Coats Group plc Capital Markets Day 23 June 2015

Agenda 14:00

Arrivals / coffee

14:30

Introduction

Paul Forman, Group Chief Executive

Apparel & Footwear

Adrian Elliott, President, Global Apparel & Footwear

Hizmy Hassen, Chief Digital Officer, Industrial Speciality

Shantanu Banerjee, President, Global Speciality & US Operations Andrew Morgan, R&D Director

Q&A 15:45

Break

15:55

Crafts

Michael Schofer, CEO Crafts

Financials

Richard Howes, Chief Financial Officer

Close and Q&A

Paul Forman

17:00

Drinks

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 2

Disclaimer Restricted distribution This presentation is not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction (the ‘Restricted Jurisdictions’).

Not an offer This presentation is not intended to and does not constitute, or form part of, any offer to sell or subscribe for or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the matters contained herein or otherwise.

Forward-looking statements This document contains certain forward-looking statements, including statements regarding Coats Group plc’s plans (‘Coats’ or the ‘Company’), objectives and expected performance. Such statements relate to events and depend on circumstances that will occur in the future and are subject to risks, uncertainties and assumptions. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements, including, among others the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts of licences; fluctuations in demand and pricing in the industry; fluctuations in exchange controls; changes in government policy and taxations; industrial disputes; and war and terrorism. These forward-looking statements speak only as at the date of this document.

Not a profit forecast The financial information contained in this presentation is based on publicly available historic financial information of Coats and is not intended to be a profit forecast or profit estimate under applicable rules.

Rounding Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 3

Introduction

Who we are… World’s leading industrial thread and consumer textile crafts business Industrial

Crafts

Apparel and Footwear (A&F)

Speciality

 Apparel and footwear thread

 High technology threads and yarns from performance materials for non-apparel and footwear uses

 Zips and trims products  Coats Global Services

Crafts 14%

Crafts 25%

2014 sales ($1.7bn)

A&F 60%

Speciality 15%

Other 1%

Employees (c20,000)

Crafts  Foundation and fashion handknitting products  Needlecrafting (inc consumer sewing and lifestyle fabrics)

Group* Industrial 85%

Operating margin

2014 8%

Attributable profit growth

21%

Adjusted free cash flow

$70m

Return on capital employed

26%

* Represents performance of Coats plc (Coats Group Limited)

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 5

Where have we come from Rich heritage  Founded over 250 years ago  One of the first truly global firms: started production in India in late 19th century  One of founding members of FT30

Fast forward to 2015  Renamed Coats Group plc (formerly GPG plc)

 Return to LSE on 125th anniversary of listing  Single Board of Directors In our long pioneering history we like to include Thomas Edison who used Coats thread in his experiments to perfect the lightbulb

 First acquisition for >10 years  Continuing to introduce new products/services

Moving forward… © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 6

Our world is changing… Global middle class in 2009 and prediction for 2030 Increasing global demand for apparel and footwear

North America

Increasing demand for consumer products with Speciality thread Asia-Pacific moving from production base to world’s largest consumer market © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Europe

Northern Africa Asia Pacific

Central and South America

Southern Africa

100mn 500mn 1bn

2030 2009 Source: OECD, Standard Chartered Research

Page 7

…and so are the markets we operate in… Apparel and footwear industry heat map

Western Europe

North America

C&E Europe

North East Asia Northern Africa

Central America

South East Asia South Asia

Hot Medium Cool

Latin America

Southern Africa

Australasia

Countries in which Coats operates Manufacturing sites Source: Coats analysis

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 8

…with positive underlying trends set to continue in A&F… Strong link between clothing retail sales and GDP growth. For the US, clothing retail sales growth is approximately 1.7 times GDP growth

US GDP growth vs consumer retail sales growth (2000-2014)

Source: IMF, US Census Bureau

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 9

… and ongoing growth in the Speciality market  Driven by growing consumer and government demand  Pace of urbanisation – key market driver in developing countries

 Speciality universe: ~$30bn1

 Immediately addressable market: ~$1.8bn1

– Consumers upgrade to Speciality products as GDP grows (eg furniture, leisure goods, cars with airbags, boats, tea bags) – Public sector spending and safety compliance increases (eg utility infrastructure, flame retardant protective clothing for military and industrial factories, telecommunications)  Innovation - market driver in developed countries – Entry into new value added engineered yarn markets

Speciality is a high value ‘GDP+’ market (1) Universe and addressable market size based on third party report prepared for Coats and internal analysis

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 10

We have the strategic hand of cards to respond  Market positions that are several times bigger than our competition with a comprehensive range of products

 Unparalleled physical network of factories, warehouses and IT systems

Global. Expert. Pioneering.

 Access to the widest range of A&F, Speciality and textile craft customers  Market leading brands  ‘Human asset base’ with world-leading expertise, commitment, truly international capability and highly engaged  Corporate brand reputation

However to lead the industry we need more… © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 11

Continual product and service innovation Hemseal For use in the secure hemming of tailored garments

eCommerce Makes thread ordering easier and faster than ever

Coats Colour Express World’s fastest, most accurate thread sampling service

Flamepro For use in personal protective equipment

Products

Services

(including digital)

Opti Express Revolutionary zips sampling

INNOVATION Signal thread Innovative reflective thread designed for fashion applications, outdoor and active wear

redheart.com Glasmo SM VO Glass fibre strength engineered yarn used in telecommunication cables

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Digital inspiration and eCommerce for America’s favourite yarn

Page 12

Corporate Responsibility credentials Highly engaged and safe workforce Global employee engagement survey results

Global recordable accident rate

90th percentile performance

80%

81%

77%

Industry norm

72%

66% Consistently better than the OSHA* average

2010

2011

2012

Source: Kenexa

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

2013

2014 OSHA: (US) Occupational Safety and Health Administration

Page 13

Improved returns and quality of earnings Return on capital employed (ROCE)1 26%

18%

20%

22%

 Increased productivity – offsetting inflation

18%

14%

2009

 Profitable Sales Growth – share gains, new product and service innovation, geographic expansion

 Expert pricing management

2010

2011

2012

2013

2014

 Focus on working capital management

Return on invested capital (ROIC)1 11% 9%

9%

 SD&A efficiency programmes and new structures being implemented

 Capital discipline – capex ≤ x1.0 depreciation

9% 8%

6%

2009

2010

2011

2012

2013

2014

Strong five year improvement trend in key return metrics using organic levers only

(1) Represents performance of Coats plc (Coats Group Limited). 2009-11 figures adjusted by $6m (estimate) to reflect impact of adoption of IAS19 (revised) on operating profit

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 14

Led by an experienced Board  Directors chosen to lead a global industrial manufacturing business Mike Clasper CBE, Chairman

Mike Allen, Independent Non-Executive Director

Ruth Anderson, Independent Non-Executive Director

 Breadth of FTSE 350, geographic, industry and functional experience  Board and Committee composition compliant with UK Code

Nicholas Bull, Senior Independent Non-Executive Director

Paul Forman, Group Chief Executive

David Gosnell, Independent Non-Executive Director

Richard Howes, Chief Financial Officer

Blake Nixon, Non-Executive Director

Alan Rosling CBE, Independent Non-Executive Director

Rajiv Sharma, Global CEO Industrial

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

 Clear definition of roles of Chairman, Senior Independent Director and Group Chief Executive  Share ownership across the Board and share based incentives for senior management

Strong governance processes and policies in place Page 15

Supports defined growth strategy to achieve three market goals

The leading value added partner to the global apparel and footwear industries

The leading global player in Speciality threads and yarns

The leading global player in textile crafts

Today we will focus on how we are delivering these goals © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 16

Five elements to our value Focus on sales, earnings and free cash flow growth

Leadership, people and systems to deliver growth

5. Cash generative; consistent growth

1. Global market leader with robust fundamentals

4. Experienced management team

Strong and defendable core business

2. Defined growth strategy

Targeting known markets through organic and acquisitive growth

3. Global presence and capabilities Key differentiators that provide a platform for growth © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 17

Apparel and Footwear To be the leading value added partner to the global A&F industries

Market overview  GDP+ growth  Consumer demand and retailer inventories  Production: highly mobile – West to East, now intra-East

 End consumption: JUSE1 focused, emerging markets increasingly important

 Supply chain: highly fragmented  ‘World’s largest cottage industry’

Market with robust fundamentals and growth opportunities (1) JUSE: Japan, US and Europe © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 19

Apparel and Footwear (A&F) business Apparel

thread Footwear thread

$1bn

Sportswear

revenue

Outerwear

Denim

43

9

thread plants

Zips and trims

zip factories

Sales presence in

+100

Global Services

countries

Ladieswear

One in five

garments on the planet are held together with Coats’ thread © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

>450 million pairs of shoes are made

every year using Coats’ thread Page 20

Continued growth in global apparel demand Similar trends in global footwear market By volume (bn garments) NE Asia

N America

Europe

S Asia

86

93

CAGR (%) 11-14 15-18 4%

forecast

RoW

90

By value ($tn)

96

100

103

106

110

4%

4%

9%

8%

0%

2%

5%

2012

2013

2014

2015

2016

2017

N America

Europe

S Asia

RoW

2%

2011

3%

NE Asia

1.51

1.53

1.55

1.58

CAGR (%) 11-14 15-18 forecast 1.60

1.64

1.67

2%

2%

3%

3%

5%

6%

(1)%

0%

1%

1%

4%

3%

1.70

1%

3%

2012

2018

2013

2014

2015

2016

2017

2018

2019

Source: Euromonitor

Source: Euromonitor

Apparel and footwear thread market >$3.5bn1, with comparable growth rates © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

(1) Coats estimate based on Euromonitor, Eurostat, National Bureau of Statistics for China and US Census Bureau

Page 21

Competitive landscape Suppliers

Competitors

• • • • •

• Coats is the global market leader: x3 larger

Includes polyester, nylon and cotton Diverse supply base Coats purchasing power Labour inflationary pressures Manage through productivity, purchasing and pricing

• Unparalleled global operational and commercial footprint • Highly fragmented by region

• Currently no mass produced, cost effective method of replacing thread in apparel and footwear products • Relationships with majority of global brands and sub-contractors to textiles industry Substitutes

Customers

Strong and defendable core business © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 22

…and need to respond to changing industry needs Speed

First to market, in-season flexibility, colour, sampling, sourcing

Productivity

Reduce labour exposure, Lean, design to cost

Innovation

Fabrics, finishes, production technology, consumer experience

Quality Compliance

Differentiation and consumer value through quality Responsible sourcing, labour, chemicals, environment

Coats is leading the industry in meeting these needs… a couple of examples… © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 23

Coats Global Services Quality

Productivity

acquisition

The world's leading colour and textile services expert

• Industry leader with strong brand • Customers in +60 countries, strong Asian presence, $2m revenue

Adding services

Software tools

• Enhances end-to-end OE solution

• End to end transformative solutions

• Time and cost benchmarking

• Digitalising Apparel and Footwear supply chain

• Process control and planning

Three verticals

• Colour Atlas

• Operational excellence (OE)

• Online training

• Improve productivity, compliance and transparency across supply chain

• Digital printing

Contractors

• Colour Solutions • Training

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Brands • Predict cost of new styles • Engineer designs to optimise cost

• Optimise costs, enhance productivity, capacity planning • Actual vs GSD standard time Page 24

Enhancing customer value through digital

Customer needs

‘Big ideas’ driving online solutions

Speed

• Removing non-value added activities

Return on investment for Coats

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Productivity

Innovation

• Guided transactions • Intelligent platforms • Easy access to experts for exception management

Profitable sales growth and productivity increase

Page 25

Market leading position within textiles industry Benefits  Key information easily accessible  Convenience (online and mobile tools for sampling and bulk)  Simplification (guiding during product selection eliminating mistakes)  Speed (high levels of automation eliminating human touch points)

Services  Gateway (Industrial Portal)  Digital sampling (Coats Colour Express and Opti Express)  Support (Coats Live Link)  Value add (eSeamWorks and Performance Enhancement Studies)

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 26

Coats Opti Express video

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 27

Delivering operational gains Digital sampling  ~65% of all sampling now digital  Enabled 17% y-o-y growth in sampling volumes in 2014, at no incremental cost

Visits to Industrial Portal (’000s) 80 60

 Supported material market share gains

40

 ~70% reduction in sampling lead-time

20

eCommerce (launched in 2014)  Receive 1.5m phone calls per year enquiring about order status

 Now live in 22 markets and ~4,000 customers using platform  ~ 30% global adoption rate; key markets 50%  1 day lead time reduction

Enables market share gains and productivity improvements © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

0 Apr-13

Oct-13

Apr-14

Oct-14

Apr-15

eCommerce roll out 200

4,000

150

3,000

Customers using platform Order lines (‘000)

100

2,000

50

0

1,000

Jan-14

Apr-14

Jul-14

Oct-14

Jan-15

Apr-15

0

Page 28

A&F summary

Market leader in >$3.5bn industry; strong, defendable, cash generative business

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

GDP+ growth market; customer and consumer needs changing

Coats leading industry through product and service innovation

Page 29

Speciality

To be the leading global player in Speciality threads and yarns

What is Speciality?

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 31

Moving beyond the stitch line Expanding from our traditional segments into value added engineered yarns as we develop competence outside our historic core Value Added Engineered Yarns ~$1,000m

Unrelated fibres, filaments or processes

Emerging segments ~$250m

Speciality universe ~$30bn1 GDP+ growth

Traditional ~$550m

Coats level of competence

Addressable market ~$1.8bn1 (1) Universe and addressable market size based on third party report prepared for Coats and internal analysis

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 32

Competitor landscape: fragmented across multiple markets Market size and share by category (approx.) Coats market share $550m

$250m

$1,000m

 Several end-markets within each category  No single end-market dominates any one category  Competitors tend to produce products for one or two end-markets and regionally focused  Speciality customers demanding manufacturing localisation and global supply solutions

28%

23%

Traditional

Emerging

> automotive > bedding > furniture > outdoor > sports goods > filtration

> tea bag > tyre cord weft > fem-hygiene > fibre optics

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

 M&A opportunities – access new geographies and end-markets 1% VAEY > flame retardant aramids > composites > extrusion > MRG > smart conductive

Innovation and urbanisation to drive growth Page 33

Gaining market share by leveraging core global capabilities

Leading innovative brands Global customer relationships

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

New technologies Global, world class asset base

• Global manufacturing footprint • Centres of excellence

Page 34

Leading to double digit sales growth / geographic diversification Global Speciality sales ($m)

Increasing sales in emerging markets

Reported basis

235

CAGR: 8%

2011

2014

N. America EMEA

174

2010

Asia / LatAm

2011

2012

2013

2014

 2014 sales: up 14% and in absolute terms = A&F  H2 2014 sales: up 18%  Jan-Apr 2015 sales: up 14%

 Extending traditional and emerging products into Asia and Latin America  Entering new markets and introducing new products in the North America and EMEA

Achieved through organic growth © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 35

Why are we growing our presence in Speciality? High technology products that guarantee performance and safety

Differentiated offer to meet sharply defined customer needs

No extensive distribution or ex-stock service required; mainly made-to-order stock

Long accreditation / approval lead times and high switching costs © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

High ROCE and ‘sticky’ business…

Relatively low working capital intensity

… in which innovation is key Page 36

Innovating up the technology chain Customer-led innovation to create new value chains

Technology

Speciality

Automotive Furniture Outdoor Bedding

Femcare Tea bag Tyre cord

Aramids Fibre optics

MRG, Extrusion, RTP Carbon composites Smart conductive

Footwear Apparel

1980

1995

2000

2010

2015

2018

Timeline © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 37

Strategy to continue growing Speciality Share penetration New market entry (inc M&A)

R&D innovation

Talent New technologies ‘deep dive’

Manufacturing excellence

Digital marketing

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 38

Protecting fibre optic cables with Coats Ultrabloc  Water swellable yarn that protects delicate fibre optic cables against damaging effects of rain and salt water  Eliminates need to use gel inside tubes allowing for totally dry fibre optic cables  Benefits: weighs less, makes installation and repair of cables much easier and more cost efficient  Proven in temperature cycling, heat ageing and freeze / thaw testing

Sales increased from zero to ~$5m in three years © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 39

Reinforced thermoplastic pipes in oil and gas

 Coated and precision wound para-aramid for use in braided reinforcement for composite pipes  Benefits: corrosion resistant, faster installation time, less disruption above ground, re-usable, lower maintenance © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Sales increased from $1m to $4m in 2014 Page 40

Product development – carbon composites

Can we talk about conductive or composite?

Including thermoplastic carbon composite prepregs for automotive

Or commercially sensitive

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 41

Speciality summary

$1.8bn addressable market; produce wide range of products across multiple end-markets

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

High ROCE and ‘sticky’ business; innovation is key

Coats consistently delivering double digit organic growth; potential for M&A

Page 42

Questions and break

Crafts

The leading global player in textile crafts

Introduction

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 45

Our products Handknitting • •

Foundation and fashion yarns

•

High quality range and large colour selection

Supported by inspiration programmes

Foundation yarns

Fashion yarns

Needlecrafting • • • •

Consumer sewing threads and zips Premium lifestyle fabrics Embroidery threads Complementary haberdashery

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Embroidery

Zips

Lifestyle fabrics

Sewing thread Page 46

Where and what we produce  ~$300m sales; ~5% operating margin  Cash generative

 ~1,500 employees  In process of completing sale of EMEA Crafts North America North America 3 Crafts plants (Georgia) 2 distribution centres

Latin America 5 shared Crafts and Industrial plants (Brazil, Columbia and Mexico) 10 distribution centres across region Head office (Charlotte, North Carolina)

% sales

Make %

Buy %

Handknitting

65%

70%

30%

Needlecraft

25%

45%

55%

Fabrics

10%

0%

100%

Latin America

% sales

Make %

Buy %

Handknitting

20%

0%

100%

Needlecraft

78%

85%

15%

Fabrics

2%

0%

100% Source: internal analysis

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 47

Market leader in ~$1.8bn Americas textile crafting industry  Market leader in handknittings

Coats 15%

North America

Other 59%

Market size ~$1,400m

 Leading positions in needlecrafting markets in which we operate (eg consumer sewings)

A 7% B 6% C 5%

 Recent entry into fabrics market; opportunity to gain market share #5 to 10 ($50m of adjusted free cash per annum over the last three years  Continued attributable profit growth  Ongoing margin improvement in industrial

2012

2013

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

2014

Represents performance of Coats plc (Coats Group Limited), not Coats Group plc Page 57

2015 trading performance  Trading was in line with management expectations, up 3% LFL1

Year-on-year sales performance (January to April)

Group Industrial Speciality Apparel & Footwear Crafts (continuing)

Group (inc EMEA Crafts2)

LFL1 sales

Reported sales

3%

(3)%

 3% decline in group sales on reported currency basis reflected strengthening of US dollar

6%

(1)%

 Speciality business continued to deliver double digit growth, up 14%

14%

6%

4%

(2)%

(6)%

(12)%

2%

(5)%

 A&F increase driven by volume growth and the strong performance in Asia  Americas Crafts impacted by expected decline in fashion handknittings

(1) Like-for-like restates 2014 figures at 2015 exchange rates (2) EMEA Crafts business being sold

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 58

Revenue base Geographically diversified

Group revenue – 2014

Discontinued

EMEA 25%

 Industrial (A&F): main markets are India, China and Vietnam  Industrial (Speciality): main markets are US and Turkey

EMEA (C) 9%

 Crafts (continuing business): US and Brazil

EMEA (I) 16%

~$1.70bn

Asia & Australasia 40%

Customer diversification  No customer (contractor or Crafts retailer) accounts >10% of group sales  No brand contributes to >10% of group sales

Americas (C) 18% Americas (I) 17% Americas 35%

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Revenue by manufacturing location (I) Industrial (C) Crafts Page 59

Cost base Cost of sales

Pre-exceptional costs – 2014 *

Operating costs

 Materials - raw materials (eg polyester, nylon, cotton), intermediates (grey thread), direct materials (eg dyes, cones) and bought-in finished goods (eg craft products)  Labour (mfg) – ongoing inflationary pressures

Administrative 14%

 Energy – sourced from local and national grids, price linked to regional supply / demand dynamics  Other includes water, maintenance, depreciation and amortisation

Distribution 18%

~$1.55bn

Materials 45%

 Distribution includes freight; admin includes corporate costs  Reviewing cost base in light of EMEA Crafts sale

Other 8%

Energy 3%

Operating costs

Additional Coats Group plc costs (2015 onwards) Labour (mfg) 12%

 $4.5-6m (£3-4m) pension related expenses for Brunel and Staveley schemes (exc tPR costs)  ~$4.5m (~£3m) corporate costs (‘plc’ related) * Costs of Coats plc (Coats Group Limited), not Coats Group plc. Includes EMEA Crafts

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 60

Segmental performance Industrial* 1,300

Crafts* Revenue ($m)

Operating Margin (%)

10.3%

1,250

9.1%

9.5%

9.1%

1,050

1,175

1,212

1,243

Operating margin (%)

Higher margins in Americas Crafts 500

479

442

300

8.5%

7.5%

2013

9.0%

7.0%

5.0%

2.8%

4.0%

4.5%

3.0%

8.0%

2012

10.0%

8.0%

492

400

200

1,000 950

Revenue ($m)

6.0% 9.0%

1,100

600

10.5% 10.0%

1,200 1,150

11.0%

2014

7.0%

2.0%

100

0.6% 0

2012

2013

2014

14

22

3

1.0% 0.0%

Operating Profit ($m) 107

111

128

Total

* On Coats plc (Coats Group Limited) basis © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 61

Financing Refinanced debt facility (February 2015)

Key terms and features

 Facility oversubscribed

Size

$680m

 Margin reduced by ~25bps

Maturity (date)

5 years (Feb 2020)

 Changed group of international banks – better reflects Coats’ global footprint

Margin structure

Margin dependent on financial leverage

2015 pricing (indicative)

LIBOR +150bps

Leverage covenant

Net debt / EBITDA ≤ 3x

Interest cover

EBITDA / net finance charges ≥ 4x

 Reduction in facility size by $40m reflects Coats’ ability to generate free cash

 No change in financial covenants (Coats plc basis)

Interest and leverage 2014

2013

2012

20

24

25

Net Debt ($m)

263

329

368

 Group cash: at end of 2014 - $615m (£375m), held in short term deposits

Leverage ratio

1.4x

1.8x

2.1x

 Coats plc: interest charge down $4m y-o-y due to reduced debt and average rates; leverage reduction

 2015: expect ongoing reduction in interest paid, interest income on group cash

 Interest rate risk - hedge floating rate exposure with swap contracts

Coats plc*

 Coats Group plc: net cash position

Interest charge ($m)

* For Coats plc (Coats Group Limited) © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 62

Tax  Historically operated with very high tax rate

Underlying tax rate

– No tax relief on exceptional costs and pension charges

55% 47%

– Losses cannot be relieved against profits

42%

– Withholding tax on global remittances  In 2013/14 launched global tax review to identify tax inefficiencies

 In 2014 reported tax rate of 60%  Underlying tax rate (UTR)1 reduced by 500bps y-o-y to 42%, primarily reflecting: – Change in mix as regions with lower statutory tax rates contributed higher profits

2012

2013

2014

 Expect to reduce UTR to 30-35% within next three years  Will also reduce tax cash outflow – in 2014 $53m, a 5% decline y-o-y

– Reduction in unrelieved losses (1) Pre-exceptional items and IAS 19 interest

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 63

Cash flow 2014 cash flow bridge*

* For Coats plc (Coats Group Limited)

 Free cash flow in excess of $50m  All pension cash payments included in adjusted FCF  Other includes provisions and payments of dividends to minorities 41 (47) (22)

$m

(53)

179

(18)

2 (9) 72

70

2013

EBITDA

Working Capital

Capex

182

10

(36)

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Interest

(26)

Taxation

(56)

Pensions

(7)

Other

(13)

Adj free Exceptional Free cash cash flow items flow 54

(9)

45 Page 64

Capital expenditure and working capital * For Coats plc (Coats Group Limited)

Capital discipline

Focus on working capital initiatives

Capital expenditure ($m)*

Industrial Crafts

51

NWC % sales* 19.0%

47

17.6%

17.1%

39

37

15.1%

36

11.5%

2010

2011

2012

2013

2014

1.0

0.9

0.7

0.8

1.0

2010

2011

2012

2013

2014

% dep’n

 Significant investment in 2000’s to upgrade assets and systems to world class standard

 Ongoing improvement due to increased focus on all working capital levers (~$900m)

 2014 y-o-y increase driven by investment in IT / digital services and efficiency initiatives

 2014 y-o-y decrease due to improvements in Industrial inventory and debtor management, and reduced Crafts sales

 Maintain ≤1.0x depreciation over medium term © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

 Aim to reduce ratio over medium term Page 65

Financial reporting changes  Previously reported GPG plc in GBP (some items also NZD) and Coats Group Limited in USD

 As of the HY 2015 results, Coats Group plc: – Single income statement, balance sheet and cash flow statement – USD reporting currency (will also show UK pensions data in GBP)

– Prior period restatement – Segmental reporting – Industrial and Crafts, will exclude pensions admin costs  Focus for Group now consistent with that of Coats business: revenue, operating profit and earnings per share (previously attributable profit) growth and adjusted free cash flow delivery; GPG KPIs such as net asset value per share no longer applicable for a global industrial manufacturing company © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 66

Pensions UK Defined Benefit schemes £m

Staveley

Brunel

Coats UK

Coats other 1

239

167

1,748

208

IAS19 liability (Dec 2014)

214 215

IAS19 accounting deficit

– Increase in liabilities; decrease in discount rate3 > fall in inflation rate4 – Adoption of revised assumption setting methodologies

April 2012

Dec 2013

 Coats UK scheme annual deficit reduction payment: $23m (£14m)

Dec 2014 Actuarial deficit 78

Date of last triennial valuation

58 28

April 2011

20

54

44 49

28 0 March 2010

Recovery payment p.a.

 IAS19 deficit at end 2014: $586m (£375m) (end 2013: $297m, £178m)2

1

-

Figures above in GBP

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

14

-

 Funded through use of Coats ongoing cash generation  Triennial valuations: Coats started Apr 2015; Brunel and Staveley ongoing  Appointed Group Pensions Director (1) (2) (3) (4)

Other Coats net employee benefit obligations Using year end USD:GBP rates Assumption derived using a yield curve approach, based on Sterling AA corporate bonds Assumption based on a market implied long-term rate of inflation

Page 67

UK Pensions Regulator investigations (tPR) – a recap  Company moving on: continue to engage with investigations balancing the interests of stakeholders  During investigations unable to make returns to shareholders  Warning Notices (WN) received on two legacy GPG UK defined benefit schemes, Brunel and Staveley, in Dec 2013 – written representations submitted by Sep 2014; WN received on Coats Plan in Dec 2014 – will litigate unless matter resolved via negotiation  During 2014 reached settlement with one trustee on more than one occasion; not accepted by tPR  Early 2015 proposal put to tPR and trustees to settle three schemes; not accepted  Expect to submit written representations on Coats Plan by end of July 2015  tPR indicated all cases to be heard at same time; any hearing unlikely before H2 2016

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 68

Lower Passaic River  In April 2015 a Cooperating Parties Group, which includes Coats and Clark Inc., a subsidiary of the Coats Group plc, submitted a remedial investigation and feasibility study (‘RI/FS’) to the US Environmental Protection Agency proposing remedial action for the Lower Passaic River in New Jersey  Coats is assessing the accounting implications, if any, of the RI/FS, and will provide an update as part of the Company’s H1 results (on 3 August)

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 69

Outlook and summary

Role of M&A in delivering future growth  Profitable sales growth over last five years driven purely by organic growth  Now looking to access inorganic growth  Comprehensive M&A process in place – from strategy to post merger integration Criteria (includes)  Aligned to Speciality, Services (eg GSD) or geographic expansion in core A&F business  Manageable risk profile  Compliance with Coats standards  Number of financial metrics (return and value) – looking for bolt-on transactions No external limitations on executing M&A

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 71

Maintain 2015 outlook Made good start to year; on track to at least deliver management expectations… … as outlined in FY14 results (February 2015)  Mixed regional picture expected to continue: Asia, broadly positive; North America, solid growth; Europe, macroeconomic dependent; and Latin America, relatively flat situation  Industrial – demonstrated good volume growth in A&F and Speciality business continues to deliver double digit growth  Crafts – ongoing growth in foundation handknitting, reduced demand for fashion handknitting  In deflationary environment more challenging to offset cost rises through pricing  Other factors impacting profitability: strong USD, losses attributable to EMEA Crafts to be treated as discontinued items and group overheads (also accounting implications, if any, of the RI/FS related to the remediation of the Lower Passaic River, New Jersey, USA)  Leading to broadly stable operating profit for the year  EPS affected by increase in pensions finance costs; offset by tax and interest upside © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 72

Looking ahead  Increase pace of product and service development and acquisitions – GSD acquisition, launch of Opti Express and Signal thread all in one week  Continue to ‘normalise’ as a UK listed, global manufacturing company  Focus on diversity and inclusion

– Culturally diverse; focus on gender diversity at top of organisation  tPR investigations – seek to balance stakeholders’ interests  Explore ways to share value with shareholders

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 73

Five elements to our value Focus on sales, earnings and free cash flow growth

Leadership, people and systems to deliver growth

5. Cash generative; consistent growth

1. Global market leader with robust fundamentals

4. Experienced management team

Strong and defendable core business

2. Defined growth strategy

Targeting known markets through organic and acquisitive growth

3. Global presence and capabilities Key differentiators that provide a platform for growth © Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 74

Summary  Global market leader with robust fundamentals; strong and defendable core  Defined growth strategy

– Apparel and Footwear: share gains based on innovation in services and products – Speciality: growth through global expansion and innovative new products – Crafts: focus on strong and profitable Americas business  Supported by key differentiators - world class asset base, product and service (including digital) innovation, highly engaged workforce and corporate responsibility  Delivering attributable profit growth and generating significant free cash flow ($189m in last 3 years)  Improving returns and quality of earnings

– ROCE (26%) and ROIC (11%) significantly increased in last 5 years  Well positioned for future sales, earnings and free cash flow growth

© Coats Group plc 2015 | Capital Markets Day | 23 June 2015

Page 75

Questions