE REPORT CONTINUED
Appendix A
EY’s assurance procedures related to the legal structure of Coats Group plc, before the acquisition of OrthoLite Holdings LLP on 29 October 2025.
The ‘Subject Matter’ Information comprises the following data:
KPI Units
Scope 1 GHG emissions footprint thousand tonnes CO
2
e
Scope 2 GHG emissions footprint (location-based) thousand tonnes CO
2
e
Scope 2 GHG emissions footprint (market-based) thousand tonnes CO
2
e
% reduction in Scope 1 & 2 GHG emissions footprint (since 2022) %
Scope 3 – Category 3 emissions footprint thousand tonnes CO
2
e
Total materials purchased by Coats tonnes
Total preferred materials purchased by Coats tonnes
% preferred materials purchased by Coats %
Total water used Million cubic meters
Total water recycled Million cubic meters
% of water recycled %
Total waste generated tonnes
Waste going to landfill tonnes
% of waste to landfill %
% effluent compliance to the Roadmap to Zero standards %
Total workforce headcount Number
Workforce with ‘Great Place to Work’ or equivalent certification Number
% employees in units covered by ‘Great Place to Work’ certification %
Total senior leadership headcount Number
Female senior leadership headcount Number
% of females in senior leadership %
Coats Group plc Annual Report and Accounts 2025199 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Other information
OTHER INFORMATION
Subsidiaries:
Indirect holdings of the Company
Country of
Incorporation Company name Registered office address Share class
Australia Coats Australian
Pty Ltd
Unit 2, 56 Keys Road, Moorabbin
Melbourne, Victoria, 3189, Australia
AUD0.54 Ordinary
Australia Guinness Peat
Group (Australia)
Pty Limited
Level 44, 600 Bourke Street, Melbourne,
Victoria, 3000, Australia
AUD1.00 Ordinary,
AUD14,977.77
Redeemable
Preference
Bangladesh Coats Bangladesh
Limited
Tower 117, 117/A Tejgaon Industrial Area,
Dhaka 1208, Bangladesh
BDT100.00 Ordinary
(80%)
Bangladesh Coats Crafts
Bangladesh Limited
Novo Tower, 270 Tejgaon Industrial Area,
Dhaka 1208, Bangladesh
BDT100.00 Ordinary
(80%)
Bulgaria Coats Bulgaria
Eood
Tsarigradsko shousse bld 7
th
Km, Sofia
1748, Bulgaria
BGL50.00 Ordinary
Cambodia Coats Threads
(Cambodia)
Company Limited
Street 102, FO-1601, Flatiron by Meridian,
Phnom Penh City Center, Phum 1, Sangkat
Srah Chak, Khan Daun Penh, Phnom Penh,
Cambodia
KHR4,000 Ordinary
Canada Coats Canada Inc 10 Roybridge Gate Blvd, Vaughan ON L4H
3M8, Canada
Common (no par
value)
Canada Staveley Services
Canada Inc
44 Chipman Hill, Suite 1000, Saint John NB
E2L 2A0, Canada
CAD Common, CAD
Class A Pref 1, CAD
Class A Pref 2
Cayman
Islands
CIRQL Global
Holdings, Ltd.
89, OGIER GLOBAL (CAYMAN) LIMITED,
Nexus Way, Camana Bay, Grand Cayman,
KY1-9009, Cayman Islands
USD0.01 Ordinary
Cayman
Islands
CIRQL
Manufacturing
Holding, Ltd.
89, OGIER GLOBAL (CAYMAN) LIMITED,
Nexus Way, Camana Bay, Grand Cayman,
KY1-9009, Cayman Islands
USD0.01 Ordinary
Cayman
Islands
CIRQL Materials
Holding, Ltd.
89, OGIER GLOBAL (CAYMAN) LIMITED,
Nexus Way, Camana Bay, Grand Cayman,
KY1-9009, Cayman Islands
USD0.01 Ordinary
Cayman
Islands
CIRQL Materials,
Ltd.
89, OGIER GLOBAL (CAYMAN) LIMITED,
Nexus Way, Camana Bay, Grand Cayman,
KY1-9009, Cayman Islands
USD0.01 Ordinary
Group structure
The Company, through various subsidiaries, has branches in several different jurisdictions in which
the business operates outside the UK. Unless otherwise indicated, all shareholdings owned directly
or indirectly by the Company represents 100% of issued share capital of the subsidiary.
Subsidiaries:
Direct holdings of the Company
Country of
Incorporation Company name Registered office address Share class
United Kingdom Arrow HJC 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United Kingdom B. M. Estates
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United Kingdom Coats Limited 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United Kingdom Contractors’
Aggregates
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United Kingdom GPG (UK)
Holdings Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United Kingdom GPG March
2004 Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United Kingdom S G Warburg
Group Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
Coats Group plc Annual Report and Accounts 2025200 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
OTHER INFORMATION CONTINUED
Country of
Incorporation Company name Registered office address Share class
Cayman
Islands
Sustainable
Solutions, Ltd.
89, OGIER GLOBAL (CAYMAN) LIMITED,
Nexus Way, Camana Bay, Grand Cayman,
KY1-9009, Cayman Islands
USD0.01 Ordinary
Chile Coats Cadena Ltda Enrique Gomez Correa 5750, 3er piso,
Oficina No.4, Macul, Santiago, Chile
US$1.00 Ordinary
China Coats Shenzhen
Limited
Coats Industrial Park, Fengtang Avenue,
Zhancheng Community, Fuhai Street,
Baoan District, Shenzhen, China 518103
US$1.00 Ordinary
(90%)
China Coats Zip
Shenzhen Limited
B7, Coats Industrial Park, Fengtang Avenue,
Zhancheng Community, Fuhai Street,
Bao’An District, Shenzhen, China
US$1.00 Ordinary
(90%)
China Dongguan ECO
Polymer Co., Ltd
No. 2, 1
st
Road, Fourth Industrial Zone,
Houjie Qiaotou, Houjie Town, Dongguan
City, Guangdong Province, China
USD1,000,000
Ordinary
China Dongguan Shoe
Technology
Services Co.
No. 549, Room 1006, Houjie Section,
Guantai Road, Houjie Town, Dongguan
City, Guangdong Province, China
USD800,000
Ordinary
China Donguan
Rhenoflex New
Materials Co. Ltd
Building 5, No. 77 Shilong Road,
Guancheng Street, Dongguan, Guangdong
Province, China
US$500,000.00
Ordinary
China Guangzhou Coats
Limited
Unit B12, 2
nd
Floor, 2
nd
Building, No 11 Hao
Ke Zhou East Street, Haizhu District,
Guangzhou, China
HKD1.00 Ordinary
(90%)
China Jiangyin Rhenoflex
Waterproof
Material Co. Ltd
No. 58 Dong Sheng Road, Hi-Tech Park,
Jiangyin Economic Development Zone,
China
US$1,500,000.00
Ordinary
China Qingdao Coats
Limited
No. 6, Sanhuan Road, Jimo Environmental
Protection Industrial Park, Jimo District,
Shandong, China
US$1.00 Ordinary
(90%)
China Shanghai Coats
Limited
No.8 Building, Export Processing Garden,
Songjiang Industrial Zone 201613,
Shanghai, China
US$1.00 Ordinary
(90%)
China Texon Dongguan
Non Woven Ltd
No. 17 Weiheng Road, Niushan Foreign
Economics Industrial Park, Dongcheng
Street, Dongguan City, China
US$1,420,000.00
Ordinary
Country of
Incorporation Company name Registered office address Share class
Colombia Coats Cadena
Andina SA
– Colombia
Avenida Santander, N.5E-87, Pereira,
Colombia
COP20.63 Ordinary
Egypt Coats Craft Egypt Industrial Area Zone B3, Plot 62, Cairo, 10
th
of Ramadan City, Egypt
EGP1.00 Ordinary
Egypt Coats Egypt for
manufacturing and
dyeing sewing
thread SAE
Industrial Area Zone B3, Plot 78, 10
th
of
Ramadan City, Cairo, Egypt
US$31.25 Ordinary
Egypt Coats for Trading
and Industry Egypt
Industrial Area Zone B3, Plot 62, 10
th
of
Ramadan City, Cairo, Egypt
EGP4000.00
Ordinary
El Salvador Coats El Salvador,
S.A. de C.V.
Zona Franca Export Salva, Edificio No 18C,
San Salvador, El Salvador
US$12.00 Ordinary
France Coats Footwear
France SAS
3 rue du Moulin, 49450 St. Macaire en
Mauges, France
€188,401.00
Ordinary
France Coats France S.A.S. 8 avenue Hoche, 75008, Paris, France €0.60 Ordinary
Germany Coats GmbH Giulinistraße 2, 67065 Ludwigshafen,
Germany
€12,000,000.00
Ordinary
Germany Coats Thread
Germany GmbH
Giulinistraße 2, 67065 Ludwigshafen,
Germany
€11,704,000.00
Ordinary
Germany Rhenoflex GmbH Giulinistraße 2, 67065 Ludwigshafen,
Germany
€1.00 Ordinary
Germany Schwanenwolle
Tittel & Krueger
AG i. L
RHS, Stadtstrasse 29, 79104 Freiburg,
Germany
DEM1.00 Ordinary
Germany Texon Components
GmbH
Giulinistraße 2, 67065 Ludwigshafen,
Germany
€25,564.59 Ordinary
Germany Texon Mockmuhl
GmbH
Giulinistraße 2, 67065 Ludwigshafen,
Germany
€27,041,999.59
Ordinary
Guatemala Coats de
Guatemala, S.A.
13-78 Zona 10, Edif. Intercontinental Plaza
Torre Citigroup Nivel 17, Oficina 1702,
Ciudad, Guatemala
GTQ1.00 Ordinary
Guatemala Crafts Central
America, S.A.
26 Avenida No. 7-27, Zona 4, Mixco oficina
11, Guatemala
GTQ100.00 Ordinary
Coats Group plc Annual Report and Accounts 2025201 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
OTHER INFORMATION CONTINUED
Country of
Incorporation Company name Registered office address Share class
Guatemala Distribuidora Coats
de Guatemala,
Sociedad Anomina
39 Avenida, 3-47 Zona 7, Colonia El Rodeo,
Guatemala
GTQ1.00 Ordinary
Guatemala Guatemala Thread
Company Sociedad
Anonima
39 Avenida, 3-47 Zona 7, Colonia El Rodeo,
Guatemala
GTQ10.00 Ordinary
Honduras Coats Honduras,
S.A.
Edificio #13 Zona Libre Inhdelva, 800 mts.
Carretera a la Jutosa, Choloma, Cortes,
Honduras
HNL100.00 Ordinary
Hong Kong China Thread
Development
Company Limited
Unit 1-4, 10/F., The Broadway, 54-62
Lockhart Road, Wanchai, Hong Kong
HKD10.00 Ordinary
Hong Kong Coats (China)
Limited
Unit 507, 5/F., Chinachem Golden Plaza,
77 Mody Road, Tsim Sha Tsui, Kowloon,
Hong Kong
HKD10.00 Ordinary
Hong Kong Coats China
Holdings Limited
Unit 507, 5/F., Chinachem Golden Plaza,
77 Mody Road, Tsim Sha Tsui, Kowloon,
Hong Kong
HKD10.00 Ordinary
Hong Kong Coats Hong Kong
Limited
Unit 507, 5/F., Chinachem Golden Plaza,
77 Mody Road, Tsim Sha Tsui, Kowloon,
Hong Kong
HKD10.00 Ordinary
(90%)
Hong Kong OrthoLite Group
Limited
Room 9102B, 10/F., YF Life Tower, 33
Lockhart Road, Wanchai, Hong Kong
HKD1.00 Ordinary
Hong Kong OrthoLite YA
Group Limited
Room 9102B, 10/F., YF Life Tower, 33
Lockhart Road, Wanchai, Hong Kong
USD1,500,000
Ordinary (50%)
Hong Kong Rhenoflex Hong
Kong Ltd
Flat/RM 1922 19/F., Lee Garden One, 33
Hysan Avenue, Causeway Bay, Hong Kong,
Hong Kong
HKD1.00 Ordinary
Hong Kong Texon International
(Asia) Limited
Room 1–4, 10
th
Floor, The Broadway, 54-62
Lockhart Road, Wanchai, Hong Kong
HKD1.00 Ordinary
Hungary Coats
Magyarorszag
Cernagyarto es
Ertekesito Korlatolt
Felelossegu
Tarsasag
1044 Budapest, Vaci ut 91, Hungary HUF100,000.00
Ordinary
Country of
Incorporation Company name Registered office address Share class
India CDM Foam
Systems India
Private Limited
110, RMZ One Paramount, Level 5, Campus
20, Mount Poonamalle High Road, Porur,
Kanchipuram, Sriperumbudur, Tamil Nadu,
600116, India
INR10.00 Ordinary
India Intellosol Softwares
India Private
Limited
1/22, Second Floor, Asaf Ali Road, New
Delhi, Central Delhi, Delhi, 110002, India
INR10.00 Ordinary
India Madura Coats
Private Limited
Unit No.3&4, Floor 3, Navigator Building,
International Tech Park, Whitefield Road,
Bangalore 560 066, India
INR10.00 Ordinary
India OrthoLite India
Private Limited
110, RMZ One Paramount, Level 5, Campus
20, Mount Poonamalle High Road, Porur,
Kanchipuram, Sriperumbudur, Tamil Nadu,
600116, India
INR10.00 Ordinary
(51%)
India Texon (India)
Private Limited
No 362, New Jail Road, Madurai, Madurai
South, Tamil Nadu, 625016, India
INR100.00 Ordinary
Indonesia PT. Coats Rejo
Indonesia
Ventura Building, Lantai 5, Suite 501-A, Jl.
RA Kartini No. 26, Cilandak, Jakarta,
Indonesia
IDR415.00 Ordinary
A, IDR627.00
Ordinary B,
IDR8690.00 Series C
and IDR11,175.00
Series D
Indonesia PT Coats Trading
Indonesia
Ventura Building, Lantai 5, Suite 501-B, Jl.
RA Kartini No. 26, Cilandak, Jakarta,
Indonesia
IDR8,965.00 Series
A, IDR15,795.00
Series B
Indonesia PT Zhi Xing
Indonesia
Jl. Industri Raya IV,Blok AF No. 16, Kawasan
Industri Jatake, Tangerang, Banten,
Indonesia
IDR11,354
Italy Texon Italia S.r.l. Largo Augusto, 8, Milan, 20122, Italy €1.00 Ordinary
Malaysia Coats Thread
(Malaysia) Sdn.
Bhd.
49-B Jalan Melaka Raya 8, Taman Melaka
Raya, 75000 Melaka, Malaysia
RM10.00 A,
RM10.00 B,
RM10.00 C (99%)
Mauritius Coats Indian Ocean
Holding Co Limited
Interface International Ltd, 9
th
Floor,
Standard Chartered Tower, 19 Cybercity,
72201, Mauritius
US$100.00 Ordinary
Coats Group plc Annual Report and Accounts 2025202 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
OTHER INFORMATION CONTINUED
Country of
Incorporation Company name Registered office address Share class
Mexico Coats Mexico S.A.
de C.V.
Blvd. Adolfo Ruiz Cortines #3720, Torre 3
Piso 12 Oficina 12A132, COL. Jardines del
Pedregal, del. Alvaro Obegon, CDMX. CP
01900 Mexico
MXP1.00
Ordinary-A,
MXP1.00 Ordinary-B
Morocco Coats Maroc 220 Bld Chefchaouni, Ain Sebaa,
Casablanca, Morocco
MAD100.00
Ordinary
Morocco Mercerie
Industrielle de
Casablanca
220 Bld Chefchaouni, Ain Sebaa,
Casablanca, Morocco
MAD100.00
Ordinary
Netherlands Coats Industrial
Europe Holdings
B.V.
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
$1.00 Ordinary
Netherlands Coats Industrial
Thread Holdings
B.V
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
$1.00 Ordinary
Netherlands Coats Northern
Holdings B.V.
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
$1.00 Ordinary
Netherlands Coats South
America Holdings
B.V.
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
$1.00 Ordinary
Netherlands Coats South Asia
Holdings B.V.
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
$1.00 Ordinary
Netherlands Coats Southern
Holdings B.V.
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
$1.00 Ordinary
New Zealand Coats Patons (New
Zealand) Ltd
3 Mana Place, Wira, Auckland, New
Zealand
NZD1.00 Ordinary
Nicaragua Coats de Nicaragua
SA
Altamira d’este, Rotonda Madrid #235,
Managua, Nicaragua
NIO100.00 Ordinary
Pakistan J & P Coats
Pakistan (Pvt)
Limited
Factory Office, A/7, Estate Ave, Sindh
Industrial Trading Estate, Karachi, Pakistan
PKR100.00 Ordinary
Peru Coats Cadena SA
– Peru
Av. Republica de Panama 3461, Piso 9, San
Isidro, Lima, Peru
PEN 0.01 Ordinary
(99%)
Country of
Incorporation Company name Registered office address Share class
Poland Coats Polska
Spolka z
oganiczona
odpowiedzialnoscia
Nowe Sady 2, 94-102 Lodz, Poland PLN1,000.00
Ordinary
Portugal Coats – Comercio
de Linhas, Fechos e
Acessorios, Para a
Industria Industria
Unipessoal Lda
Praca Duque de Saldhana, 1, Edif. Atrium
Saldanha, Piso 7, Lisbon, 1050-094,
Portugal
€150,000 Quotas
Portugal Companhia de
Linha Coats &
Clark Unipessoal
Lda
Praca Duque de Saldhana, 1, Edif. Atrium
Saldanha, Piso 7, Lisbon, 1050-094,
Portugal
€5,000,000 Quotas
Romania Coats Romania SRL Municipiul Odorheiu Secuiesc, Str. Nicolae
Balcescu, Nr. 71, Judetul Harghita, Romania
RON169.38 Ordinary
Russian
Federation
Coats LLC Office No. 4, part of premises No. 13, 7
th
Floor, st. Krasnaya, 1, Lyubertsy, Moscow,
Russia
RUB173.55 Ordinary
Singapore Coats International
Pte. Limited
12 Marina View, #11-01, Asia Square
Tower 2, 018961, Singapore
SGD1.00 Ordinary
South Africa Coats South Africa
(Proprietary)
Limited
107 Escom Road, New Germany, 3620,
KZN, Natal, South Africa
ZAR0.01 Ordinary,
ZAR0.01 Cumulative
Redeemable
Preference, ZAR0.01
Non-redeemable
Preference Shares,
ZAR0.01
Non-redeemable
Non-cumulative
Variable Rate
Convertible
Preference
Spain Gotex S.A. Avinguda de Montcau, No 5, Parcela A del
VGP Llica d’Amunt, (Nave E2 y E3), Llica de
Munt, Barcelona, 08186, Spain
€6.02 Ordinary
Spain OrthoLite Europa,
S.L.
C/ Aparadoras,Poligono Industrial, El
Mugrón, Almansa, Albacete, 02640, Spain
€715.000.00
Ordinary
Coats Group plc Annual Report and Accounts 2025203 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
OTHER INFORMATION CONTINUED
Country of
Incorporation Company name Registered office address Share class
Sri Lanka Coats Thread
Exports (Private)
Limited
Moragahahena, Millewa, Horana, 12400,
Sri Lanka
LKR100.00 Ordinary
(99%)
Sri Lanka Coats Thread
Lanka (Private)
Limited
Moragahahena, Millewa, Horana, 12400,
Sri Lanka
LKR10.00 Ordinary
(99%)
Sweden Coats Industrial
Scandinavia AB
Stationsvagen 2, SE-516 31 Dalsjofors,
Sweden
SEK100.00 Ordinary
Switzerland Coats Stroppel AG c/o Haussmann Treuhand AG,
Seefeldstrasse 45, 8008 Zurich, Switzerland
CHF2,500.00
Thailand Coats Threads
(Thailand) Ltd
39/60 Moo 2 Tambol Bangkrachaw,
Amphur Muang, Samutsakorn Province
74000, Thailand
THB1,000.00
Ordinary
Tunisia Coats Industrial
Tunisie
52, rue du Tissage, Douar Hicher,
Manouba, 2086, Tunisia
TND10.00 Ordinary
Tunisia Coats Trading
Tunisie
52, rue du Tissage, Douar Hicher,
Manouba, 2086, Tunisia
TND10.00 Ordinary
Turkey Coats (Turkiye) Iplik
Sanayii AS
BALAT OSB MAH Mavi Cad. No 2, 16225
Bursa, Turkey
TRY1.00 New
Ordinary (92%)
Ukraine Coats Ukraine Ltd Moskovskiy ave. 28A, litera B, Kiev, 04655,
Ukraine
UAH1.00 Ordinary
United
Kingdom
Allied Mutual
Insurance Services
Ltd
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Anfield 1 Limited Mazars Llp, 45 Church Street, Birmingham,
B3 2RT United Kingdom
£1.00 Ordinary
United
Kingdom
Anfield 2 Limited Mazars Llp, 45 Church Street, Birmingham,
B3 2RT United Kingdom
£1.00 Ordinary,
£1.00 Deferred
United
Kingdom
Barbour Threads
Limited
1 George Square, Glasgow, G2 1AL,
United Kingdom
£10.00 Ordinary
United
Kingdom
Brown Shipley
Holdings Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Brunel Pension
Trustees Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats (UK) Limited 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary,
£1.00 Ordinary A
Country of
Incorporation Company name Registered office address Share class
United
Kingdom
Coats Digital
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats Finance Co.
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats Group
Finance Company
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£0.33 Ordinary
United
Kingdom
Coats Holding
Company
(No. 1) Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£0.125 Ordinary
United
Kingdom
Coats Holding
Company
(No. 2) Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£0.25 Ordinary
United
Kingdom
Coats Holdings Ltd 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats Industrial
Thread Brands
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats Industrial
Thread Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats Patons
Limited
1 George Square, Glasgow, G2 1AL,
United Kingdom
£0.25 Ordinary
United
Kingdom
Coats Pensions
Trustee Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats Property
Management
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats Shelfco
(BDA) Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats Shelfco (CV
Nominees) Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Coats Shelfco (VV)
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£0.01 Ordinary,
£0.075 Deferred
United
Kingdom
Coats Trading (UK)
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
Coats Group plc Annual Report and Accounts 2025204 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
OTHER INFORMATION CONTINUED
Country of
Incorporation Company name Registered office address Share class
United
Kingdom
Coats UK Pension
Scheme Trustees
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Corah Limited 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£0.25 Ordinary,
£1.00 4.2%
Cumulative
Preference
United
Kingdom
D. Byford & Co
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£0.20 Ordinary,
£1.00 Preference
United
Kingdom
Embergrange 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Fast React Systems
(Bangladesh)
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Fast React Systems
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
GPG Securities
Trading Ltd
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Griffin SA Ltd 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
GSD (Corporate)
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
GSD Holdings
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary-A,
£1.00 Ordinary-B
United
Kingdom
Hicking Pentecost
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£0.50 Ordinary
United
Kingdom
I.P. Clarke & Co.
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
J.& P. Coats,
Limited
1 George Square, Glasgow G2 1AL,
United Kingdom
£1.00 Ordinary
United
Kingdom
Marshaide Limited 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Needle Industries
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Patons & Baldwins
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
Country of
Incorporation Company name Registered office address Share class
United
Kingdom
Patons Limited 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary,
£1.00 7% Preference
United
Kingdom
Simpson, Wright &
Lowe, Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Sir Richard
Arkwright & Co.
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
SIRBS Pension
Trustee Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Staveley 2005 No 3
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Staveley Industries
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Staveley Services
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Texon (Newco 2)
Ltd
4
th
Floor, 14 Aldermanbury Square, London,
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Texon International
Group Limited
4
th
Floor, 14 Aldermanbury Square, London,
EC2V 7HS, United Kingdom
£0.0001 A Ordinary
United
Kingdom
Texon
Management Ltd
4
th
Floor, 14 Aldermanbury Square, London,
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Texon Non Woven
Ltd
4
th
Floor, 14 Aldermanbury Square, London,
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
Texon Overseas 4
th
Floor, 14 Aldermanbury Square, London,
EC2V 7HS, United Kingdom
£1.00 Ordinary
United
Kingdom
The Central Agency
Limited
1 George Square, Glasgow, G2 1AL,
UnitedKingdom
£10.00 Ordinary
United
Kingdom
Thomas Burnley &
Sons, Limited
1 George Square, Glasgow, G2 1AL,
UnitedKingdom
£10.00 Ordinary
United
Kingdom
Tootal Group
Limited
4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£0.25 Ordinary,
£1.00 3.5 %
Cumulative
Preference
United
Kingdom
Tootal Limited 4
th
Floor, 14 Aldermanbury Square, London
EC2V 7HS, United Kingdom
£1.00 Ordinary
Coats Group plc Annual Report and Accounts 2025205 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
OTHER INFORMATION CONTINUED
Country of
Incorporation Company name Registered office address Share class
United
Kingdom
Torque Group
International
Fortune Limited
4
th
Floor, 14 Aldermanbury Square, London,
EC2V 7HS, United Kingdom
$0.01 A Ordinary
United
Kingdom
Torque Group
International
Wealth Limited
4
th
Floor, 14 Aldermanbury Square, London,
EC2V 7HS, United Kingdom
$1.00 Ordinary
United States Coats American Inc CT Corporation System, 820 Bear Tavern
Road, West Trenton, NJ 08628, USA
US$10.00
COMMON, US$5.00
5% Cumulative
Preference
United States Coats Garments
(USA) Inc
CT Corporation System, Corporation Trust
Centre, 1209 Orange Street, Wilmington,
DE 19801, USA
US$1.00 Ordinary
United States Coats Holdings Inc CT Corporation System, Corporation Trust
Centre, 1209 Orange Street, Wilmington,
DE 19801, USA
US$1.00 Ordinary
United States Coats HP Holding
Inc
CT Corporation System, 160 Mine Lake Ct.,
Suite 200, Wake NC 27615-6417, USA
US$1.00 Ordinary
United States Coats HP Inc CT Corporation System, 160 Mine Lake Ct.,
Suite 200, Wake NC 27615-6417, USA
US$1.00 Ordinary
United States Coats North
America
Consolidated Inc
CT Corporation System, Corporation Trust
Centre, 1209 Orange Street, Wilmington,
DE 19801, USA
US$0.10 Ordinary,
US$1.00 Class B
Voting Shares
United States Coats North
America de
Republica Dominica
Inc
CT Corporation System, 160 Mine Lake Ct.,
Suite 200, Raleigh, North Carolina,
27615-6417, USA
US$1.00 Ordinary
United States Coats Sales
Corporation
CT Corporation System, 820 Bear Tavern
Road, West Trenton, NJ 08628, USA
US$100.00 Ordinary
United States Jaeger Sportswear
Ltd
CT Corporation System, 28 Liberty Street,
New York, NY 10005, USA
US$ Common
United States OrthoLite Holdings
LLC
251, Little Falls Drive, Wilmington, DE,
19808, United States
Class A1, A2 and B
Units
United States OrthoLite
Intermediate LLC
251, Little Falls Drive, Wilmington, DE,
19808, United States
Membership interest
Country of
Incorporation Company name Registered office address Share class
United States OrthoLite LLC 1209, Orange Street, Wilmington, DE,
19801, United States
Membership interest
United States O2 Partners, LLC 254 Commercial Street,Portland, ME,
04101, United States
Common units
United States Patrick Yarn Mill,
Inc.,
CT Corporation System, 160 Mine Lake Ct.,
Suite 200, Raleigh, North Carolina,
27615-6417, USA
US$1.00 Class A
voting, Class B
non-voting
United States Staveley Inc The Corporation Trust Co., 1209 Orange
Street, Wilmington, DE 19801, USA.
US$0.01 Ordinary
United States Sustainable
Solutions Financing
LLC
1209 Orange Street, DE 19801,
Wilmington, USA, United States
Membership interest
United States TCP Cirql Group
Holdings, Inc.
251, Little Falls Drive, Wilmington, DE,
19808, United States
USD0.01 common
stock
United States TCP OrthLite
Group Holdings,
Inc
251, Little Falls Drive, Wilmington, DE,
19808, United States
USD0.01 common
stock
United States Texon Materials,
Inc.
Corporation Trust Center, 1209 Orange
Street, Wilmington, DE, United States
US$0.01 Ordinary
United States Westminster Fibers,
Inc.
c/o The Corporation Trust, 1209 Orange
Street, Wilmington, Delaware, USA
US$1.00 Common
shares
Vietnam CIRQL Innovations
Vietnam Company
Limited
Suite 1,Floor 15, Metropolitan Building,
No 235 Dong Khoi Street, Ben Nghe Ward,
Ho Chi Minh City, Viet Nam
VND1,168,500
Charter Capital
Vietnam CIRQL
Manufacturing
Vietnam Company
Limited
Lot No. 11, Map No. 39, CN7 Street,
Tan Binh Industrial Park, Tan Binh Town,
North Tan Uyen District, Binh Duong
Province, Viet Nam
VND23,370,000
Charter Capital
Vietnam Coats Footwear
Vietnam Limited
Liability Company
Workshop No. 57, Road 1-7, Long Thanh
Industrial Park, An Phuoc Commune,
Dong Nai Province, Viet Nam
VND17,581,335,900
Charter Capital
Vietnam Coats Phong Phu
Limited Liability
Company
No. 48 Tang Nhon Phu Street, Tang Nhon
Phu B Ward, Thu Duc City, Ho Chi Minh
City, Vietnam
US$1.00 Ordinary
(64%)
Coats Group plc Annual Report and Accounts 2025206 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
Statutory audit exemptions
Coats Group plc has issued a parental guarantee under s479C of the Companies Act 2006 to
the following companies, exempting them from the requirements of the Companies Act 2006
related to the audit of individual accounts by virtue of s479A of the Companies Act 2006.
Company Registered number
B. M. Estates Limited 01032353
Brown Shipley Holdings Limited 00653955
Coats Digital Limited 04952167
Coats Finance Co. Limited 02591134
Coats Holdings Ltd 00104998
Coats Industrial Thread Limited 00332517
Coats Property Management Limited 00508154
Coats Trading (UK) Limited 13264213
Fast React Systems (Bangladesh) Limited 08586160
Fast React Systems Limited 03698622
GPG (UK) Holdings Limited 00159975
GSD (Corporate) Limited 03081931
GSD Holdings Limited 03997465
I.P. Clarke & Co. Limited 00093416
J.& P. Coats, Limited SC002042
Texon (Newco 2) Ltd 05329581
Texon International Group Limited 05329617
Texon Management Ltd 05308213
Texon Non Woven Ltd 05286674
Texon Overseas 02082136
Torque Group International Fortune Limited 10076655
Torque Group International Wealth Limited 10076684
Country of
Incorporation Company name Registered office address Share class
Vietnam ORTHOLITE
Vietnam Company
Limited
Lot No. 137-138-139, No. 7, VSIP II-A,
Street No. 23,Vietnam-Singapore II-A
Industrial Park, Vinh Tan Ward, Tan Uyen
City, Binh Duong Province, Viet Nam
VND25,970,000,000
Charter Capital
Vietnam Specific Gravity
Company Limited
Lot No. 137-138-139, No. 7, VSIP II-A,
Street No. 23,Vietnam-Singapore II-A
Industrial Park, Vinh Tan Ward, Tan Uyen
City, Binh Duong Province, Vietnam
VND23,500,000
Charter Capital
(100% owned by
Ortholite YA Group
Limited)
Vietnam Texon
Manufacturing
Vietnam Company
Limited
Plant No. 02 and Factory No. 03, An Phuoc
Industrial Zoe, An Phuoc Ward, Long Thanh
District, Dong Nai Province, Viet Nam
VND33,446,917,552
Charter Capital
Joint Ventures
Country of
Incorporation Company name Registered office address Share class
China Guangying
Spinning
Company Limited
2 Yuan Cun Xi Jie Guangzhou, 510655,
China
US$1.00 Ordinary
(50%)
China Tianjin Jinying
Spinning Co Ltd
10m E of intersec. of Jinlai Rd and
Mingqing Rd, Liqi Zhuang, Xiqing Qu,
Tianjin, 300381, China
US$1.00 Ordinary
(50%)
India S&P Threads
Private Limited
Delite Theatre Building, III Floor, Asaf Ali
Road, New Delhi, 110 002, India
INR10.00 Ordinary
(50%)
OTHER INFORMATION CONTINUED
Coats Group plc Annual Report and Accounts 2025207 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
For the year ended 31 December
2021
US$m
2022
US$m
2023
US$m
2024
US$m
2025
US$m
Continuing operations (before exceptional
and acquisition-related items)
1
:
Revenue 1,282.7 1,412.4 1,325.6 1,433.0 1,464.9
Cost of sales (825.1) (937.4) (842.9) (886.3) (889.8)
Gross profit 457.6 475.0 482.7 546.7 575.1
Operating costs (258.7) (251.6) (246.0) (274.8) (285.3)
Operating profit 198.9 223.4 236.7 271.9 289.8
Share of profits from joint ventures 1.2 1.1 1.1 1.9 1.3
Finance income 0.4 2.6 4.6 3.1 11.0
Finance costs (21.8) (32.3) (33.9) (31.5) (48.9)
Profit before taxation 178.7 194.8 208.5 245.4 253.2
Taxation (53.3) (59.7) (57.5) (70.0) (73.4)
Profit from continuing operations 125.4 135.1 151.0 175.4 179.8
Adjusted earnings per share (cents) 7.17 8.02 8.04 9.71 9.26
Dividend per share (cents) 2.11 2.43 2.80 3.12 3.28
Adjusted free cash flow ($m) 123.8 113.7 130.5 158.1 184.3
Adjusted return on capital employed (%) 45% 31%
2
30% 39% 22%
2
Notes:
1. The income statement amounts for 2021-2024 have been restated following the disposal of the Americas Yarns business.
Adjusted earnings per share, adjusted free cash flow and adjusted return on capital employed for 2021-2023 are as previously
reported.
2. Operating profit from continuing operations before exceptional and acquisition related items for the year ended 31 December
2025 has been adjusted in the adjusted return on capital employed calculation to include OrthoLite and Viz Reflectives as if the
acquisitions had taken effect at the beginning of the reporting period (1 January 2025). In addition, operating profit from
continuing operations before exceptional and acquisition-related items for the year ended 31 December 2022 has been
adjusted in the adjusted return on capital employed calculation to include Texon and Rhenoflex as if the acquisitions had taken
effect at the beginning of the reporting period (1 January 2022).
FIVE-YEAR SUMMARY SHAREHOLDER INFORMATION
United Kingdom
4
th
Floor,
14 Aldermanbury Square,
London EC2V 7HS
Tel: 020 8210 5000
coats.com
Incorporated and registered in England No. 103548
Registered office:
4
th
Floor,
14 Aldermanbury Square,
London EC2V 7HS
UK registered members
To manage your shareholding online, please visit: investorcentre.co.uk
Location of share registers
The Company’s register of members is maintained in the United Kingdom
Register enquiries may be addressed direct to the Company’s share registrars named below:
Registrar Telephone and postal enquiries Inspection of Register
UK Main Register:
Computershare Investor
Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Tel: 0370 707 1022
Facsimile: 0370 703 6143
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Coats Group plc Annual Report and Accounts 2025208 OTHER INFORMATIONSTRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS TCFD
This report is printed on paper certified in accordance with the FSC® (Forest Stewardship Council®) and is recyclable and acid-free.
Pureprint Ltd is FSC certified and ISO 14001 certified showing that it is committed to all round excellence and improving environmental performance is an important part of this strategy. Pureprint Ltd
aims to reduce at source the effect its operations have on the environment and is committed to continual improvement, prevention of pollution and compliance with any legislation or industry standards.
Pureprint Ltd is a Carbon / Neutral® Printing Company.
This publication is produced by a CarbonNeutral® company and Carbon Balanced with World Land Trust. Balancing is delivered by World Land Trust, an international conservation charity,
whooffset carbon emissions through the purchase and preservation of high conservation value land.
Through protecting standing forests, under threat of clearance, carbon is locked in that would otherwise be released. These protected forests are then able to continue absorbing carbon from
theatmosphere, referred to as REDD (Reduced Emissions from Deforestation and forest Degradation). This is now recognised as one of the most cost-effective and swiftest ways to arrest the rise
in atmospheric CO
2
and global warming effects. Additional to the carbon benefits is the flora and fauna this land preserves, including a number of species identified at risk of extinction on the
IUCN Red List of Threatened Species.
Designed and produced by Black Sun Global. A Positive Change Group company.
CBP035138
Coats Group plc
4
th
Floor,
14 Aldermanbury Square,
London EC2V 7HS
coats.com
Incorporated and registered
in England No. 103548