Coats group plc – Annual report – 31 December 2016
NOTES TO THE FINANCIAL STATEMENTS (extract)
36 Post balance sheet events
Albany distribution centre
On 22 January 2017, the main distribution centre for the US Crafts business in Albany, Georgia suffered significant damage following a tornado strike, including one building which housed sourced products for yarns, threads and crafting implements. The decision had been taken to close the centre at the time and there were no injuries to Coats’ personnel. Although buildings in the centre are leased, our initial estimate is that the tornado has damaged a significant proportion of the stock as well as causing disruption to our logistics activities. Given the extent of the damage, temporary alternative premises have been found but operations are not expected to be fully back to normal until later in Q2. The Group’s insurance policies are expected to be sufficient to cover both the loss of inventory and physical assets. Although sales will be adversely impacted in the first half, lost profits as well as the incremental costs of re-establishing operations are included in the Group’s business interruption insurance cover.
Settlement agreement and cessation of TPR regulatory action for two pension schemes
On 16 February 2017 the Company signed binding settlement agreements with the Trustees of the Coats UK Pension Plan and Brunel Holdings Pension Scheme. On 28 February 2017 agreed cash payments of £200.0 million and £34.5 million were made by the Company into the Coats UK Pension Plan and Brunel Holdings Pension Scheme respectively. Regulatory action by the UK Pensions Regulator in relation to these two schemes under the Warning Notices that it issued to Coats in 2013 and 2014 has now ceased.
The Trustees of the Staveley scheme have not to date accepted the Company’s proposal regarding that scheme and currently the UK Pension Regulator’s investigation in connection with that scheme remains open.