Coats Group, the leading UK threads and zips provider, achieved a financial milestone by securing an agreement with its UK Pension Scheme trustee to discontinue pension deficit repair payments starting January 1. This breakthrough prompted a nearly 10% surge in Coats Group shares on the London Stock Exchange.
The pivotal agreement translates to a £2 million monthly boost in free cash flow for Coats Group, with payments set to remain off as long as the scheme’s assets stay above 99% of its technical provisions. A one-off £10 million lump sum payment will be made to ensure the scheme moves into an expected surplus position, maintaining a comfortable margin above the payment threshold.
CFO Jackie Callaway highlighted the strategic progress on pensions, positioning Coats for enhanced free cash flow generation. The collaborative effort with the scheme trustee aligns with the company’s medium-term goals, including complete pension scheme insurance, risk mitigation, and an optimized capital allocation framework for future growth opportunities.
This positive development reinforces Coats’ resilience in a challenging yet recovering market, as indicated by strong margins and cash generation in November’s financial results.
Discover how Coats Group’s strategic financial decisions are shaping a robust future.
