Annual Report 2014
Total Page：16
File Type：pdf, Size：1020Kb
Annual Report 2014 Coats Group plc Formerly known as Guinness Peat Group plc Guinness Peat Group plc has been renamed and is now Coats Group plc, operating under a single combined Board of Directors. These changes establish Coats Group plc as the standalone, listed entity and signal its return to the market in the 125th anniversary year of its initial listing on the London Stock Exchange. 1. This Annual Report is for the year ended 31 December 2014, throughout which the company was known as Guinness Peat Group plc (‘GPG’ or ‘the Company’). 2. On 26 February 2015, Guinness Peat Group plc was renamed Coats Group plc. All references in this document to ‘GPG’ or ‘the Company’ refer to Coats Group plc (formerly known as Guinness Peat Group plc) and all references to ‘Group’ refer to Coats Group plc and its subsidiaries. 3. All references to ‘Coats plc’ refer to the subsidiary operating entity and ‘Coats Group Limited financial information’ relates to the unaudited consolidated results of Coats Group Limited (‘Coats’) which are included within the audited consolidated financial information of GPG, now Coats Group plc. 4. All references to ‘Parent Group’ refer to the central investment activities of the ‘the Company’. For more information about Coats Group plc – latest news and products, financial performance, investor Information business operations, CR approach and heritage www.coats.com Coats Industrial www.coatsindustrial.com Coats Crafts www.makeitcoats.com Overview and strategic report Corporate governance Financial statements Coats financial information Contents Overview and Corporate Financial Coats financial strategic report governance statements information 01 2014 Financial summary 21 Chairman’s introduction 42 Independent auditor’s report 101 Financial information 02 Chairman’s statement 22 Board of Directors 46 Consolidated income statement 106 Notes to financial information 05 GPG 24 Directors’ report 47 Consolidated statement 26 Corporate governance of comprehensive income Coats 29 Annual statement by the 48 Consolidated statement 08 At a glance Chairman of the Audit and of financial position 10 Chief Executive’s review Risk Committee 50 Company balance sheet 12 People 32 Directors’ remuneration report 51 Consolidated statement 13 Corporate Responsibility 41 Directors’ responsibilities of changes in equity 14 Operating review statement 52 Consolidated statement of 16 Financial review cash flows 18 Principal risks and 53 Notes to financial statements uncertainties 2014 Financial summary GPG Coats Operating profit Revenue Pre-exceptional operating profita £64m $1,686m $131m (2013: £41m) (£1,023m) (£79m) (2013: $1,704m / £1,089m) (2013: $133m / £85m) Pre-exceptional Net attributable profit net attributable profitac Adjusted free cash flowb £9m $45m $70m (2013: £23m) (£27m) (£43m) (2013: $37m / £24m) (2013: $54m / £35m) a Exceptional items are set out in note 2 of Coats financial information on page 107. b See Coats financial review on page 16 for calculation of adjusted free cash flow. c Net attributable profit after exceptional items was $21 million (2013: $29 million). Reporting currency explanation: GPG’s reporting currency is £UK. Coats’ reporting currency is $US. Explanatory note for currency conversion: Headline numbers for Coats have been presented in £UK using a conversion rate of 1.647 to £1 (2013: 1.565 to £1). All other figures within the Coats business review are presented in $US, which is its reporting currency Annual Report 2014 01 Overview and strategic report Chairman’s statement I am pleased to say we have moved on. Coats Group plc is a world class manufacturing business and has now returned to the market under its own name in the 125th anniversary year of its initial listing on the London Stock Exchange. Mike Clasper Chairman We have moved away from the GPG Corporate and Board changes Directors of the Coats plc Board were investment company past, we now have On 26 February 2015 the Directors of GPG appointed to the Coats Group plc Board, one Board to lead the business and we are took the decision to rename the Company as effective Monday 2 March 2015. David structuring our executive team to efficiently Coats Group plc and establish a single, Gosnell, who was recently appointed to the support the simplified corporate structure. combined Board of Directors. This Coats plc Board, and Alan Rosling both Within Coats, the Industrial business established Coats Group plc as the became Independent Non-Executive delivered good profit growth; however the standalone, listed entity and signalled its Directors, while Paul Forman, Coats Group results were impacted by Crafts, particularly return to the market in the 125th anniversary Chief Executive, Richard Howes, Chief in EMEA. Despite this Coats achieved a high year of its first listing on the London Stock Financial Officer, and Rajiv Sharma, Global conversion into free cash flow during the Exchange. It also marked the point at which CEO Industrial became Executive Directors. year. We have recently agreed the sale of the listed Company became a focused, They join Mike Allen, Ruth Anderson, the loss making EMEA Crafts business, global industrial manufacturing business and Sir Ron Brierley, Blake Nixon and me on the leaving management free to focus on moved on from being an investment Coats Group plc Board. In line with best further growth opportunities in our strong company with a diversified portfolio of practice, it is the intention that from 2016 and profitable global Industrial and assets. onwards Directors of Coats Group plc will Americas Crafts businesses. stand for re-election on an annual basis, The name change from Guinness Peat Group and the Board will continue to assess its The ongoing investigations by the UK plc to Coats Group plc became effective on composition with respect to its size and mix Pensions Regulator mean we cannot pass 26 February 2015. to reflect the needs of a global on our success by way of returns to manufacturing business with FTSE 250 shareholders. However, we are not going to Rob Campbell, Scott Malcolm, (Chair of aspirations. let the investigations stop us from creating the Remuneration and Nominations further value for our shareholders and Committee), and Waldemar Szlezak all With the departure of Scott Malcolm, and continuing to strengthen the business which stepped down from the Board, effective in line with best practice, the Board has underpins the Company’s obligations to its 2 March 2015. decided to separate the Remuneration and pension schemes. Nominations Committee. The Coats Rob, as former GPG Chairman, has brought Group plc Remuneration Committee continuity, experience and insight over this will be chaired by David Gosnell and its period of change. The Board would like to Nominations Committee will be chaired by thank all retiring directors for their me. Further information on Board leadership during the successfully committees is available in the corporate completed asset realisation programme, governance section of this report. and for their support for the corporate changes. Further details regarding Coats Group plc corporate governance given from page 21 of this report. 02 Annual Report 2014 Overview and strategic report Corporate governance Financial statements Coats financial information Capital management and share schemes Income statement Further details regarding In addition to the corporate changes, the The Group generated revenues, all Coats’ performance in 2014 Board is focused on having in place a attributable to Coats, of £1,023 million given on page 8 in this report suitable capital structure to support the (NZ$2,046 million) in 2014 (2013: £1,089 business and its growth strategy. To that million, NZ$2,178 million). Gross profit of end Coats has successfully refinanced its £375 million (NZ$750 million) was relatively main debt facility which features an flat year-on-year (2013: £380 million, Cash at bank extended maturity and a lower margin. The NZ$760 million). Operating profit increased At 31 December 2014 the Parent Group had facility is backed by a group of international from £41 million (NZ$82 million) to cash of £375 million (NZ$750 million) banks that reflects Coats’ global footprint £64 million (NZ$128 million) in 2014, (31 December 2013: £383 million (NZ$766 (see Coats financial review on pages 16 to primarily driven by a significant reduction in million)). The decrease in cash during the 17 for more details). Parent Group administrative expenses. Net year was primarily as a result of operating attributable profit was £9 million compared expenses and costs related to pensions Coats Group plc will look to grant share- to £23 million in 2013, which included a investigations, which were partially offset by based long term incentives for senior £46 million profit from discontinued foreign exchange gains. executives, consistent with our FTSE 250 operations. Earnings per share from aspirations. To support this programme we continuing operations was 0.66p Pensions plan to fund an employee benefit trust to (2013: loss of 1.58p). The deficits in the Coats UK Pension Plan buy shares in the open market over time, (‘Coats Plan’) and the Brunel and Staveley and we are considering wider share Overview of GPG’s key net assets schemes, on an IAS19 financial reporting ownership across the Group. The employee Coats basis have increased from the position at benefit trust is able to hold shares at any Net profit attributable to GPG was 31 December 2013. This is due to an one time of up to 5% of the market £13 million (US$21 million) compared with increase in liabilities largely driven by a capitalisation without seeking shareholder £19 million (US$29 million) in 2013. The 115 basis point (bps) decrease in the approval. decline was primarily driven by an discount rate, which more than offset a £11 million (US$19 million) impairment 35bps decrease in the inflation rate, the Although the Company is moving forward charge on property, plant and equipment adoption of revised assumption setting with the change in name, corporate and intangible assets relating to the EMEA methodologies and the Coats Plan trustee structure and capital structure, in one Crafts business.