Coats affirms guidance for modest annual profit growth   19 May 2016

Thursday 19 May 2016 09:13 AM

Coats affirms guidance for modest annual profit growth, delisting from NZX, ASX

By Jonathan Underhill

May 19 (BusinessDesk) - Coats Group, the UK-based thread-maker left after diversified investor Guinness Peat Group sold its other assets, reiterated its guidance for a "modest" increase in annual earnings before one-time items and affirmed plans to delist from the NZX and the ASX and keep its London Stock Exchange listing.

The company said reported sales in the four months ended April 30 fell 5 percent, mainly reflecting a 23 percent slump in craft sales, which it attributed to weak demand in the US handknitting market. Industrial sales fell 1 percent. It didn't give actual amounts in the statement ahead of its annual meeting yesterday.

Part of the weakness in sales reflected adverse currency movements, particularly the stronger US dollar against the Brazilian real and Indian rupee, and in constant exchange rate terms, craft sales fell 18 percent and industrial rose 4 percent, leaving overall sales unchanged. Demand from the apparel and footwear industries drove industrial sales.

Coats had intended to return capital to shareholders, but this year agreed to retain the funds to settle a dispute over its UK pensions scheme obligations with the British regulator. It had agreed the December 2013 triennial funding valuation with the trustee of the Staveley scheme which showed a technical provisions deficit of about 100 million pounds, which would be covered by a 34 million pound upfront payment drawn from the parent company's cash holdings (342 million pounds as at Dec. 31) and annual cash payments to the scheme of 4.4 million pounds for nine years.

It was still in talks about the April 2015 valuation.

Coats would delist from the NZX and ASX on June 24 following approval of shareholders at their annual meeting, where 99 percent of votes were cast in favour of the move. New Zealanders and Australians now make up only 11 percent of the share register, down from 30 percent a year ago, it said.

After June 24 all shares will automatically transfer to the UK main register.

Coats shares last traded at 63 cents on the NZX and have gained 15 percent in the past 12 months.

(BusinessDesk)

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