Coats Pension Update

December 2022

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COATS GROUP PLC | COATS PENSION UPDATE

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Summary

Major step to full de-risking

c. £350m buy-in delivered

In mid November 2022

Buy-in reduces Technical

Fully hedges 20% of total

Technical Provisions deficit had

Provisions deficit by another

scheme liabilities

reduced to c. £55m

c. £25-30m

Two key Group objectives:

  1. Reduce Technical Provisions deficit to zero & cease cash payments. Resulting in a significant improvement in FCF
  2. Fully insure the scheme and remove it from the Group balance sheet if cost effective to do so

COATS GROUP PLC | COATS PENSION UPDATE

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Key Points

  • Coats Pension Scheme has transacted a c. £350m "buy-in" policy with Aviva
  • Fully hedges financial and life expectancy risks for c. 20% of total scheme liabilities
  • Builds on collaborative working relations with the scheme trustee with major progress during 2022:
    • Materially reduced Technical Provisions deficit: from £193m at March 2021 to c. £55m mid November
    • Post the buy-in the Technical Provisions deficit: will reduce a further c. £25-30m
    • Significantly reduced financial risk: 90%+ of interest rate and inflation risks now hedged
    • Strong liquidity position in place: Hedging levels maintained throughout September/October "LDI crisis"

COATS GROUP PLC | COATS PENSION UPDATE

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Key Points 2

  • First "buy-in" helps deliver a significant step forward to achieving our key Group objectives:
    1. Reduce the Technical Provisions deficit to zero, cease cash payments, resulting in significant improvement in FCF:
      • Buy-inreduces Technical Provisions deficit by a further c. £25-30m
      • Now considering ways to cease cash payments when deficit is zero (will need Trustee approval)
    3. Fully insure the scheme and remove it from the Group balance sheet IFcost effective to do so
      • Full insurance solution now appears viable in short to medium term
  • Further details on future scheme plans as part of March 2023 results presentations

COATS GROUP PLC | COATS PENSION UPDATE

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Coats Group plc published this content on 06 December 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 December 2022 07:41:04 UTC.