Global. Expert. Pioneering. Every Hour, Every Day, Around the World
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Global. Expert. Pioneering. Every hour, every day, around the world. Coats plc Annual Report 2011 Global. Expert. Pioneering. Every hour, every day, around the world. Coats is a global business with a rich heritage that dates back over 250 years. We are ‘at home’ in over 70 countries and were one of the world’s fi rst truly multinational organisations. Every hour, every day, around the world our team of passionate people are striving to understand customer and consumer needs and develop products and services to improve their businesses and lives. From Charlotte to Colombo our expertise helps us to inspire and innovate, developing market-leading ideas that are driving our business forward. Overview 2011 fi nancial summary Overview 02 Global 04 Expert 06 Pioneering 08 At a glance Established in 1755, Coats is the world market leader in industrial yarns and threads Business review Business review and textile consumer crafts. 10 Chairman’s statement 11 Our vision, goals and principles 12 Business review 15 Our Divisions 16 Operating review – Industrial • Total revenue up 7%. Sales of $1,701.6 million – Crafts – Group review $1,701.6m represent Coats’ best sales performance under 20 Corporate Responsibility Revenue (2010 – $1,583.6m) GPG ownership. Sales in all three regions of Governance Governance both Divisions grew year-on-year. 24 Board of Directors 26 Group Management Board • Pre-exceptional operating profi t increased by 27 Corporate governance $143.6m 9%; this was achieved notwithstanding cost 32 Directors’ report Pre-exceptional operating profi t* infl ation of approximately $100 million. (2010 – $132.3m) • Profi t before taxation increased by 16%. • Attributable profi t increased by 19% to Financial statements Financial statements $71.2 million (2010 – $59.9 million). This is Coats’ 34 Independent auditor’s report – Group $131.6m best full year attributable profi t performance 35 Consolidated income statement Operating profi t (2010 – $118.0m) under GPG ownership. 36 Consolidated statement of comprehensive income • Industrial Division pre-exceptional operating 37 Consolidated statement of fi nancial position profi t increased by 6% to $118.3 million 38 Consolidated statement (2010 – $112.0 million). of changes in equity $124.2m 39 Consolidated statement Profi t before taxation** • Improved performance from the Crafts Division: of cash fl ows (2010 – $107.4m) 40 Notes to the consolidated sales increased by 6% to $559.3 million accounts 75 Independent auditor’s report (2010 – $528.6 million), the highest growth rate – Parent Company seen since 2005, and pre-exceptional operating 76 Company statement profi t increased by 25% to $25.3 million of fi nancial position $71.2m 77 Notes to the Company accounts Net profi t attributable to equity (2010 – $20.3 million). shareholders** (2010 – $59.9m) • Reorganisation costs reduced to $14.6 million (2010 – $19.8 million). • Net cash infl ow from normal operating activities $150.3m increased by $32.5 million to $150.3 million Net cash infl ow from normal (2010 – $117.8 million), refl ecting a $42.6 million operating activities lower net working capital outfl ow. (2010 – $117.8m) • Average net debt reduced to $295.3 million (2010 – $300.5 million). • Coats successfully completed the refi nancing of its $295.3m core committed bank facility in 2011 by signing a Average net debt (2010 – $300.5m) fi ve year agreement with its key relationship banks. * Pre reorganisation, impairment and other exceptional items (see note 5 to the accounts) ** Pre notional interest (see note 5 to the accounts) Coats plc Annual Report 2011 1 Global 1 Global 1 Unrivalled colour accuracy, from anywhere in the world Coats is a truly global organisation with Colour is an exact science and getting the right unrivalled access to markets and customers. match fi rst time around can save time and money. From our years of experience we know there are We have over 70 manufacturing facilities key principles that need to be understood when matching thread to fabric or material. across six continents, supported by an Our proprietary colour management system, integrated global supply chain and our CF2000E, electronically captures these principles and enables our dye houses and laboratories specialised IT and colour management throughout the world to deliver accurate and consistent colour wherever and whenever systems. Our products are sold in over it is required. 100 countries, with a leading market presence in high growth markets such as India, China, Brazil and Vietnam. 2 Coats plc Annual Report 2011 Overview 2 A motivated, global team Coats employs over 22,000 people throughout the world, and we value our workforce highly and recognise them as a key strength. Our diverse culture and rich heritage has defi ned a way of working that we‘re proud of. Business review Working at Coats means being a part of a highly motivated team in a company that believes in building long-standing relationships with its customers. We take our environmental and safety responsibilities extremely seriously and work hard to have a positive impact on the local communities where we operate. 2 Governance Financial statements 3 Managing brand relationships globally With our unique global footprint, Coats is one of very few organisations in the world that has relationships with virtually every major brand and contractor producing apparel, footwear and accessories. This global reach and scale means we can work with brands to help them make better products. We work closely with a brand’s design or R&D team, typically located in markets such as Japan, the United States and Europe, on product development and then see this through to assisting on any sourcing or technical issues in the manufacturing markets of Asia and the Far East. Our ability to bridge both areas of operation provides an integrated service offer others cannot match. 3 Coats plc Annual Report 2011 3 Expert 3 1 1 Providing seam solutions to the Over the past twelve months the centre has world’s leading brands provided bespoke training programmes and Based in Shenzhen, China, the Coats Global resources such as ‘stitch encyclopaedias’, for teams Training Centre provides the world’s leading sewn from the world’s leading apparel brands including product brands with expert training and technical Adidas and Marks & Spencer, their suppliers and services in the fi eld of sewing and sewn product leading trading houses such as Li & Fung. construction. The centre offers customers access to industry experts and resources to resolve issues in challenging areas in their factories and to offer recommendations and training on thread types and consumption, seam and stitch types, sewing problem resolution and sewing machine adjustment. 2 2 Helping Timberland bring an innovative new shoe to market Coats is already a leading supplier of thread to Timberland for its footwear products. Recently this relationship has branched into zips, where our expertise and product offer enabled them to develop and bring to market an innovative outdoor shoe. The ‘Radler Camp’ – designed for campers and hikers – has a groundbreaking design, which allows the shoe to be folded in half, zipped up into a compact package and clipped onto a bag or backpack. This cutting-edge product was made possible by Coats Opti’s unique woven spiral zip. 4 Coats plc Annual Report 2011 Overview Business review Governance Financial statements Expert 3 Experts in handknitting and textile design Our people are experts in their fi elds Handknitting has a rich fashion history and for and in possession of unrivalled industry over 30 years Rowan has been at its forefront. This inspirational and aspirational brand has knowledge developed over centuries. grown in stature and success through its creative approach to knit and yarn design. This results in a deep understanding of Using the talents of many of the world’s renowned the needs of our customers, brand partners handknit designers and textile artists such as Kaffe Fassett, Kim Hargreaves and Amy Butler, and consumers and enables Rowan showcases its unique pattern collections each season through brochures and the iconic us to continually deliver value added Rowan magazine which recently celebrated the publication of its 50th edition and online at products and services that enhance www.knitrowan.com. productivity and widen product offerings. Coats plc Annual Report 2011 5 Pioneering 1 Pioneering Coats has always been a pioneering organisation. There are many examples of this in our long heritage – for instance when, as far back as 1784, we pioneered linen thread production and during the 1830s sought out new opportunities in India and America. Today we are still leading the way, whether in the fi eld of colour perception, or applying innovative techniques in product areas such as fl ame retardant clothing or fi bre optics. 6 Coats plc Annual Report 2011 2 Overview A pioneering thread for the apparel industry Buttons that fall off, hems that come undone and bulky uncomfortable seams can all damage a garment’s quality and brand reputation. These issues could soon become a thing of the past thanks to ‘Coats Fusion’, a pioneering thread that securely attaches seams, buttons and embellishments with no visible stitching. The magic behind this is a special, patented device Business review called the ‘Coats Fusion Capsule’. This contains a fusible yarn and sits underneath a standard Coats thread. As the thread and yarn are drawn into the machine, the standard thread is twisted around the low melt yarn. This results in consistent adhesion of seams after the application of heat. Governance 3 Financial statements Creating online communities At Coats we are embracing the new opportunities that social media offers to put customers at the heart of everything we do. One way we can do this is through online communities that are based around the sharing of inspirational craft ideas.