TIDMCOA
RNS Number : 6730I
Coats Group PLC
06 December 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014) AS IT FORMS
PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018.
6 December 2022
Coats Group plc
A major step forward with partial buy-in of UK defined benefit
pension scheme
Coats Group plc ("Coats" or the "Group") is pleased to announce
that the trustee of the Coats UK Pension Scheme ("the scheme") has
purchased a cGBP350m bulk annuity policy from Aviva which insures
benefits payable under the scheme in respect of c3,700 pensioner
and dependant members. These members represent roughly 20% of the
scheme's liabilities.
The purchase of this policy sees all the scheme's financial and
demographic risks fully hedged for the covered liabilities. The
scheme will receive a regular stream of income that matches the
pension payments for the covered members, making it a precise
liability hedging asset, thus further de-risking the scheme and
reducing future balance sheet volatility. This builds on the
significant positive steps to de-risk the scheme in recent years
through which 90% of the scheme's inflation / interest rate
exposure had previously been hedged.
The Aviva buy-in is consistent with Coats' aspiration of fully
insuring the scheme and removing it from the Group balance sheet.
Once the scheme is fully funded and cash contributions cease, the
Group's free cash generation will improve significantly allowing
increased investment in growth or the return of excess capital to
shareholders.
When the Technical Provisions deficit for the scheme was last
formally assessed at 31 March 2021, as part of the triennial
valuation cycle, it showed a GBP193m deficit. Updates since then
indicate that the deficit had fallen closer to GBP55m by
mid-November 2022, with a further reduction to GBP25m-GBP30m
expected following the buy-in.
The Group will provide a further update at its 2022 full year
results presentation in March 2023.
Conference call
The Group will host a call at 8am today covering this statement.
Join the call by dialling +44 (0) 333 300 9035. A short
presentation is also available on our website.
Jackie Callaway, Chief Financial Officer, said:
"The purchase of this bulk annuity policy represents an
important step in further de-risking our UK defined benefit pension
scheme. It moves us closer to eliminating our Technical Provisions
deficit and achieving our ultimate plan of fully insuring, in a
cost effective manner, the scheme and moving it off our balance
sheet. Once the scheme is fully funded and cash contributions cease
this will lead to a significant improvement in the Group's free
cash generation. The completion of the buy-in reflects the
constructive and collaborative working relationship between the
Group and the trustee and I would like to thank all involved for
helping us get to this position, which will benefit all
stakeholders."
Enquiry details
Coats Group +44 (0)79 7497
Investors Chris Dyett plc 4690
Richard Mountain / +44 (0)20 3727
Media Nick Hasell FTI Consulting 1374
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Notes
1. The Coats UK Pension Scheme is Coats Group plc's sole defined
benefit pension scheme in the UK, having been formed from the
merger of three legacy pension schemes in 2018.
2. The policy, commonly termed a pensioner "buy-in", is
underwritten by Aviva Life and Pensions UK Limited, a leading UK
life insurance business specialising in bulk annuity contracts.
3. Aviva was selected by the scheme trustee following a
competitive selection process overseen by a joint working group
established between Coats and the trustee.
About Coats Group plc
Coats is a world leader in thread manufacturing and structural
components for apparel and footwear, as well as an innovative
pioneer in performance materials. These critical solutions are used
to create a wide range of products, including ones that provide
safety and protection for people, data and the environment.
Headquartered in the UK, Coats is a FTSE250 company and a FTSE4Good
Index constituent. Revenues in 2021 were $1.8bn.
Trusted by the world's leading companies to deliver crucial,
innovative, and sustainable solutions, Coats provides value-adding
products including apparel, accessory and footwear threads,
structural footwear components, fabrics, yarns and software
applications. Customer partners include companies from the apparel,
footwear, automotive, telecoms, personal protection, and outdoor
goods industries.
With a proud heritage dating back more than 250 years and spirit
of evolution to constantly stay ahead of changing market needs,
Coats has operations across some 50 countries with a workforce of
over 17,000, serving its customers worldwide.
Coats connects talent, textiles, and technology, to make a
better and more sustainable world. Worldwide, there are three
dedicated Coats Innovation Hubs, where experts collaborate with
partners to create the materials and products of tomorrow. It
participates in the UN Global Compact and is committed to Science
Based sustainability targets for 2030 and beyond, with a goal of
achieving net-zero by 2050. Coats is also committed to achieving
its goals in Diversity, Equity & Inclusion, workplace health
& safety, employee & community wellbeing, and supplier
social performance.
To find out more about Coats visit www.coats.com .
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END
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