Coats in action

Moving woman

Acquisition of Gotex and Fast React Systems

In June 2016 we acquired Gotex, a Spanish-based company which designs and manufactures high-tech industrial yarns for a range of industrial sectors; and Fast React Systems, a UK-based company providing software solutions and expertise to A&F manufacturers and retailers

$3 Million
OPERATING PROFIT CONTRIBUTION IN 2016
Find out more about Acquisition of Gotex and Fast React Systems
Woman with tablet

Growth of eCommerce with brands and contractors

We are making it easier, simpler and faster to do business with. Our online thread availability system, eComm, is in use in over 25 countries and with some 12,000 of our customers. In 2016, over 70% of our total thread orders were placed using it.

70%
Total thread orders now placed online
Find out more about Growth of eCommerce with brands and contractors
Close-up of shoe

PFC free thread range – maintaining our strong CR credentials

During the year, we launched a range of water resistant threads for apparel end-use that are free from PFC chemical compounds – this is an industry first and provides customers with strong sustainability credentials, without compromising on performance.

Find out more about PFC free thread range – maintaining our strong CR credentials
Carbon fibre wheel cover for sports car

Launch of cutting edge carbon composite product

Our Performance Materials segment launched Synergex, a range of advanced composite fibres which can be used to mould strong, but lightweight, parts for industries such as automotive and aerospace. The brand launched when it was used as a wheel arch in a high performance sports car.

Find out more about Launch of cutting edge carbon composite product
COATS logo

Reinstatement of a shareholder dividend

Following the pensions settlement agreement and the cessation of regulatory action by TPR, we have resumed a shareholder dividend and recommended a final dividend payment of 0.84 US cents per share for the full year 2016, which, subject to shareholder approval, will be payable in May 2017.

1.25 cents
pro-forma full year dividend for 2016
Find out more about Reinstatement of a shareholder dividend
COATS employees

Global rollout of our Supplier Code

In 2016, we completed the global rollout of our Supplier Code – a set of standards which describe our expectations from all partners in our supply chain in terms of labour practices, environmental management, responsible sourcing and business conduct.

20+
Supplier engagement workshops to date
Find out more about the Global rollout of our Supplier Code

Introduction

Mike Clasper

Chairman’s statement

The role of the Board is to act as custodians of shareholder value for the long term

Mike Clasper

Rajiv Sharma

Group Chief Executive’s statement

I am excited to be taking on this new role, guiding Coats as we move from an industrial to a digital age

Rajiv Sharma

Performance

Revenue

$1,457m +2%

Pre-exceptional operating profit

$158m +16%

Adjusted earnings per share

4.91c +23%

Adjusted free cash flow

$78m +10%

Employee engagement score

83% overall favourable

Recordable accident rate

0.38 per 100 FTEs per year

At a Glance

World’s leading industrial thread manufacturer and major player in Americas textile crafts

Industrial

Revenue

$1,221m

Apparel & Footwear

The value adding partner to the global Apparel and Footwear industry

  • Threads
  • Zips
  • Trims
  • Technology solutions

Performance Materials

Global experts in the design and supply of high technology performance materials. Industries served include:

  • Automotive
  • Household and recreation
  • Medical
  • Health and food
  • Safety
  • Telecoms
  • Composites
  • Mechanical rubber goods
  • Other industrial

Crafts

Revenue

$236m

Americas Crafts

Foundation and fashion, hand knitting products, lifestyle fabrics and needlecrafting items.

Key brands

  • Red Heart
  • Coats & Clark
  • Dual Duty XP
  • Anchor
  • Free Spirit
  • Cisne

Growth strategy

Our three strategic goals help and support us in achieving our vision

Profitable sales growth

Overview

We rely on developing strong customer relationships. This means responding to our customer needs with relevant products and services.

For A&F we ensure we constantly develop our leading consumer brands and strong market positions.

Within Performance Materials, we are leveraging our core capabilities in ‘clever thin lines’ to differentiate our offer from other players.

Finally, for Crafts this means maintaining consumer brands and strong market positions.

Key Metrics

  • KPI – Divisional revenue growth
  • KPI – Pre-exceptional operating profit
  • KPI – Adjusted EPS
  • Divisional margins

Performance in 2016

  • A&F – Increased sales of 3%, deeper integration of eCommerce and consultancy growth through acquisition of Fast React Systems.
  • Performance Materials – Gotex acquisition provides synergy opportunities, development of new carbon composite 100% fibre based product and automotive range of threads delivered double digit growth in key regions.
  • Crafts – Category captain at Walmart for the fifth consecutive year and the only textile crafting company part of their joint business planning process.

Increased productivity

Overview

We continually look at initiatives to make savings in the areas of productivity, procurement and SD&A. These include expanding our network of Lean and Six Sigma experts, reducing energy and water consumption and increasing sales and productivity per employee. Initiatives help to offset factors such as labour and energy inflation and support operating margins. Generating consistently strong free cash flow allows us to invest in areas such as pension recovery payments, bolt on acquisitions and dividend policy.

Key Metrics

  • KPI – ROCE
  • KPI – Adjusted FCF
  • KPI – Pre-exceptional operating profit
  • KPI – Adjusted EPS

Performance in 2016

  • Improved margins of 10.8% (2015: 9.5%).
  • Delivered manufacturing productivity and non-raw material sourcing gains: $10-15m pa (2013-16).
  • Energy consumption down 3% and water usage down 3%.
  • Overhead reduction programme delivering as per expectations.
  • Double digit point increase in ROCE in two years driven by higher profitability and controlled capital expenditure.

Value delivery

Overview

We aim to add superior value to our customers through our offer of unique products, services and digital solutions. For our employees, we endeavour to deliver a value proposition where they can develop to their fullest potential within a safe, respectful and inclusive workplace. Ultimately this will help to drive shareholder value through the successful implementation of our strategy – balancing our growth and efficiency agenda.

Key Metrics

  • KPI – Employee Engagement
  • KPI – Health and Safety
  • Market share
  • Total Shareholder Return

Performance in 2016

  • Delivered share gain and new market growth across all aspects of our offer.
  • Earnings and cash growth.
  • Initiation of shareholder dividend.
  • Benchmarked workplace culture.
  • Employee Engagement score of 83% retaining our place in upper decile IBM Kenexa workplace survey.