Coats

Factory

Understanding Coats

Investment case

Our investment case supports and sustains our market leadership and delivers cash generative and consistent growth to our shareholders.

There are five elements to our investment case – each element is a strength in itself but together they combine to set us apart from our competitors, giving us a solid platform from which we can innovate, grow and deliver consistently strong shareholder returns.

Throughout 2019 we continued to review each element of our investment case and looked to align these more closely to the future core operations of our key business segments and the ongoing integration of recent acquisitions.

1

Global market leader in Apparel and Footwear (A&F)

A strong and defendable core business representing some 77% of Group sales

  • Global leader in A&F thread market
  • Consistently increasing market share in a stable market
  • Leading the response to meet changing industry needs – speed, productivity, innovation, quality, responsibility and sustainability
Coats collaboration
2

Leading player in Performance Materials market

Ability to build scale through technology, innovation and acquisition. Representing some 23% of Group sales

  • Global presence in multiple but focused end use sectors; building scale both organically and inorganically
  • Performance Materials offer products that guarantee performance and safety, and solve customer solutions through applying our vast textile expertise
  • Innovation in developing or acquiring new competencies and technologies – such as lightweight carbon and innovative composites
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3

Track record of delivering continuous improvements and operational excellence

Focused improvement programmes and experienced management to deliver margin and other financial improvements

Ensuring the Group is ‘fit for purpose’ and agile in the modern high-paced world

  • Productivity gains and procurement initiatives
  • Investing in energy / waste reduction to improve operational efficiencies
  • Global transformation programme – Connecting for Growth (C4G) – delivered ahead of schedule
  • General cost discipline around the organisation
Threads
4

Track record of delivering free cash flow

Strong cash flow generation and high ROCE

  • Balancing key cash demands of organic investment, pension schemes and shareholder returns
  • Sustained high levels of ROCE over recent years
Coats Annual Report
5

Value adding acquisitions

Ability to build scale in the strategic focus areas which are currently fragmented competitively

  • Continue to identify strategic and value add bolt-on acquisitions principally in the areas of hi-tech
  • Performance Materials and software solutions for the Apparel and Footwear industry
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