5 March 2026

Coats Group plc 2025

Full Year Results

Continued market outperformance, strong margin progression and significant free cash generation

Coats Group plc ('Coats' or the 'Group'), a world-leading Tier 2 supplier of critical components to the apparel and footwear industries, today announces its audited results for the year ended 31 December 2025.

Strategic Highlights

Financial Highlights

Outlook for 2026

Upgraded medium term targets

Commenting on the results David Paja, Group Chief Executive, said:

"2025 was a transformational year for Coats. We achieved record profit and cash generation, reshaped the portfolio for accelerated growth and reorganised the Group for simplicity. As a result, we have upgraded our medium-term financial targets, including c.$1bn of free cash, and look at 2026 with confidence."

Notes:

1. Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1)

2. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest corresponding statutory measure in note 14. Constant Exchange Rate (CER) metrics are 2024 results restated at 2025 exchange rates. Organic figures are results on a CER basis and excluding contributions from the OrthoLite and Viz Reflectives acquisitions

3. Reported metrics refer to values contained in the IFRS column of the primary financial statements in either the current or comparative period

4. Leverage calculated on a frozen GAAP basis and therefore excludes the impact of IFRS 16 on both adjusted EBITDA and net debt. See note 14b for details

5. EBIT (Earnings before interest and tax) relates to Operating Profit as shown on the face of the P/L. Reconciliation between the Adjusted EBIT and Reported EBIT is disclosed in the Financial Review section

6. Free cash flow after interest, tax, minority interests and exceptionals, before dividend distribution and M&A

Conference Call

Coats Management will present its full year results in a webcast at 9.00am GMT today (Thursday 5 March 2026). The webcast can be accessed via https://www.investis-live.com/coats/CoatsFYResults. The webcast will also be made available in archive form on www.coats.com.

About Coats Group plc

Coats is a world-leading Tier 2 manufacturer and trusted partner for the apparel and footwear industries. We deliver essential materials, components, and software solutions that help our customers grow, compete and win.

With over 250 years of industry expertise, we're shaping the future of the apparel and footwear supply chain through insight-led innovation, impactful sustainability practices, and digital technologies that unlock better product quality, efficiency and performance.

Headquartered in the UK, Coats is a FTSE 250 company and a constituent of the FTSE4Good Index. In 2025, we generated $1.5 billion in revenue and employed c.19,000 people worldwide - all united by a spirit of innovation, quality and service. Learn more at www.coats.com or follow us on LinkedIn.

Cautionary statement

Certain statements in this full year report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements contain risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Group Chief Executive's review

2025 review

Coats delivered a resilient performance in the year against a background of macroeconomic and tariff uncertainty from the second quarter onwards.

At $1,465m, revenue was flat compared to last year on an organic constant exchange rate ('organic') basis, comfortably outperforming our core thread and footwear end markets, which we estimate were down low to mid-single digits year-on-year. This demonstrates the strength and agility of our global footprint and service capabilities which enable us to grow and protect share, even under challenging market conditions. It also reflects the good progress made in our target organic adjacencies, which are focused on faster growing market segments, and contributed 1% of Group revenue growth in 2025. Sustainability remains fundamental to our growth strategy and in 2025 revenue from sales of 100% recycled thread once again increased strongly by 43% on a CER basis to $554m.

In addition, we successfully managed pricing pressures and flexed our cost base during the year. As a result, Group operating profit grew 3% on an organic basis with Group operating margin increasing by 80bps to 19.8% (180bps improvement including Americas Yarns results in the prior year comparator).

Apparel delivered a strong performance with 1% organic revenue growth, continuing to win share with major brands against a challenging market back-drop, underpinned by a strong focus on customer service and operational agility. As a result, our Apparel market share is estimated to have grown by 100bps to c.27%. The division achieved high operating margins of 20.2% reflecting pricing discipline and favourable mix with customers valuing our premium and sustainable thread offerings.

Footwear revenue declined by 2% on an organic basis, a reflection of cautious customer ordering from April and brands managing down inventory further at the end of the year in response to an uncertain 2026 outlook. The division is estimated to have further increased its market share organically to c.30%, following two years of strong share gains. Operating profit was flat on an organic basis, which reflects the benefit of the operational initiatives implemented in the past year and an effective pricing strategy, with EBIT margin increasing to 23.9%.

As expected, we saw a return to growth in Performance Materials in the second half of the year driven by accelerated growth in two target adjacencies, safety fabrics and energy tapes, alongside market share gains in automotive thread which offset softness in Telecom end markets. We estimate that in aggregate our end markets continued to decline in 2025, highlighting the importance of our adjacencies strategy. Operating margins were significantly ahead of prior year reflecting the benefit of operational improvements across the division, which included site initiatives in Turkey and Mexico. We were encouraged by the operating margin run rates in Q4 which were approaching the bottom end of our medium-term target range.

I am particularly pleased with our strong cash performance with a record $160m of free cash flow generated in the year, demonstrating the powerful dynamics of high margins and the low capital intensity of the Group. For reference the cumulative free cash flow in the ten years prior to 2025 was an outflow of $14m, including strategic projects and pension payments, which have now ended. Consistent with previous guidance, year-end leverage increased to 2.2x due to the completion of the OrthoLite acquisition in October. We continue to expect leverage to fall below 2x by the end of 2026, underpinned by the cash generative characteristics of the enlarged Group.

Portfolio enhancement

Over the past year we have taken significant steps to enhance the quality of our portfolio and, as a result, the business we have today has improved margin performance and growth potential and is more capable of consistently outperforming end markets through the cycle.

In June 2025, we fully exited from the non-core US Yarns business based in Kings Mountain, North Carolina. This followed a strategic review of the Americas Yarns operations which started in Q4 2024 and resulted in the closure of the Toluca, Mexico facility in December 2024. The exit from the Americas Yarns business has improved the Group's margin by around 100bps and enables us to focus on growing other attractive parts of the portfolio. This exit has also improved the Group's revenue growth profile given the lower growth expectations.

At the end of October, we completed the acquisition of OrthoLite Holdings LLC ('OrthoLite') for an enterprise value of $770m. OrthoLite is the global market leader in open cell insoles and operates in an attractive, fast-growing segment of the footwear market with strong growth tailwinds as brands increasingly adopt open-cell technology due to its superior benefits in terms of comfort, performance and sustainability. The acquisition accelerates our strategy to create a leading Tier 2 supplier in critical footwear components, strengthening our product offering to brands and creating exciting commercial opportunities to deepen customer relationships and accelerate growth, leveraging our combined strengths in technology and access to customers.

OrthoLite is a high-quality business, with a strong track-record of growth, averaging high single digits over the last five years, and the acquisition is accretive to Group EBIT margins and EPS from the first full year of ownership. Return on Invested Capital (ROIC) is expected to exceed WACC by 2028, at the latest. In addition, the business has an attractive operating cash conversion of 90%+, which will support and accelerate the Group's free cash flow growth over the medium term.

In 2025 the OrthoLite business delivered full year profit in line with our expectations, with good revenue growth above the market and strong levels of cash generation. Our 2026 priorities include the commencement of the footprint optimisation project, with Indonesia as the first site, the delivery of cost synergies and the acceleration of joint innovation initiatives.

Our building blocks for growth

Our strategy is to build on our organically and inorganically developed market leading positions in those parts of our markets with the most attractive structural growth characteristics. We have an overall goal of delivering over 5% revenue growth on average through the cycle.

We aim to grow organically not only by benefiting from growth in our underlying markets, expected to be around 3% per annum over the medium term, but also through share gains, supported by our focus on customer service and sustainability led innovation. Our global footprint and digital technology platforms remain tangible points of differentiation, making it easy for our customers to do business with us. We can be trusted to deliver and have developed deep Tier 1 and brand relationships, which enables us to align with faster growing brands globally - winning where it matters.

In addition, we target organic growth from certain attractive fast growing adjacent markets. These include safety fabrics where we saw substantial growth in 2025 through innovative solutions and global access to existing thread customers. We also see exciting opportunities in other adjacencies including: composite tapes for energy market applications, Coats Digital our software as a service business, woven uppers for footwear and structural components for premium leather handbags. Together these adjacencies represent an additional addressable market estimated at $2bn growing at a CAGR of >5%. In 2025 our target adjacencies delivered c.$45m of revenue, contributing 1% of Group revenue growth, with further strong growth anticipated in 2026.

Our strong and growing operating margins are underpinned by multiple competitive advantages that combine to provide significant barriers to entry. Those competitive advantages include, but are not limited to, having the broadest well invested global footprint, the most advanced ordering and planning systems, the ability to exactly colour match hundreds of thousands of threads, having a fully established supply chain to provide sustainable threads at scale, a leading innovation capability and a strong balance sheet.

We have a disciplined approach to capital allocation and aim to invest in high quality, highly complementary businesses which generate attractive returns and support or accelerate our growth ambitions. The recent acquisition of OrthoLite, enables us to benefit from additional technology adoption growth tailwinds and will support with our ambition of delivering a more consistent growth profile through the cycle.

Our upgraded medium-term targets

Given the transformation of the business over the past year, including bringing OrthoLite into the Group, we have reviewed our medium-term targets set out in March 2025 to ensure that they continue to appropriately reflect our ambitions for the business. Based on our review, we have upgraded and simplified certain elements of the framework. The refreshed framework is summarised below:

1. From a 2026 baseline

2. Free cash flow after interest, tax, minority interests and exceptionals, before dividend distribution and M&A

While we are maintaining our ambition of delivering above 5% revenue CAGR, we expect that the quality of the portfolio we have today will support a more consistent delivery, enabling us to outperform end market growth by 200+bps on average through the cycle. As set out in our growth strategy, we are well positioned to deliver this level of growth through a combination of market growth, market share gains, target adjacencies and the benefit of the additional technology penetration tailwinds and innovation capabilities that OrthoLite brings to the Group.

Given the strong margin performance in 2025, with the Group EBIT margin currently at 19.8%, and the addition of OrthoLite, which is margin accretive, we are stepping up our margin target range to 21-23% (previously 19-21%).

We continue to expect to deliver EPS CAGR of >10% post-M&A or share buybacks.

The key upgrade to our medium-term targets relates to the cash generation of the Group, with a new target of generating c.$1bn of cumulative free cash flow in the next five years. This is a significant step up from our previous target and reflects the low capital intensity and cash generative nature of the enlarged Group including OrthoLite, which has an attractive operating cash conversion profile of 90%+, in line with the rest of our business. As an additional enhancement, we have redefined the measure as free cash flow after interest, tax, minority interests and exceptionals, but before dividend distribution or M&A (previously exceptional cash flows were excluded). This new metric and target will be aligned to executive incentive plans.

Our approach to capital allocation

With the expected strong cash generation and low organic investment needs of the business, we are taking a disciplined, flexible and returns focused approach to capital allocation. After investing in organic growth, we will use our free cash flow to maintain a growing dividend and execute disciplined and accretive M&A to further enhance our position in certain of our markets. The Board will continue to evaluate the potential for additional shareholder returns including share buybacks.

We believe a strong financial position is key to our long-term ambitions and will aim to maintain a target leverage ratio of 1-2x net debt: EBITDA. As anticipated, our leverage ratio was 2.2x at the year-end due to the completion of the OrthoLite acquisition. Our priority in the near term is to reduce leverage. Based on the highly cash generative characteristics of the enlarged Group we expect leverage to fall below 2x by end of 2026.

Divisional structure change

As previously announced, we have streamlined our organisation structure into two divisions: Apparel and Footwear, to reflect the transformation of the Group's profile following the exit from the Americas Yarns business and the acquisition of OrthoLite. This change reduces internal complexity and aligns the divisions more closely with the underlying textile engineering and polymer science technologies. We will report under this new structure at our half year results in July 2026.

Progress in Sustainability

At Coats sustainability is embedded throughout the business; from the impact of our operations to our investment in innovation. The result of this approach is a strong competitive advantage and an enhanced reputation with customers and suppliers in our markets.

This year momentum across our sustainability programme has remained strong. We made good progress against our sustainability goals which cover energy, materials, waste, water and people. We are pleased to report that we have already reached or surpassed our 2026 commitments (one year in advance) in several targeted areas, including:

We are currently evaluating the environmental impact of OrthoLite, having only completed the acquisition in Q4 2025. As a consequence, the sustainability related metrics disclosed above as well as Coats' 2026 and 2030 ESG targets do not currently include OrthoLite.

We have responsibility for the environmental impact along our value chain, not just within our own operations. We are committed to using recycled material in our products and in 2025 made excellent progress in material transition, with our sales of 100% recycled thread growing 43% on a CER basis to $554m (2024: $387m) and our use of non-virgin oil based materials representing 52% of our total Group primary materials (2024: 46%).

Going forward, with growth in recycled sales expected to moderate, supplier decarbonisation will become an important lever to achieve our Scope 3 emissions reduction targets. After a successful first supplier decarbonisation workshop in November 2025, we will continue to invest in initiatives to help our partners understand and reduce their emissions. In 2026, we will expand product lifecycle assessments for primary raw materials and evolve our Scope 3 related targets to include supplier decarbonisation, ensuring the right levers are incorporated to help us achieve our Science Based Target initiative targets. In support of this we have begun to onboard strategic suppliers to Cascale's Higg framework, a tool used by 350+ brands and retailers, to drive emissions reduction and increase data transparency.

Our focus on sustainability and environmental transparency continues to bring external recognition. In December 2025 we featured on the Carbon Disclosure Project's (CDP) A List for the first time, achieving an A-rating for Climate Change and A rating for Water.

*Excluding medical and asbestos waste.

Board changes

Hannah Nichols joined the Board as Executive Director and Group Chief Financial Officer (CFO) designate in April 2025 and became Group CFO in May 2025. Hannah was previously CFO at Hill & Smith PLC, the FTSE250 international provider of infrastructure solutions and is also a Non-executive Director of Oxford Instruments plc. Jackie Callaway stepped down from her role as Coats' CFO in May 2025 after four and half years' service.

In addition, Wu Gang joined the Board as a Non-executive Director in July 2025. He is an investment banker by background, with a career of close to 30 years in international banks in Asia and Europe, advising companies on strategic transactions and capital raising.

Dividend

We have delivered a robust financial performance in a challenging market, continuing to gain market share, increase operating margin and generating strong free cash flow. Given these factors and our confidence in the Group's future growth prospects, the Board is proposing a final dividend of 2.28 cents per share, a 4% increase on the prior year. This equates to a full year dividend of 3.28 cents per share, an increase of 5%. Subject to approval at the AGM, the final dividend will be paid on 28 May 2026 to ordinary shareholders on the register at 8 May 2026, with an ex-dividend date of 7 May 2026.

The Board will continue to review the level of dividend payment to shareholders on the basis of the performance of the business, the opportunity to reinvest capital on high returning projects and its longer-term potential.

Outlook

Our assumption is that our core apparel and footwear end markets will remain uncertain in 2026, with comparatives becoming easier as the year progresses. We expect to grow organically in 2026, even under conditions of market uncertainty. That said, we are mindful of the potential impact on demand and supply chains as a result of the conflict in the Middle East, which we are assessing, however it is too early to provide an update.

Delivering growth will be achieved through execution of our playbook, leveraging the powerful combination of continued share gains and strategic adjacency growth. In addition, OrthoLite is expected to significantly outperform the underlying footwear market based on technology penetration tailwinds and new business wins.

We expect further modest organic operating margin improvement in 2026 in addition to the margin enhancement benefit of bringing OrthoLite into the Group. We also expect another strong year of free cash flow generation.

2025 Operating Review

Apparel

1. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest corresponding statutory measure in note 14.

2. Constant Exchange Rate (CER) metrics are 2024 results restated at 2025 exchange rates.

Coats is the global market leader in supplying premium sewing thread to the Apparel industries. We are the trusted value-adding partner, providing critical supply chain components, services and software. Our portfolio of world-class products and services provide exceptional value creation for our customers, brands and retailers.

Revenue of $769m (2024: $770m) was flat on a reported basis and up 1% on a CER basis. This was a strong result in a year that started with market growth momentum but softened towards the end of April, following the US tariff changes, with market conditions remaining challenging through the rest of the year.

Against this market backdrop, the division outperformed the core thread markets which we estimate were down c.3% in the year as we continued to win market share, increasing to c.27% vs. c.26% in 2024. This was achieved through a strong focus on delivery and service in response to customer needs and was underpinned by our global manufacturing capabilities. The division also benefited from a favourable product mix in the year with growth in premium thread sales including continued strong growth in 100% recycled thread products. In addition, the division has been successful in driving strong growth in the China domestic market, requiring high levels of operational agility to meet demanding customer lead times. Our Apparel customers continue to value our focus on sustainability led innovation and operational excellence supported by our proprietary technology platforms.

Adjusted EBIT increased by 4% on a CER basis to $156m (2024: $151m). EBIT margin was 20.2%, up 60bps (2024: 19.6%). The margin expansion reflects excellent pricing discipline, despite downward pressures from customers and favourable product mix, alongside prudent cost control and an ongoing focus on productivity gains. H2 2025 EBIT margin was 20.0%, in line with our expectations.

An attractive target growth adjacency for the division is the Coats Digital business, our software as a service business which helps customers optimise their production planning and costs. Despite the challenging market conditions, the business delivered good revenue growth in 2025 and continued to innovate, bringing to market new product features, including GSD Quest. This automates production costing by the upload of a garment image, increasing process accuracy and reducing the time needed for costing by c.90%.

With effect from H1 2026, the Personal Protection and Industrials businesses (c.80% of Performance Materials) will become part of the Apparel division, reducing internal operational complexity.

Footwear

1. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest corresponding statutory measure in note 14.

2. Constant Exchange Rate (CER) metrics are 2024 results restated at 2025 exchange rates.

3. Organic figures are results on a CER basis and exclude contributions from the OrthoLite acquisition.

We are the trusted partner to the footwear industry, shaping the future of footwear for better performance through sustainable and innovative solutions. We are a global leader with a portfolio of highly engineered products including structural components, threads and insoles with strong brand component specification, primarily targeted at the attractive athleisure, performance, fashion and sports markets.

Footwear revenue increased to $440m (2024: $403m), primarily reflecting the acquisition of OrthoLite, with revenue 2% lower on an organic CER basis. The organic revenue performance reflects a period of good trading until the end of April with increased US tariffs resulting in customers taking a cautious approach to ordering and inventory management through the autumn. Towards the end of the year, we saw brands managing down inventory further in response to the uncertain 2026 outlook, consistent with trends in the wider market. As such we estimate our core footwear end markets were down c.4-5% vs 2024 for the full year.

Despite this challenging backdrop, the division modestly outperformed with estimated market share growing to c.30%* (2024: 29%), driven by a focus on building market-leading positions in athleisure and casual footwear markets where customers value differentiated, engineered products. The division also successfully maintained pricing despite downward pressures.

Adjusted EBIT was $105m (2024: $95m), including two months contribution from OrthoLite, and was flat on an organic CER basis compared to the prior year. The adjusted EBIT margin was 23.9% (2024: 23.5%). The margin increase of 40bps reflected the benefits of an effective pricing strategy and prudent cost control measures alongside operational actions taken in the past year including footprint consolidation in Europe and a rebalancing of the division's manufacturing towards Indonesia.

Footwear has continued its focus on innovation and bringing to market new, highly engineered products. This includes the ProWeave shoe upper, one of our target organic adjacencies, which offers light and strong materials for performance, including for sports and athleisure, as well as for luxury applications.

The acquisition of OrthoLite was completed at the end of October 2025, expanding Footwear into the attractive and complementary, premium insole segment. OrthoLite brings significant overlap in customer base, route-to-market and operational footprint, providing opportunities to accelerate growth through innovation and cross-selling. The 2025 performance was in line with our expectations, with above market revenue growth and high levels of cash generation. In 2026, we will commence the footprint optimisation project, with Indonesia the first location, and have identified other cost synergy opportunities, including strategic procurement. Based on these initiatives, we expect to achieve annualised cost synergies of $5m in 2026, in line with our plan to deliver $20m of annualised cost synergies by 2028. We are committed to ensuring these initiatives don't affect the top-line growth capability of the business. Alongside this, we are also focused on the acceleration of joint innovation initiatives.

As previously announced, the Telecom & Energy business (c.20% of Performance Materials) has become part of the Footwear division. With effect from H1 2026 Footwear's external reporting will align to this structure.

*Footwear market share data excludes OrthoLite.

Performance Materials

1. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest corresponding statutory measure in note 14.

2. Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).

3. Constant Exchange Rate (CER) metrics are 2024 results restated at 2025 exchange rates.

4. Organic figures are results on a CER basis and exclude contributions from the Viz Reflectives acquisition.

We develop highly engineered solutions for industrial customers, including performance thread for different applications, safety materials and fabrics, and composite products for Telecom & Energy applications.

Revenue in the year was $256m (2024: $260m), flat on an organic CER basis and 1% down on a reported basis, reflecting a return to growth in the second half of the year of 2%. Industrial revenue was 1% lower than prior year, with share gains in automotive thread, partly offsetting softness in other industrial end markets. The division saw a strong demand for safety fabrics, a strategic adjacency, which delivered 40% revenue growth in the year. Telecom revenue was down 17%, reflecting a weakness in EMEA Telecoms markets, which was partially offset by energy market tapes which grew 21% in the full year, after a particularly strong performance in the second half.

Adjusted EBIT was $29m (2024: $26m), an increase of 10% on an organic basis, with a margin increase to 11.3% (2024: 10.2%). The organic margin improvement reflects the benefits of operational actions and the stronger second half trading, with Q4 run rate margins at 11.8%, approaching the bottom end of the medium-term targets set out in March 2025. During the year the portfolio quality was improved with the exit from the non-core US Yarns business in Q2, following the closure of the Toluca, Mexico facility in December 2024. Divisional margins improved by 390 basis points including Americas results in the prior year comparator.

Investment in innovation has continued, with a particular focus on two of our target organic adjacencies where we expect strong growth: safety fabrics and composite tapes for Energy markets. Within safety fabrics, we brought to market the FlamePro ARC in the second half of the year. This is a lighter and more comfortable material, offering exceptional personal protection in markets where electrical safety is critical, including protection against heat, flame and flash risks, while also offering good durability. Following development and qualification, we also brought to market two new composite tapes for specialist and demanding undersea pipeline applications, with first orders received towards the end of the year.

In addition, the small acquisition of Viz Reflectives (VizLite) was completed in October 2025 for an initial cash consideration of £3m ($4m), with contingent consideration of up to £6m ($8m), dependent upon performance. The unique VizLite phosphorescent (glow-in-the-dark) technology can be used in combination with our existing retro-reflectivity and fluorescent colour capabilities, to offer a third layer of visibility for environments with reduced or no light. This combination has life-saving attributes for fire-fighting and other applications. We see VizLite as accelerating our safety fabrics strategy.

From H1 2026 Performance Materials results will be integrated into Apparel (c.80%) and Footwear (c.20%), enabling the adoption of a two-division Group structure. This change better aligns the Group's structure with its underlying technologies and reduces internal operating complexity.

Financial Results

2025 Results

Operating Results

The Group has delivered a resilient performance in 2025 against a challenging market backdrop. Revenue from continuing operations was $1,465m (2024: $1,433m) up 2% on a reported basis and flat on an organic CER basis.

Adjusted EBIT from continuing operations was $290m (2024: $272m), an increase of 3% on an organic CER basis. EBIT margin improved by 80bps to 19.8% (2024: 19.0%), the improvement reflecting pricing discipline and mix coupled with cost control and operational improvement actions which more than offset the impact of inflation. Margins also benefited from strategic projects savings including the Footwear footprint consolidation and a rebalancing of manufacturing towards Indonesia. OrthoLite contributed to $11m of operating profit in the last two months of the year including $1m of losses associated with Cirql*. The table below provides further detail behind the EBIT movement in the year:

1.          Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest corresponding statutory measure in note 14.

2025 reported EBIT, including exceptional and acquisition related items, increased to $241m (2024: $224m).

*Cirql is a newly-developed proprietary foam technology at an early stage of commercial development.

Exceptional and Acquisition related Items

In 2025 net exceptional items were $2m (2024: $26m). The level of exceptional items significantly reduced from the prior year with previous strategic projects now complete. 2025 exceptional items comprised:

·      Strategic project costs: $1.6m

·      Costs to deliver Footwear acquisition integration synergies: $0.2m

·      Acquisition related items were $50m in 2025 (2024: $21m), including:

o  Amortisation of acquired intangible assets: $27m

o  Acquisition transaction costs, primarily relating to the OrthoLite acquisition: $20m

o  Acquisition transaction costs, relating to loan financing: $3m

Further details of exceptional and acquisition related items are set out in note 3 to the Financial Statements. The non-cash elements of these charges was $28m.

Non-operating Results

As expected, the 2025 adjusted EPS was 9.3 cents (2024: 9.7 cents). Increased EBIT was offset by higher pension related interest charges following the 2024 pension buy-in and the increased number of shares in issuance following the successful capital raise that took place in July 2025 to part fund the OrthoLite acquisition. Reported 2025 EPS was 6.8c (2024: 6.7 cents).

At $38m (2024: $28m) net interest costs, excluding the impact of exceptional and acquisition-related items were higher mainly due to the impact of the 2024 pension buy-in. Incremental interest costs associated with the purchase of OrthoLite were largely offset by investment income on the capital raise in the period prior to completion. On a reported basis interest costs were $41m (2024: $28m).

The adjusted taxation charge for the year was $73m (2024: $70m). Excluding the impact of exceptional and acquisition-related items, the effective tax rate on pre-tax profit remained at 29% (2024: 29%), in line with our guidance. The reported tax rate for the year was 32% (2024: 36%), after exceptional and acquisition related items.

Discontinued operations

In December 2024 the Group closed its Performance Materials Division facility in Toluca, Mexico and in April 2025 announced the full exit from the non-core US Yarns business based in Kings Mountain, North Carolina. The sale of the Kings Mountain plant was completed in June 2025 for cash proceeds, net of transaction costs, of around $13m. This follows the strategic review of the Americas Yarns business, which started in Q4 2024. The strategic review concluded that the Americas Yarns business did not fit with Coats' future strategy and the exit allowed management to focus on driving forward and growing other parts of the Group's attractive portfolio.

Amounts for year ended 31 December 2024 in the consolidated income statement have been represented accordingly to reclassify the results of the Americas Yarns business from continuing operations to discontinued operations. Note 13 provides further details of the sale. This has resulted in a reduction in previously reported 2024 revenues of $68m and $1m adjusted EBIT. Exceptional and acquisition related items for the year ended 31 December 2025 charged to operating loss from discontinued operations was $17m (2024: $22m).

Cash generation

The Group delivered a strong cash performance in 2025 with an overall free cash inflow prior to shareholder distributions and M&A of $160m (2024: $2m), reflecting the low capital intensity, lower level of exceptional cash flows including no further contributions to the UK pension scheme and the cash generation capability of the enlarged Group, including a positive contribution from OrthoLite.

The working capital inflow in the year was $13m, including a timing benefit from the OrthoLite acquisition. We have continued to manage net working capital closely, with a focus on inventory management without compromising service levels. We also continued our disciplined approach to payables and receivables management as an input to working capital efficiency. Working capital as a % of sales was 11.0% in 2025 (2024: 12.4%). In 2026 we expect this ratio to return to a more typical level of c.12%.

Capital expenditure was $32m (2024: $26m) as we continued investing in growth and efficiency projects which drive long-term returns. We anticipate 2026 capital expenditure to increase to c.$40-50m range, reflecting the expansion of the Group following the OrthoLite acquisition.

Cash conversion* for 2025 was 114% (2024: 101%), with the high conversion rate reflecting the working capital inflow in the year.

Exceptional cash flows were $24m (2024: $156m) including residual cashflow related to strategic projects, which are now complete. The 2024 exceptional cash flows included $128m of cash outflows associated with the UK pension scheme.

Minority dividends of $15m (2024: $18m) were paid, as cash was repatriated from relevant overseas entities to the Group. Tax paid was $71m (2024: $69m). Interest paid was $31m (2024: $30m).

*Defined as adjusted free cash flow as a percentage of profit attributable to equity shareholders of the company from continuing operations, before exceptional and acquisition related items.

Balance sheet and liquidity

Group net debt (excluding lease liabilities) at 31 December 2025 was $815m (2024: $449m). Outflows in the year included $54m for the 2024 final and 2025 interim dividends and $471m on M&A activity, principally the OrthoLite acquisition (net of the inflow from the associated equity raise). Net debt at the year end includes lease liabilities under IFRS 16 of $93m (31 December 2024: $83m).

Our Balance Sheet remains in a strong position with total committed debt facilities of $1,470m with a well-diversified source and tenor. The facilities comprise: $420m revolving credit facility, $600m USPP notes and a $450m loan to support the OrthoLite acquisition, provided by existing banks through a $300m bridge facility and a $150m term loan. The committed headroom on our banking facilities was $420m at 31 December 2025.

At 30 December 2025, our leverage ratio (net debt to EBITDA; both excluding lease liabilities) remains well within our 3x covenant limit at 2.2x. Given the strong cash generation capabilities of the combined Group, we expect leverage to fall below 2x by the end of 2026.

There was also significant headroom on our interest cover covenant at 31 December 2025 which was 11.2x, with a covenant limit of greater than 4x. The covenants are tested twice annually in June and December and monitored throughout the year.

Foreign exchange

The Group reports in US Dollars and translational currency impacts can arise, as its global footprint generates significant revenue and expenses in a number of other currencies. During the year, this was a headwind of 1% on revenue and adjusted EBIT. At latest exchange rates, we expect a minimal impact on revenue and adjusted EBIT for full year 2026 (excluding any future hyperinflation impact in Turkey, which cannot be forecast with accuracy).

UK pension update

In 2024 it was announced that the trustee of the Coats UK Pension Scheme (the "scheme") purchased a c.£1.3 billion ($1.7 billion) bulk annuity policy ("buy-in") from Pension Insurance Corporation plc ("PIC") which insures benefits payable under the scheme in respect of the remaining 80% of the scheme's liabilities. This is further to the purchase of a bulk annuity policy for 20% of the scheme liabilities in December 2022.

As a result of the buy-in, all the financial and demographic risks relating to the scheme's liabilities are now fully hedged, with the two policies paying the scheme a regular stream of income that matches its pension payments to all members. This buy-in is the final and most significant step in Coats fully insuring its UK pension obligations. Subject to customary post-transaction data reconciliations and the scheme liquidating certain assets to meet a deferred element of the PIC premium, it will also give Coats the option to remove the scheme fully from the Group balance sheet in the future at very limited further administrative cost. This process remained on track during 2025.

The agreement with PIC is anticipated to require up to c.£100m (c.$128m) of additional funding from the Group, with Coats making a £70m (c.$90m) upfront cash contribution to the scheme and a further £30m ($38m) provided initially as a loan to the scheme. The £100m cash contribution was made in H2 2024.

As previously reported, deficit repair contributions to the scheme, of around $30m per annum, were temporarily switched off in January 2024 and have now permanently ceased as a result of this agreement.

Going concern

On the basis of current financial projections and the facilities available, the Directors are satisfied that the Group and the Company has sufficient resources to continue in operation for the period from the date of this report to 30 June 2027, and, accordingly, consider it appropriate to adopt the going concern basis in preparing the financial statements. Further details of our going concern assessment, financial scenarios and conclusions are set out in note 1.

Coats Group plc

Consolidated income statement

* Represented to reflect the results of the Americas Yarns business as a discontinued operation (see note 1).

Coats Group plc

Consolidated statement of comprehensive income