REG - Coats Group PLC - Annual Financial Report
09/03/2023 11:30
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RNS Number : 4656S Coats Group PLC 09 March 2023
COATS GROUP PLC
Annual Financial Report 2022
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 2022 ('Annual Report 2022'), as required
by UK Listing Rule 9.6.1.
The Annual Report 2022 is available from the Company's website,
www.coats.com/ar2022 (http://www.coats.com/ar2022) , and will also be
available for viewing at the Financial Conduct Authority's national storage
mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
A hard copy version of the Annual Report 2022, the Notice of the 2023 Annual
General Meeting and other ancillary shareholder documents ('AGM documents')
will be sent to those shareholders who have elected to receive paper
communications on or about 30 March 2023. The AGM documents will be made
available on the Company's website (www.coats.com/agm2023
(http://www.coats.com/agm2023) ) to those shareholders who have not elected to
receive paper communications, and will also be available for viewing at the
Financial Conduct Authority's national storage mechanism at the link above, on
the same date.
This announcement also contains as appendices additional information for the
purposes of compliance with Disclosure Guidance and Transparency Rule 6.3.5,
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 2022. The Preliminary Announcement released on 2
March 2023 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
(https://www.coats.com/en/Investors/Investors-Overview) . These announcements
should be read in conjunction with and are not a substitute for reading the
full Annual Report 2022. All page and note references in the extracted
information below refer to page and note references in the Annual Report 2022.
Stuart Morgan
Company Secretary
9 March 2023
Enquiry details
Investors Chris Dyett Coats Group plc +44 (0)79 7497 4690
Media Richard Mountain / Nick Hasell FTI Consulting +44 (0)20 3727 1374
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. Revenue in 2022 was $1.6 billion. 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 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 an aspiration 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
(https://nam11.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.coats.com%2F&data=05%7C01%7C%7Cd427f915c4a04c7a281808db0a8c12ed%7C048ff72770274cd0b672f075b0bdb973%7C0%7C0%7C638115368955536325%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=84xJl8cQryEvN50TOkTQnuGQiFTmWNiC4iTooOH29u0%3D&reserved=0)
.
Appendix
Principal Risks overview
A description of the principal risks the company faces is extracted from pages
42 to 49 of the Annual Report 2022.
The Board, with input from a range of key internal stakeholders, undertook a
comprehensive assessment of the emerging and principal risks facing the Group,
along with the risk trends and levels of risk tolerance for each of those
risks. We also considered the new acquisitions and the new divisional
structure when refreshing the Group Risk Register.
CHANGE OF RISK DESCRIPTION
Due to the ever-changing global risk environment, the following risks have
been updated since the last report:
1. Talent and capability risk has been amended to refer more explicitly to
diversity, equity and inclusion given the importance of this area.
2. Risk of increasing customer expectations has been amended to be more explicit
in relation to product sustainability, given the importance of this area.
3. Economic and geopolitical risk has been amended to call out even more
explicitly macroeconomic and global political uncertainty risk.
4. M&A programme ambition risk has been amended to make more explicit
reference to the integration of the two recent acquisitions.
Change in risk trend
From increasing to stable The risk trend for talent and capability risk has decreased from increasing to
stable, due to the risk not being higher than 12 months ago and the various
internal actions undertaken in 2022 as part of the Strategic Projects.
From increasing to stable The risk trend for climate change has decreased from increasing to stable, due
to the risk not being higher than 12 months ago and in light of the robust
process and activities being pursued under the regular oversight of the GET
and the Board.
From increasing to stable The risk trend for risk of supplier non- performance and/or unavailability
and/ or price increases of raw materials, labour and freight has decreased
from increasing to stable, due to the risk not being higher than 12 months ago
and anticipated supply chain trends which are already starting to materialise.
Our principal risks, along with a summary of the measures we have put in place
to manage and mitigate them 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 Risk trend Action / mitigation
1. Strategic
M&A programme ambition risk in light of Group's increasing ambition in Stable Originating and executing M&A opportunities is a key focus for the Group.
scale of its acquisition programme and its ability to source, satisfactorily A key component of our strategy is value creation and very carefully
acquire and integrate suitable targets, including two footwear acquisitions considered and disciplined use of capital to fund inorganic opportunities to
completed in H2 2022 build scale and acquire new capabilities, technology and talent. The Board has
approved a set of criteria to source and evaluate acquisition opportunities,
aligned to Group divisional strategy. These criteria include both financial
parameters, such as revenue growth and EBITDA margins, and non-financial
parameters, such as innovation and sustainability credentials. All M&A
projects are overseen and closely monitored by the Board and by senior
executive management.
Clear M&A processes have been developed and include identification and
evaluation of opportunities, specified roles and responsibilities for all
aspects of M&A projects, along with focused project management resources
during both execution and integration phases.
Specific M&A risks and mitigations include the risk of failing to achieve
required financial returns by either overpaying for a target or
under-delivering on the business case. This risk is managed by deep sector
knowledge brought by executive management, an experienced M&A team which
leverages specialist external advice on valuations, and focused diligence to
satisfy the Board that the commercial fundamentals are robust.
The risk of failing to fully integrate the target company into the Group is
managed by a dedicated integration management office (IMO), involved from the
diligence phase onwards and leveraging internal and external diligence
resources, to facilitate successful integration of the target company. A key
focus of the IMO is enabling delivery of the business case, whilst managing
people and culture change to ensure sustained success.
The risk of failing to capture synergies is managed by ensuring that synergy
cases are robust and achievable and are reviewed by internal and external
experts. The IMO plays a key role in ensuring the integration allows for
effective synergy delivery in line with the business case. In addition to a
well-resourced acquisitions team, we leverage wider internal resources and
external advisers in specialist areas such as valuation, financing, due
diligence and integration. Post-completion/integration reviews are also
conducted to ensure that learnings are identified and built into subsequent
projects as part of a continuous improvement process. Significant work has
been completed in 2022 and, having acquired two strategic businesses (Texon
and Rhenoflex), our primary focus remains the successful integration of these
acquisitions into Coats, whilst continuing to build a robust pipeline of
opportunities for future acquisitions.
Risk of ever-increasing customer product and sustainability expectations and Stable For customers across all industries, 2022 was an unprecedented year of market
Group's continuing ability to meet and exceed those expectations as part of volatility, uncertainty, and complexity. Expectations of speed to market,
its strategic growth and sustainability ambitions productivity, innovation, quality, reliability, and sustainability developed
and changed rapidly through the year.
Coats continued to leverage its market leadership, customer relationships and
global footprint to meet and exceed those expectations.
We continue to leverage our well-established lines of communication with
customers to gain deep and valuable insights, and to anticipate trends that
have the potential to change our industry in the long term. We utilise various
methods to engage with manufacturers, brands and OEMs as well as customer and
industry stakeholders, influencers and decision-makers, including surveys,
calls and workshops. Considering and responding to the outcomes of these daily
interactions result in our delivery of superior customer value. In 2022 we
have met customers' innovation and sustainability needs by launching 17 new
products across Apparel, Footwear, and Performance Materials divisions, as
well as continuing our focus on recycled solutions. Our acquisitions of Texon
and Rhenoflex provided the opportunity for us to offer enhanced and
synergistic solutions, including new levels of innovation and sustainability.
For example, Texon's Proweave allows us to enhance our partnerships with brand
customers. The demand for increased personalisation and customisation
continues and is a focus in our innovation.
The addition of Rhenoflex's Rhenoprint 2.0 technology to our portfolio
enhances our offer to customers in this area, including reducing waste and
increasing productivity. Coats Digital's FastReactPlan was selected by a large
Chinese apparel manufacturer to transform its production processes, enabling
them to respond with agility to complex order requests and improve on-time
deliveries. In Personal Protection, increased worker protection remains a key
theme with more industry regulation and the need for comfort with multi-hazard
protection. Our customers and their customers continue to demand increased
performance from the materials they use, and our new personal protection yarn
ranges address these customer needs.
Our new sustainability targets for the period 2023-2026 include energy,
materials, water, waste and people goals, in line with customer expectations.
Our Sustainability team continue to collaborate and engage with customers
across the globe to deepen their understanding of demand trends and
successfully meet and exceed expectations as evidenced by the significant
increase in sustainable product sales and the development of new products to
progress the industry circularity agenda. Sales of EcoVerde continued to grow
during the year and we supported a major European retailer in the launch of a
new sportswear brand by supplying high quality recycled threads.
We were able to flex our broad geographic manufacturing footprint to allow us
to meet customer requirements for speed of production and delivery in the
event of local disruption, a key differentiator of the business. During the
year we utilised our total Asian manufacturing footprint to maximise service
across markets in China that were experiencing ongoing impacts from Covid-19
to meet increased demand during the peak season. We also expanded our
manufacturing capacity of a specialised thread product for a world-leading
retailer to allow them to fast-track productions of a new innerwear range.
Risk of failure to attract, retain and develop diverse and inclusive set of Stable As a result of significant macroeconomic volatility, 2022 has seen critical
talent and capability given business changes, growth in new areas and labour labour shortages and specific skill gaps in some labour markets where Coats
availability challenges. operates - particularly the US, India and China - which have become
increasingly competitive. To ensure that Coats retains, attracts and develops
the right talent with the right skill sets, the Board's and senior management
team's close focus on engaging and developing talent continued
in 2022.
Following our successful switch to 100% online learning in 2020, we delivered
more than 95,000 hours of training to our employees in 2022 through a variety
of training platforms. We added new elements to our suite of learning
programmes including Manager Excellence, which focuses on critical manager
skills through short, relevant sessions of an hour every month for 12 months.
In order to further engage our employees we launched a Global Recognition
Program called 'Applause' with 8 programs to recognise employees at all levels
of the organisation both globally and locally. Recognising that a sense of
belonging contributes to a great place to work, we launched our 'Coats for
All' initiative, bringing all our diversity initiatives across the world under
one umbrella and brand. The gender diversity initiative under the name of
'Coats for Her', with five programs to develop and nurture our female talent,
further engaged our colleagues. A Global Job Vacancy Bulletin ensured
transparency of vacancies to allow development of talent and capability.
Whilst ensuring engagement and career development of Coats employees, we
actively monitored the Coats markets to ensure payment of living wage for all
our employees to receive a wage that is sufficient to afford a decent standard
of living in their country or location. We also closely monitored the
inflation situation and made interventions where required.
As part of our employee listening strategy, which provides an integrated
approach to understanding the overall employee experience, we continued
surveys during 2022 as well as considering the insights from the Designated
Non-Executive for Workforce Engagement. Through our Future of Work survey we
listened to what our employees want from a workplace post-pandemic. As a
result of the outcomes, we implemented flexible work policies to continue
engaging our employees. A Future of Work leadership guide provided our
managers with tips and tricks on how to engage employees in this new hybrid
world of work. Through the Great Place to Work survey we heard the voice of
over 14,000 of our employees and were proud that 86% of our employees worked
in a certified 'Great Place To Work'. The Great Place To Work Trust Index
score increased from 79% to 85%, showing the increased engagement of the
workforce. The survey also allowed us to understand how we can further improve
the work environment for our employees. Whilst we continued to deliver key
employee health and wellbeing programs at a local level across Coats, we will
be focusing on a global wellbeing program called "Fit for Work, Fit for Life"
addressing all four health zones: mental, physical, emotional and social to
further retain our employees.
2. External
Economic and geopolitical risk arising from significant macroeconomic and Increasing 2022 was a year of significant macroeconomic uncertainty with continued higher
demand uncertainty - across both key Asian and developed markets - including than normal inflation evident across all areas of the business. We have taken
risk to free trade conventions - as well as global inflationary pressures and swift actions to counter the continued high inflation through early and
ongoing geopolitical developments decisive strategic pricing actions and a combination of activities (including
the execution of the Strategic Projects, acquisitions and divestments that
supplemented self-help initiatives including productivity improvement and cost
control measures). We have also focused on volume and share gain in addition
to taking strategic pricing actions where appropriate. Supply chain
disruptions have been managed through leveraging our global footprint, long
term relationships with global suppliers and adjusting our inventory holding
as needed (see further actions referred to in Supply risk on page 47).
The Group continued to conduct appropriate financial forecasting and modelling
to track liquidity and assess foreign exchange exposure. We utilised our prior
experiences of managing in a downturn, including creating appropriate
contingency plans for a number of scenarios across our geographies. The
ongoing impacts from the Covid-19 pandemic that continue to manifest and
impact both the supply chain and labour, particularly in China, are monitored
with the previous learnings being utilised.
We monitor geopolitical risks and take action where appropriate. The Russian
invasion of Ukraine resulted in swift decision making by the Board and GET to
ensure our people were safe and that our operations were closed where
necessary. The wider implications of the war, including on oil/energy price
and supply availability are considered and managed via our Supply chain
relationships and our global operational footprint.
Overall, our strategic focus has been on innovation, sustainability and
automation to manage the Group through a volatile, uncertain, complex and
ambiguous environment and achieve our strategic goals in 2022.
Cyber risk Stable 2022 was a year of transition with changes in our internal talent adding to
our in-house capabilities and the consolidation of certain systems to allow us
Risk of cyber incidents leading to corruption of applications, critical IT to introduce more protective systems. We changed to a new provider for
infrastructure, compromised networks, operational technology and/or loss of phishing simulations and user awareness and training materials. These improved
data. training materials and better insights of user habits from phishing tests
enable us to target users' specific education needs and in turn give Coats
greater protection from online threats.
Our Managed Detection and Response (MDR) service was replaced with a more
robust device protection system and service, which includes a tier-1 Security
Operations Centre (SOC) and network discovery capability. Outbound internet
traffic filtering through the 2021 SASE solution enables us to monitor traffic
from our devices to identify and block malicious activity. We proactively
strengthened and matured existing controls, including bringing support for
some systems in-house rather than by third parties. This enables our team to
provide a better level of support with greater agility.
For our key systems we make daily backups to an alternative cloud provider to
ensure we do not have a single point of failure, and for these key systems we
utilise the layers of protection provided by Microsoft. For 2023 we have key
strategic projects planned including firewall enhancement across all global
locations and secure reconfiguration of our networks to reduce risk and
mitigate potential attack.
As Coats continues to grow as a digital organisation, and supporting our
strategy to Accelerate and Transform, there will be huge benefits to be gained
along with significant digital security and strategy risks. Moving forward we
will focus on continuing to ensure the right level of governance, cyber
personnel, technology, processes and training across our business to minimise
these risks, working on a principle of security by design at all times.
Climate change risk arising from either (i) the impact of failing to Stable The GET, through the Group Sustainability function, is responsible for
sufficiently address the need to decarbonise the Company's operations and overseeing the reporting of environmental data by the business, and driving
reduce emissions, leading principally to commercial and reputational risks and the sustainability strategy and climate change risk management processes. The
the financial risk of emissions taxes or other legislative changes, or (ii) Board and Sustainability Committee provide strategic oversight and monitor the
the physical impact of climate change on the Company's operations and business execution of the Company's sustainability strategy and initiatives. The ARC
model, and that of its customers in the textile supply chain. reviews the processes for the reporting of environmental data externally. We
manage a detailed register of climate related risks and opportunities which
are assessed based on their level of materiality and impact over short, medium
and long term time horizons and for those of greatest impact we define and
implement mitigating actions.
Through 2022 we have further progressed work on climate change risk analysis,
including a review of our core scenario database which remains unchanged, and
building on our review of physical risks with detailed bottom up analysis for
those sites identified at highest risk of coastal or riverine flooding. As a
result of this further analysis, we have determined that the physical flooding
risks are marginally lower than our previous assessment and more granular
details are included in our Taskforce on Climate-related Financial Disclosures
(TCFD) report. As a major identified risk we have also reviewed and updated
our model for future carbon taxes.
As during 2021, risk and opportunity analysis, quantification and mitigation
has been carried out using the TCFD Recommendations 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.
Work progress was reported to the GET on a quarterly basis and went to the ARC
for review in both February and December 2022. A copy of our 2022 TCFD
disclosures, which set out the implications of climate risk over the short,
medium and long term, can be found in the TCFD Report. As a result of this,
our current most significant transitional risk remains linked to the potential
introduction of carbon emission taxes and this is detailed in our TCFD
disclosures.
Following the submission and approval of our near term (2030) Science Based
Targets (SBTs) for emissions reduction under the 1.5°C pathway in February
2022, we have now submitted our long term Science Based Targets for Net Zero
emissions by 2050 and await their approval. Delivery of the SBT carbon
emission reductions will clearly have a very significant mitigating effect on
any carbon tax regimes that may potentially be introduced. Progress has been
made in transitioning to renewable supplies through 2022, however country
level energy market regulation could present a risk of fully achieving the
planned rate of progress in the coming few years. Priority focus will be given
to our units with highest energy consumption, with Renewable Energy
Certificates purchased to compensate in areas where full transition is not
possible. You can read more about our new sustainability targets in the
sustainability report.
During the due diligence processes for the Texon and Rhenoflex acquisitions,
initial assessments of the impact of their operations on our climate
commitments were undertaken. In both of the key aspects relating to climate
commitments we found that they were on a similar trajectory to Coats (though
not committed to SBTs) and had made good progress to date on material
transition and emissions reduction. During 2023 they will be fully
incorporated into our SBTs by re-baselining back to 2019.
Risk of supplier non- performance, unavailability and/or price increases of Stable The Group continues to conduct regular scenario analysis and continuity
raw materials, labour and freight and/or logistical challenges causing major planning in relation to each of our key raw materials and dyes, as well as
disruption to Coats' supply chain. labour and freight, to assess what counter measures can be put in place if
certain events were to occur.
During 2022, there was a continued impact of the Covid-19 virus on global
supply chains particularly in China, limiting availability of certain
feedstocks and raw materials. This, coupled with the volatile global economic
environment, has resulted in demand fluctuations and the withdrawal from the
market of some suppliers. There was also higher than normal inflation across
raw materials, freight, labour and energy. To mitigate these, we continue to
assess our global stocking policy for strategic raw materials, enter into
discussions with key suppliers ahead of any anticipated shortages to secure
the required volumes and destocking where downturns are expected. We also have
expanded our supplier base where necessary. We monitored regulatory
developments and utilised our global footprint to respond to changing sourcing
requirements. Robust assessments of financial performance of key suppliers and
evaluation of suppliers' own risk management plans are undertaken, and our
dependency on key suppliers and raw materials was reviewed frequently. From
August 2022 onwards, supply concerns on most raw materials were viewed to have
eased.
We continue to work closely with our key suppliers to ensure our requirements
are met and rely on systems and tools, such as the supplier portal, to manage
costs. Coats' scale and global footprint offers security to both brands and
contractors.
Environmental non-performance risk given changing standards, increasing Stable During 2022 we retained very tight focus on risk mitigation areas that align
scrutiny, customer and investor demands and expectations and scale of Group's to our 2022 sustainability targets. This meant that we made continued progress
own self-imposed standards and ambitions, creating commercial, financial and on reducing energy intensity through our energy monitoring system pilot, and
reputational risks as well as opportunities. accelerated our transition to renewable electricity and performed strongly in
relation to Zero Discharge of Hazardous Chemicals (ZDHC) standards.
Progress on waste prevention and reduction was accelerated in 2022 with many
circularity initiatives introduced, particularly in paper, cardboard and
plastic packaging.
Environmental targets continue to be core to our sustainability strategy and
we have now developed 2026 targets which will ensure that this remains central
to the business.
Our 2026 targets include further reduction in energy intensity, with
significant focus on our energy transition, effluent standards, increased
water recycling and zero waste to landfill. Further details on our
sustainability strategy can be found in our annual Sustainability Report which
is published at the same time as this Annual Report
(www.coats.com/sustainability).
We continue to track and implement new and updated Environment, Health &
Safety (EHS) legislative requirements using a subscription based environmental
system, thereby enhancing our performance in relation to EHS legal
requirements. We also utilise a permit management system for management of all
environmental permits and licences held in each country we operate in.
Our environmental incident management system ensures that we have a consistent
and transparent way of managing any environmental incidents that occur, and we
implement corrective and preventative actions to prevent reoccurrence through
a risk-based approach. Online analytical monitoring equipment provides
real-time data for our effluent treatment plants that discharge direct to
natural waterways, to ensure we meet local permit conditions and ZDHC limits.
Following our acquisitions of Texon and Rhenoflex in 2022, we have commenced
the program of aligning those business units to the Coats environmental
policies and procedures, and use of common systems. During the due diligence
their environmental performance was assessed as fully as possible, and no
concerning issues were identified.
Our global Business Continuity Plan includes environmental emergency
preparedness and response plans, and we track environmental risks through an
environmental aspects and impacts management system. Our environmental
management plans are run through a series of workstreams to ensure key
stakeholders have an input into their delivery through a define, measure,
analyse, improve and control (DMAIC) process.
3. Operational
Health and safety - risk of (i) safety incident(s) leading to injury or Stable The Board continues to receive and discuss with management - as a priority at
fatality involving our employees or other interested parties such as each Board meeting - detailed reviews of health and safety (H&S)
contractors, visitors, onsite suppliers etc along with potential resulting performance and monitoring of progress against established annual H&S
prosecution, financial costs, business disruption and/or reputational damage; targets and objectives. Senior management and employees throughout the Group
and/ or (ii) physical and mental health issues, including as a result of the likewise remain closely focused on creating an injury-free work environment
pandemic, impacting wellbeing, engagement, productivity and talent retention. through the identification and remediation of hazards and training and
behavioural change programmes.
Covid-19 has continued to be an area of focus in 2022, but at a much lower
level than in the two previous years. Our units performed commendably in
maintaining appropriate levels of workplace controls and were able to protect
employees from workplace infection and maintain operations. With the
significant increase in Covid-19 cases in China towards the end of 2022 as
societal controls were lifted, we immediately re-introduced tighter workplace
controls to protect employees.
We continued pursuing our Journey to Zero safety strategy that was launched in
2019. We maintain a consistent focus on proactive and preventive actions as
well as leading indicators, as well as full investigation of any incident or
near miss. We maintained broadly the same level of employee training hours as
in 2021 (30 hours vs 29 in 2021).
All of our proactive, preventive actions translated into the following results
for 2022:
- 11% reduction in work-related recordable injury
rate (0.40 vs 0.45 in 2021)
- 27% reduction in lost time case rate (0.24 vs 0.34
in 2021)
- 36% reduction in days lost per lost time injury
(13 vs 21 in 2021)
- 24% reduction in first aid case rate (2.27 vs 2.97
in 2021)
At the end of 2022, to align our H&S management structure to the new
business structure, and recognising the significant progress made in the last
few years, we embedded much of the global team more directly into the business
Divisions where they will be better able to work closely with units to
maintain the improvement momentum.
Our slimmer global team will work with divisional and geographic H&S
leaders on global development and delivery of global strategies. During 2023
we will continue our Journey to Zero strategy and will be revising and
updating our safety management system. We will also be ensuring that our new
acquisitions made in 2022 are aligned with our H&S policies and
procedures. We have also detected a marginal increase in commuting- related
incidents in 2022 that we believe is related to a post-Covid-19 behavioural
shift of employees from public to private transport and we will be enhancing
still further our focus on developing awareness and mitigation of commuting
risks amongst our employees.
Bribery and anti- competitive behaviour - risk of breach of anti- corruption Stable The Group continues to maintain clear and well-publicised policies and
law or competition law, resulting in material fine and/or reputational damage. processes, including on anti-bribery and corruption and anti-competitive
behaviour, which sit alongside and interact with policies and procedures
covering a number of other ethics issues, such as the Code of Business
Conduct, Gifts and Entertainment Policy, Ethics Code and Supplier Code. These
various policies and procedures apply not only to Coats but also to Coats'
relations with partners, contractors and suppliers. These policies are
reviewed and updated annually, with the most recent review being completed in
December 2022. The policies are reinforced through contractual terms and
through a comprehensive Supplier Code. The Supplier Code and onboarding
process contains initial due diligence processes (through an automated vendor
data management system), onboarding, training, ongoing compliance monitoring
and auditing.
The GET, comprising key business and functional leaders, regularly considers a
range of ethics risks (including closely monitoring key risk indicators for
those risks), legislative and regulatory developments, any issues or trends
identified from the Group's internal audit function and mitigation plans. GIA
conducts a dedicated risk questionnaire which covers anti-bribery and
corruption and anti-competitive practices. The risks and mitigation plans are
also considered at division level during regular local risk management
meetings.
Coats implements an extensive annual and new-joiner training regime for its
staff, with enhanced training for managers and customer-facing and procurement
staff. Specific training regimes were also implemented for the staff who
joined Coats as part of the Rhenoflex and Texon acquisitions. This training
regime includes compulsory annual training in a range of areas, including
anti-bribery and corruption and anti-competitive behaviour. Refreshed online
ethics training, alongside the ongoing self-certification testing regime, was
released in 2022. Coats also maintains an extensive database of relevant
training materials and guidance on its web portal and carries out face-to-face
training and regular communications through a range of channels, including
through leveraging the support of its global ethical culture champions
network. The Group actively maintains a whistleblower system through a
dedicated "Speak Up" inbox and 24/7 whistleblower hotline which is maintained
by an external provider. The whistleblowing system enables employees and
others who are aware of, or suspect, unethical behaviour to report it
confidentially. Awareness of the system, together with the risks and the
policies, is publicised through an ongoing Ethical Culture Campaign which
operates at a Group and local level. An independent review of the Group's
whistleblowing policy and associated processes is currently being conducted to
ensure these continue to align appropriately with best corporate governance
practice.
4. Legacy risks
Lower Passaic River legacy Stable The Board continues to monitor developments very closely and oversees the
strategy in relation to the Lower Passaic River proceedings.
environmental matter
Detail of the Lower Passaic River legacy environmental matter can be found in
note 28 on page 151.
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 84 of the Annual Report 2022.
Responsibility is for the full Annual Report 2022 and not the extracted
information presented in this announcement or the Preliminary Announcement
released on 2 March 2023.
· 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 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 1
March 2023
Related party transactions
A description of the related party transactions of the Company is extracted
from page 158 of the Annual Report 2022:
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 85 to 97 in the audited part of the Directors' Remuneration Report.
Year ended 31 December 2022 2021
US$m US$m
Short-term employee benefits 10.3 10.4
Share based payments 2.1 1.6
12.4 12.0
Trading transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on
consolidation and are not disclosed in this note. Transactions between the
Group and its joint ventures are disclosed below.
During the year, Group companies entered into the following transactions with
related parties who are not members of the Group:
Sale of goods Purchase of goods
2022 2021 2022 2021
US$m US$m US$m US$m
Joint ventures 1.4 2.7 63.2 61.1
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.
END.
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