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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Coats Group Plc | LSE:COA | London | Ordinary Share | GB00B4YZN328 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 1.20 | 1.50% | 81.40 | 81.20 | 81.40 | 81.50 | 79.90 | 81.50 | 5,030,797 | 13:40:54 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Textile Goods, Nec | 1.42B | 56.5M | 0.0354 | 22.94 | 1.3B |
From Apr 2019 to Apr 2024
TIDMCOA
RNS Number : 3327S
Coats Group PLC
08 March 2019
COATS GROUP PLC
Annual Financial Report 2018
Coats Group plc ('Coats' or the 'Company') has today submitted to the Financial Conduct Authority's national storage mechanism its Annual Financial Report for the year ended 31 December 2018 ('Annual Report 2018'), as required by UK Listing Rule 9.6.1.
The Annual Report 2018 is available from the Company's website, www.coats.com/ara2018, and will also be available for viewing at the Financial Conduct Authority's national storage mechanism at www.morningstar.co.uk/uk/NSM.
This announcement also contains as appendices additional information for the purposes of compliance with the UK Disclosure Rules and Transparency Rules, including principal risk factors, a responsibility statement and details of related party transactions. This information is extracted, in full unedited text, from the Annual Report 2018. The Preliminary Announcement released on 1 March 2019 contained a condensed set of financial statements together with extracts of the Company's management report, and is also available to view on the Company's website www.coats.com/investors. These announcements should be read in conjunction with and are not a substitute for reading the full Annual Report 2018.
Stuart Morgan
Company Secretary
8 March 2019
Enquiry Details:
Rob Mann
Coats Group plc
020 8210 5175
About Coats Group plc
Coats is the world's leading industrial thread company. At home in some 50 countries, Coats has a workforce of 18,000 people across six continents. Revenues in 2018 were US$1.4bn. Coats' pioneering history and innovative culture ensure the company continues leading the way around the world. It provides complementary and value added products, services and software solutions to the apparel and footwear industries. It applies innovative techniques to develop high technology Performance Materials threads, yarns and fabrics in areas such as automotive composites, fibre optics and Oil and Gas. Headquartered in the UK, Coats is a FTSE 250 company and is a constituent of the FTSE4Good Index Series. To find out more about Coats visit www.coats.com.
Appendix
Principal risk
A description of the principal risks the company faces is extracted from pages 25 to 27 of the Annual Report 2018.
Throughout the year, the Board has kept each of the principal risks under review with support from the Group Risk Management Committee. The Board also undertook a comprehensive assessment of the principal risks facing the Group, along with the current levels of risk tolerance for each of those risks. Due to the ever-changing global risk environment, the following risks have been updated since 2017:
-- NEW 'Risk of supplier non-performance and/or unavailability and/or price increases of raw materials' has been moved up from a Key Risk to the category of Principal Risk in light of various market developments leading to limited availability of a number of key raw materials and a restricted number of suppliers for certain such raw materials.
-- DEMOTED 'Risk of failure to identify, understand and respond to customer and end user expectations' has been moved down and off the list of Principal Risks and is now categorised as a Key Risk due to the ongoing focus, monitoring and actions taken by the management team throughout the course of 2018.
-- DEMOTED IN PART 'Risk of legacy environmental matters': with the exception of the Lower Passaic River matter. This has also been moved down to become a Key Risk in light of the ongoing focus, monitoring and mitigating actions taken by the management team.
-- FROM STABLE TO INCREASING: 'Economic Risk' is increasing in light of the ongoing political uncertainty in various parts of the world and the uncertainty that this brings in particular in relation to free trade conventions.
-- FROM INCREASING TO STABLE: 'Connecting for Growth programme': the execution risk in relation to this programme is now stabilised as a result of the progress in the structural, operational and financial deliverables during 2018 - the focus is now very largely on fully embedding the programme in 2019.
-- FROM INCREASING TO STABLE: 'Cyber Risk': the trend for this risk has now stabilised as a result on the ongoing focus, monitoring and actions, including various technology enhancements as well as a range of policies, standards and training programmes, implemented by the management team throughout the course of 2018.
-- FROM STABLE TO DECREASING: 'Pension scheme deficit funding risk': has gone from stable to decreasing because of the agreement of a single funding valuation setting our UK pension deficit contributions, for the next three years, at an affordable level.
Our principal risks, along with a summary of the measures we have put in place to manage and mitigate them, are set out below.
As stated above, the Board will continue to keep these principal risks, as well as the appropriateness of this list and the ever evolving broader risk environment, under ongoing review.
Hot Features
Premium
Principal risk Risk nature / potential Action / mitigation
impact
1. STRATEGIC
---------------------------------- ----------------------------------------------
Connecting for Execution of global The Group is continuing to make
Growth programme transformation programme changes to its operating model in
Trend on year: - in particular implementation order to increase productivity,
Stable of digital offering promote efficiency in its supply
(2017: New risk) and global functional chain and thereby enhance speed
model. of delivery to customers and to
optimise its use of digital platforms
to improve customer experience.
Leadership of the programme is provided
by a Group Executive Team member,
Ronan Cox, supported by a team of
project managers. The programme
is monitored regularly, including
through the use of key performance
and risk indicators, and regular
pulse surveys are carried out to
ensure the programme continues to
drive colleague engagement in terms
of the change process. Financial
savings are checked monthly by the
finance function. Regular reviews
are held at executive management
and Board level to ensure the programme
continues its very positive progress
in delivering on its change management
programme and in fully embedding
the relevant processes and behaviours
to become part of business as usual
in 2019.Leadership of the programme
is provided by a Chief Transformation
Officer supported by a team of project
managers. The programme is monitored
regularly, including through the
use of key performance and risk
indicators and regular pulse surveys
are carried out to ensure the programme
continues to drive colleague engagement
in terms of the change process.
Financial savings are audited monthly
by the finance function. Regular
reviews are held at executive management
and Board level to ensure the programme
continues its very positive progress
in delivering on its change management
programme and in fully embedding
the relevant processes and behaviours
to become part of business as usual
in 2019.
---------------------------------- ----------------------------------------------
Appropriate talent Risk of failure to develop The Board and senior management
and capability and retain talent and remain very focused on talent and
development capability, given business capability development, as well
Trend on year: changes and growth in as retention and succession planning.
Stable new areas. 2018 capability development actions
(2017: Stable included training new cohorts on
) a range of management and senior
leader development programmes such
as Transcend, Business Partnering
and Sales Accelerator training.
2018 also saw Board approval of
an updated People Strategy to support
the changing roles and capabilities
required by the business over the
next three years. In 2019, we will
offer specific training in order
to develop our senior business leaders
for future Group Executive Team
opportunities.
---------------------------------- ----------------------------------------------
2 EXTERNAL
---------------------------------- ----------------------------------------------
Economic risk Economic risk arising The economic outlook for many of
Trend on year: from the markets in which Coats operates
Increasing ( political and demand remains highly uncertain. Geopolitical
2017: Stable ) uncertainty events in recent years and, in particular,
- including risk to the risks to free trade, including
free trade in light of ongoing US/China trade
conventions. discussions, and the potential consequences
for economic growth, add to this
uncertainty.
However, the breadth of our portfolio
and our geographic reach help to
mitigate our exposure to any particular
localised risk and enable us to
meet demand if brands/customers
were to transition to other countries.
As a gobal industrial manufacturing
company with no UK manufacturing
facilities and minimal direct sales
in the UK, Coats is of the view
that there would be limited direct
adverse impacts on the Group from
Brexit. Both the UK and the EU,
however, are significant markets
for both Apparel and Footwear and
Performance Materials. Therefore
any impact on sales and future growth
expectations for these markets could
have an indirect consequence for
our business. We also maintain an
appropriate dialogue with our key
customers and suppliers regarding
their own risk management and mitigation
plans including in relation to Brexit.
Whilst there continue to be a number
of uncertainties in connection with
the future of the UK and its relationship
with the EU, there have been indirect
factors which continue to have an
impact on our results, primarily
the effect of lower discount rates
on the accounting valuation of pension
liabilities and the depreciation
of sterling on our UK costs.
Many years of exposure to emerging
markets have given us experience
of operating and developing our
business successfully during periods
of economic and political volatility.
We continually monitor and analyse
economic and demand indicators to
ensure that our supply chain remains
flexible and our product portfolio
remains relevant. This analysis
provides a key input to our product
development, business planning and
pricing strategies. The Group's
international footprint and comprehensive
portfolio also provide a mitigating
balance in our exposure to both
EU and non-EU markets.
---------------------------------- ----------------------------------------------
Cyber risk Risk of cyber incidents Throughout the year we implemented
Trend on year: leading to corruption a range of policies, standards and
Stable of applications, critical training programmes that focused
(2017: Increasing IT infrastructure, compromised on IT security and the need to prevent
) networks, operational loss of data. We deployed a new
technology and/or loss vulnerability management solution
of data. to enhance the ability to detect
common vulnerabilities. This enables
us to detect issues before they
are able to harm our environment.
In 2018, we also delivered a programme
of online training to the Group.
Technology enhancements were also
put in place, including further
firewall blocking of non-approved
applications, the expanded deployment
of multi-factor authentication,
deployment of an email encryption
solution for all high-risk users
and centralisation of data into
Microsoft Azure which both protects
the data and creates enhanced tracking
capabilities. We also deployed a
data loss prevention solution to
allow us to detect and/or block
sensitive data transfers when data
is sent to a non-Coats location.
Plans for 2019 include adding a
managed security operations centre
which will bring the monitoring
of our network from a security perspective
up to 24x7x365. We also plan to
add enhanced technology such as
intrusion detection, data and asset
labelling, asset tracking, improving
our identity and access management,
and mobile device management to
better control our phones and tablets.
---------------------------------- ----------------------------------------------
Environmental Environmental non-performance Our environmental policy applies
non-performance risk given changing across the Group. The Coats Global
risk standards and increased Environmental Policy was updated
Trend on year: scrutiny resulting in during 2018 with a greater focus
Stable disruption of existing on Leadership and Commitment. A
(2017: Stable business, fines and/or communications campaign took place
) reputational damage to assist in communicating the policy
and its meaning to teams across
the Group. We also implemented a
global digital platform for environmental
incident reporting. This further
reduces our environmental risk by
leveraging risk-assessed improvement
actions to prevent re-occurrence
of environmental incidents.
Compliance with all applicable environmental
legal requirements is a minimum
standard for the Group and is monitored
very closely at both a local and
Group level. In 2018, a pilot for
an advanced environmental legal
register with enhanced evaluation
of legal compliance took place in
China and discussions regarding
a broader roll-out are ongoing.
The Board have sanctioned the implementation
of a harmonised global system for
management of energy and environment
aligned to ISO 50001 and ISO 14001
respectively, as part of the wider
materiality strategy. During 2018,
the Group eliminated the persistent
organic pollutant, polychlorinated
biphenyl, from the high voltage
electrical infrastructure.
---------------------------------- ----------------------------------------------
3. OPERATIONAL
---------------------------------- ----------------------------------------------
Risk of supplier Risk of local and broader The Group conducts scenario analysis
non-performance economic and regulatory on each of our key raw materials
and/or unavailability market developments to assess what counter measures
and/or price increases leading to limited availability can be put in place if certain events
of raw materials of key raw materials were to occur. Regular assessment
Trend on year: and/or restricted number of financial performance of key
Increasing ( of suppliers for such suppliers and evaluation of suppliers'
2017: Key risk) materials. own risk management plans is undertaken
and our dependency on key suppliers
and raw materials is reviewed frequently.
Our supplier portfolio is also kept
balanced with a view to further
minimising risk. There is ongoing
development of a pipeline for alternative
suppliers and product substitution.
In order to remain alert to market
developments, procurement teams
maintain access to good market intelligence
on key raw materials and feedstocks.
In addition to this we continue
to work with third party experts
on market developments and market
insights.
---------------------------------- ----------------------------------------------
Products and services Products and services Our products and services are tested
liability risk liability risk arising and measured against stringent quality
Trend on year: in particular from Performance standards. As a result of our ongoing
Stable Materials and software strengthening of controls in the
(2017: Stable services. Performance Materials area with
) enhanced batch by batch testing
of safety critical products, pass
rates are at an all-time high. In
2018, we drove digital automation
with direct Internet of Things (IoT)
linkage implemented between testing
equipment and the SAP quality module
in order to minimise the risk of
human error. We worked towards fail-safe
restrictive programming to prevent
the risk of the sale of unapproved
products to safety-critical customer
sectors and we introduced additional
key risk indicators to track monthly
and quarterly progress.
Due to these actions, there have
been a reduction in the rate of
customer quality complaints and
zero major non-conformances reported
in key automotive management systems
audited during 2018. There were
also zero incidences of contamination
reported in feminine hygiene during
2018. In 2019, Coats will be deploying
a failsafe digital solution to eliminate
product mislabelling and will continue
to extend the deployment of IoT
connectivity beyond existing safety
critical testing, using IoT data
to continue to increase the internal
safety critical pass rates. Coats'
global insurance programme includes
product liability cover.
---------------------------------- ----------------------------------------------
Bribery and anti-competitive Risk of breach of anti-corruption The Group continues to maintain
behaviour risk law or competition law clear and well publicised policies
Trend on year: resulting in a material and processes, spanning bribery
Stable fine and/or reputational and anti-competitive behaviour along
(2017: Stable damage. with a number of other ethics issues,
) including in relation to partners,
contractors and suppliers which
are reinforced through a comprehensive
Supplier Code (covering initial
due diligence processes, on-boarding,
training, ongoing compliance and
auditing). These policies are reviewed
annually. There is extensive online
and face-to-face training and regular
communications through a range of
channels including through our global
ethical champions network. A sub-committee
of the Group Risk Management Committee
comprising key business and functional
leaders meets quarterly to consider
a range of ethics risks (including
key risk indicators for those risks),
legislative and regulatory developments
and mitigation plans.
The Group actively maintains a whistle
blower system, enabling employees
and others who are aware of, or
suspect unethical behaviour to report
it confidentially. Awareness of
the system, together with the risk
and the policies, has been increased
through an ongoing Ethical Culture
Campaign which operates at a Group
and local level. See page 22 for
more details.
---------------------------------- ----------------------------------------------
4. LEGACY RISKS:
---------------------------------- ----------------------------------------------
Pension scheme Risk of potential volatility The funded UK pension scheme is
deficit funding in UK pension gross overseen by its Trustee Board, which
risk liabilities and total is required to have the appropriate
Trend on year: assets leading to increased knowledge and understanding in this
Decreasing -- annual cost of repair area. Independent professional trustee
(2017: Stable plan to fund deficit Directors are appointed to the Trustee
) (which could impact Board to provide additional expertise.
one or more of free In particular, professional investment
cash flow and dividend advice is taken as necessary; and
payment). assets diversified by class and
geography and currency exposures
hedged where appropriate. Interest
rate and inflation exposures are
hedged at appropriate levels (currently
>80% of interest rate and inflation
linked liabilities are hedged).
Consolidation of the three UK defined
benefit pensions schemes into one
single scheme has simplified our
governance requirements; and the
agreement of a single funding valuation
has set our UK pension deficit contributions
for the next three years at an affordable
level. The Group and the Trustee
Board routinely review de-risking
of the scheme through liability
management and investment strategies.
See note 10 on page 112 for more
details.
---------------------------------- ----------------------------------------------
Lower Passaic Detail of the Lower The Board continues to monitor developments
River Legacy environmental Passaic River legacy very closely and oversee the strategy
matter risk environmental matter in relation to the Lower Passaic
Trend on year: can be found in note River proceedings. More details
Stable 28 on page 134. can be found in note 28 on page
(2017: Stable 134.
)
---------------------------------- ----------------------------------------------
Responsibility statement
The following responsibility statement is repeated here solely for the purpose of complying with Disclosure and Transparency Rule 6.3.5. This statement relates to and is extracted from page 76 of the Annual Report 2018. Responsibility is for the full Annual Report 2018 and not the extracted information presented in this announcement or the Preliminary Announcement released on 1 March 2019.
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 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 it faces; 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 performance, business model and strategy.
This responsibility statement was approved by the Board of Directors.
Related party transactions
A description of the related party transactions of the Company is extracted from page 140 of the Annual Report 2018.
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the Group, 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 55 to 67 in the audited part of the Directors' remuneration report.
Year ended 31 December 2018 2017
US$m US$m
Short-term employee
benefits 3.8 3.6
------ ------
Share based payments 1.1 0.9
------ ------
4.9 4.5
------ ------
Trading transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its joint ventures are disclosed below.
During the year, Group companies entered into the following transactions with related parties who are not members of the Group:
Sale of goods Purchase of goods
2018 2017 2018 2017
US$m US$m US$m US$m
------- ------- --------- ---------
Joint ventures 3.7 2.9 50.9 52.7
------- ------- --------- ---------
-ENDS-
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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March 08, 2019 06:28 ET (11:28 GMT)
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