RNS Number:4240I
Coats PLC
7 March 2003

PART 2

Notes to the accounts

1 Continuing and discontinued operations and acquisitions

                                    2002                        2001 (Restated)          
                      __________  ___________  ______  __________  ____________  _______
                      Continuing  Discontined   Total  Continuing  Discontinued    Total
                              #m           #m      #m          #m            #m      #m 
_____________________ __________  ___________  ______  __________  ____________  _______

  Turnover                1031.4        124.2   1155.6     1069.4         177.6   1247.0 
_____________________ __________  ___________  ______  __________  ____________  _______
                                                                              
  Cost of sales            678.3         63.3   741.6       720.0          90.6    810.6
_____________________ __________  ___________  ______  __________  ____________  _______
                                                                              
  Net operating expenses                                                      
  Distribution costs       205.6         60.8   266.4       215.1          72.0    287.1

  Administrative expenses   93.6         17.3   110.9        94.3          23.6    117.9

  Other operating income    (1.1)        (2.4)   (3.5)       (1.6)         (2.9)    (4.5)
  (note 3)                                    
                      __________  ___________  ______  __________  ____________  _______
  Total                    298.1         75.7   373.8       307.8          92.7    400.5
_____________________ __________  ___________  ______  __________  ____________  _______
                                                                              
  Operating profit          55.0        (14.8)   40.2        41.6          (5.7)    35.9
_____________________ __________  ___________  ______  __________  ____________  _______
                                                                              
  Profit on sale of fixed    3.4          5.3     8.7         9.2           4.4     13.6
  assets                                                                      
_____________________ __________  ___________  ______  __________  ____________  _______
  Sale or termination of                                                      
  operations:                                                                 
  Losses                    (7.0)        (3.1)  (10.1)      (24.1)        (16.3)   (40.4)
    
  Gains                        -            -       -           -          13.6     13.6
                        __________  ___________  ______  __________  ____________ _______
                            (7.0)        (3.1)   (10.1)      (24.1)        (2.7)   (26.8)
_____________________ __________  ___________  ______  __________  ____________  _______
                                                                              



During the year ended 31 December 2002 the Group continued to withdraw from its
Indian Textile business and completed the sale of its Jaeger Knitwear business.

A loss of #10.1 million was incurred in respect of the disposal of these
operations. The sale of the Jaeger Knitwear business is shown as loss on
disposal of discontinued operations following the sale of substantially the
whole of the remainder of the Fashion Retail business in January 2003.

Subsequent to the year end, on 23 January 2003 the Group completed the disposal
of the majority of its Fashion Retail businesses.  In accordance with FRS3, the
results of the businesses disposed have been shown as discontinued and prior
year figures have been restated accordingly.

For the year ended 31 December 2001, the loss on disposal of continuing
operations primarily related to the disposal of a US crafts business, Dimensions
Inc, at a total loss of #11.8 million including #12.7 million of previously
written-off goodwill, and the exit from apparel fabric manufacturing in Madura
Coats Limited in India at a cost of #12.8 million. The balance represented net
adjustments in respect of prior year disposals.

The loss on disposal of discontinued operations related to the sale of the
Group's Branded Clothing businesses and all Home Furnishing businesses other
than the Dorma UK bedwear operations.

All acquisitions during the year have been accounted for using the acquisition
method.

None of these acquisitions was material for the purposes of The Companies Act
1985, FRS 3 or FRS 6.

2(a) Analysis of turnover, operating profit and net assets by product

                                     Turnover             Operating profit          Net assets  
                              __________  _________   __________  __________   __________   __________
                                    2002       2001         2002        2001         2002         2001 
                                           Restated                 Restated                  Restated
                                      #m         #m           #m          #m           #m           #m 
                              __________  _________   __________  __________   __________   __________

  Thread             
                                                         
  UK and Europe                    321.6      325.9         12.8        18.1        125.8        132.8 
                                   
  North America                    291.0      304.5         12.0        11.7        174.1        197.6 
                                   
  South America                     87.6      103.7         11.5        12.6         64.1         78.8 
                                                                              
  Asia                             222.4      203.8         35.7        29.5        147.0        151.4 
                                   
  Corporate (including net             -          -          5.3         0.8         (7.8)        28.8 
  negative goodwill                
  amortisation of #2.1 million                                                
  (2001 - #nil))                                                              
                                 ________  ________     ________    ________      ________    ________
  Total Thread                      922.6     937.9         77.3        72.7         503.2       589.4 
                                 ________  ________     ________    ________      ________    ________

  Reorganisation costs and                                 (15.2)      (25.7)              
  impairment                                                                  
  of fixed assets                                                             
                                                                              
  Exceptional items                                            -        (1.1)               
                                                        ________    _________       
  Thread operating profit                                   62.1        45.9               
                                                        ________    _________              
                                                       
  Other businesses                                                            
  India Textiles                     22.6      32.4         (0.2)       (2.3)          5.8        13.7 
                                                                              
  Bedwear                            75.7      86.6         (1.5)        0.7          22.8        23.7 
                                                                              
  Fashion Retail                    134.7     155.7        (16.3)       (2.3)         44.4        50.5 
                                   
  Other                                 -      34.4            -        (0.4)            -         0.7 
                                 ________  ________     ________    ________      ________    ________
  Total other businesses            233.0     309.1        (18.0)       (4.3)         73.0        88.6 
                                 ________  ________     ________    ________      ________    ________
  Reorganisation costs and                                  (3.8)       (5.8)               
  impairment                                                                  
  of fixed assets                                                                  
  Exceptional items                                         (0.1)        0.1               
                                                        ________    ________
  Other businesses operating loss                          (21.9)      (10.0)              
                                                        ________    ________ 
                                                                              
  Total Group                      1155.6    1247.0         40.2        35.9         576.2       678.0 
                                 ________  ________                               ________    ________
                                                                              
  Associated companies                                       0.9         0.6               
  Profit on sale of fixed assets                             8.7        13.6               
  Loss on sale or termination of                           (10.1)      (26.8)              
  operations                                                                  
                                                        ________    ________ 
  Profit before interest                                    39.7        23.3               
  Net interest payable                                      (9.4)      (10.5)              
                                                                              
  Other finance income                                      14.3        10.2               
                                                        ________    ________ 
  Profit before tax                                         44.6        23.0               
  Tax on profit                                             (9.1)      (11.0)              
                                                        ________    ________ 
  Profit after tax                                          35.5        12.0               
                                                        ________    ________ 
                                                                              
  Headline basis                                                              
  Profit before tax                                         44.4        38.0               
                                                        ________    ________ 
  Profit after tax                                          34.9        26.6               
                                                        ________    ________ 



The analysis of turnover, operating profit before
reorganisation costs and impairment of fixed assets
and exceptional items, and net assets was:

  Continuing                                                                  
  Total Thread     922.6      937.9      77.3       72.7    503.2       589.4 
  India             22.6       32.4     (0.2)      (2.3)      5.8        13.7 
  Textiles                                                                    
  Bedwear           75.7       86.6     (1.5)        0.7     22.8        23.7 
  Fashion           10.5       12.5     (3.2)      (1.1)      0.8         2.2 
  Retail                                                                      
                 _______   ________   _______   ________   ______    ________ 
                  1031.4     1069.4      72.4       70.0    532.6       629.0 
  Discontinued                                                                
  Fashion          124.2      143.2    (13.1)      (1.2)     43.6        48.3 
  Retail                                                                      
  Other                -       34.4         -      (0.4)        -         0.7 
                 _______   ________   _______   ________   ______    ________ 
                  1155.6     1247.0      59.3       68.4    576.2       678.0 
                 _______   ________   _______   ________   ______    ________ 
                                                                              
 
Operating profit margins for the Thread business
before reorganisation costs and impairment of fixed
assets and exceptional items were:

                    Turnover        Operating profit      Operating margin     
              ________   _______   _______    ________   ______     ________  
                  2002      2001       2002       2001       2002        2001 
  Thread            #m        #m         #m         #m          %           % 
              ________   _______    _______   ________     ______    ________ 
  UK and         321.6     325.9       12.8       18.1       4.0%        5.6% 
  Europe                                                                      
  North          291.0     304.5       12.0       11.7       4.1%        3.8% 
  America                                                                     
  South           87.6     103.7       11.5       12.6      13.1%       12.2% 
  America                                                                     
  Asia           222.4     203.8       35.7       29.5      16.1%       14.5% 
  Corporate          -         -        5.3        0.8          -           - 
              ________   _______    _______   ________     ______    ________ 
  Total          922.6     937.9       77.3       72.7       8.4%        7.8% 
  Thread                                                                      
              ________   _______    _______   ________     ______    ________ 

2(b) Geographical analysis of turnover, operating profit and net assets by
location

                                     Turnover             Operating profit          Net assets  
                              __________  _________   __________  __________   __________   __________
                                    2002       2001         2002        2001         2002         2001 
                                           Restated                 Restated                  Restated
                                      #m         #m           #m          #m           #m           #m 
                              __________  _________   __________  __________   __________   __________
                                                                              
  United Kingdom                    121.8     137.3         (5.9)       (3.4)        53.0         88.4 
                                       
  Rest of Europe                    261.3     259.6         17.6        20.2         88.8         91.3 
                                                                     
  North America                     301.0     316.3          9.3         9.9        175.5        200.3
                                           
  South America                      87.6     103.7         11.5        12.6         64.1         78.8 
                                                                             
  Asia, Australasia and Africa      259.7     252.5         39.9        30.7        151.2        170.2
                                 ________  ________     ________    ________      ________    ________

  Total continuing operations      1031.4    1069.4         72.4        70.0        532.6        629.0
                                                                  
  Discontinued operations           124.2     177.6        (13.1)       (1.6)        43.6         49.0 
                                 ________  ________     ________    ________      ________    ________
                                                                              
                                   1155.6    1247.0         59.3        68.4        576.2        678.0
                                 ________  ________     ________    ________      ________    ________
                                                                              
                                                                              
  Reorganisation costs and impairment                      (19.0)      (31.5)            
  of fixed assets                                          
  Exceptional items                                         (0.1)       (1.0)             
                                                                              
                                                        ________    ________    
  Operating profit                                          40.2        35.9              
  Associated companies                                       0.9         0.6              
  FRS 3 exceptional items                                   (1.4)      (13.2)             
                                                        ________    ________    
  Profit before interest                                    39.7        23.3              
                                                        ________    ________    
                                                                              
  Net debt                                                                        (104.4)       (128.1)
  Other fixed and current asset                                                     29.8          30.8 
  investments                                                                   ________      ________   
  Net assets per consolidated balance                                              501.6         580.7
  sheet                                                                         ________      ________                  
                                                 
  The geographical analysis of                                                
  discontinued operations by location                                         
  was:                                                                        
  United Kingdom                    121.0     155.1       (13.0)        (0.7)       43.8          49.4 
                                         
  Rest of Europe                      0.4      19.7           -         (1.2)       (0.6)         (0.4)
                                                                          
  North America                       2.8       2.8        (0.1)         0.3         0.4             - 
                                 ________  ________     ________    ________      ________    ________
                                    124.2     177.6       (13.1)        (1.6)       43.6          49.0 
                                 ________  ________     ________    ________      ________    ________
                                                                              



                                                                                                                       
Note

The geographical analysis of turnover by destination has not been presented as
it does not differ materially from the analysis by location.

3 Operating profit

                                                                            2002     2001 
                                                                              #m       #m 
  Operating profit is                                                         
  stated after charging:                                                      
  Depreciation               - Owned assets                                 41.7     45.0 
                             - Leased assets                                 0.3      0.5 
  Amortisation of goodwill                                                  (1.6)     0.7 
  Reorganisation costs                                                      17.1     31.6 
  Impairment of fixed                                                        1.9     (0.1) 
  assets                                                                      
  Exceptional items                                                          0.1      1.0 
  Hire of plant and                                                          6.4      6.4 
  machinery                                                                   
  Other operating lease                                                     21.5     20.8 
  rentals                                                                     
  Research and development                                                   2.1      2.2 
  expenditure                                                                 
  Directors' remuneration                                                    1.5      2.1 
  ( note 4 )                                                                  
  Auditors' remuneration     - Audit fees                                    1.7      1.7 
                             - Non audit related fees       - UK               -      0.1
                                                            - Overseas       0.3      0.2 
                                                                        __________________

In addition to the non audit related fees charged to operating profit, a further
#4.5 million was incurred in 2001 in respect of advisory work in relation to 
the disposal of businesses, and was included in the loss on sale or termination 
of operations. 

  and after crediting other operating income:                                 
  Rental income net of expenses                                              1.1      0.9
  Royalties and licensing income                                             0.9      1.1
  Credit card income                                                         1.5      1.6
  Exchange gain                                                                -      0.9
                                                                        ________  ________
                                                                             3.5      4.5
                                                                        ________  ________

  ______________________________________________________________                                                        
                     

Product category analysis of reorganisation costs and impairment of fixed assets

  Thread                                                                      
  UK and Europe                                                              8.9     11.1
  North America                                                              3.8     10.5
  South America                                                              1.1      1.8
  Asia                                                                       1.4      1.7
  Corporate                                                                    -      0.6
                                                                        ________  ________
  Total Thread                                                              15.2     25.7
  India Textiles                                                             0.3        - 
  Bedwear                                                                    1.3      1.6
  Fashion Retail                                                             0.5        - 
                                                                        ________  ________
  Continuing operations                                                     17.3     27.3
  Discontinued operations                                                     
  Fashion Retail                                                             1.7      4.1
  Other                                                                        -      0.1
                                                                        ________  ________
  Total                                                                     19.0     31.5
  ______________________________________________________________                                                        
                                                                                    
                                                                              
  Analysis of other exceptional items                                         
  Impairment of goodwill                                                       -      1.1
                                                                        ________  _______                               
  Continuing operations                                                        -      1.1
  Discontinued operations                                                    0.1     (0.1)
                                                                        ________  _______                               
                                              
  Total                                                                      0.1      1.0
                                                                        ________  _______                               
                                                                           
  ______________________________________________________________

 4 Directors' emoluments 
                                                                 
                                                                            2002     2001 
                                                                              #m       #m 
  Aggregate emoluments                                                       1.5      1.1 
  Compensation for loss of office                                              -      1.0 
  Total                                                                      1.5      2.1 

 ________________________________________________________________________________________
  5 Employees 

                                                                             
                                                                            2002      2001
                                                                          Number    Number
                                                                              
  _____________________________________________________________________ ________  ________
  The average numbers employed by the Group during the year were:             
                                                                              
  Direct                                                                   19250     22310
  Indirect                                                                  5373      5291
  Staff                                                                    10880     12069
                                                                        ________  ________
                                                                           35503     39670
  _____________________________________________________________________ ________  ________
  Comprising:                                                                 
  UK                                                                        5484      6702
  Overseas                                                                 30019     32968
                                                                        ________  ________
                                                                           35503     39670
  _____________________________________________________________________ ________  ________
                                                                              
  The total numbers employed at the end of the year were:                     
  UK                                                                        4879      5919
  Overseas                                                                 29453     31162
                                                                        ________  ________
                                                                           34332     37081
  _____________________________________________________________________ ________  ________
  The costs incurred in respect of these employees were:                      
 


                                                                              #m        #m 
                                                                        ________  ________
  Wages and salaries                                                       287.6     309.7
  Social security                                                           31.7      37.1
  costs                                                                       
  Other pension costs   included in operating profit                        11.6      15.5
  (note 29):                                                                  
                        included in other finance costs                    (14.3)    (10.2)
                                                                     
                        included in statement of total recognised           40.8       5.9 
                        gains and losses                                      
                                                                        ________  ________
                                                                           357.4     358.0
  _____________________________________________________________________ ________  ________
  6 Interest receivable and similar income 
                                                                              
                                                                            2002      2001
                                                                              #m        #m 
  _____________________________________________________________________ ________  ________
  Interest receivable                                                        7.7       9.5
                                                                              
  Income from other fixed and current asset investments                      2.5       2.6
                                                                              
  Gain on sale of other fixed and current asset investments                    -       0.6
                                                                        ________  ________
  Gross interest receivable and similar income                              10.2      12.7
                                                                       
  Less: credit card interest transferred to other operating income          (0.5)     (0.7)
                                                                        ________  ________
                                                                             9.7      12.0
  _____________________________________________________________________ ________  ________

 7 Interest payable and similar charges 
  Loans                                                                      6.2      10.6
  Bank overdrafts and other borrowings                                       7.7       6.9
  Discounting interest re onerous leasehold provisions                       0.1       0.1
  Finance leases                                                             0.3       0.7
                                                                        ________  ________
                                                                            14.3      18.3
                                                                              
  Cost of financing convertible debt (note 17)                               3.9       3.9
                                                                    
  Share of net interest payable of associated companies                      0.9       0.3
                                                                        ________  ________
  Total interest payable and similar charges                                19.1     22.5
  _____________________________________________________________________ ________  ________
  The above interest includes interest on borrowings not repayable in          -      0.6
  full within five years of:                                                 
  _____________________________________________________________________ ________  ________

  8 Tax on profit on ordinary activities 
                                                                              
                                                                         2002                          2001 
                                                                                                   Restated
                                                                           #m                            #m 
  _______________________________  ______________                  __________                     _________
  UK taxation based on profit                                                 
  for the year:                                                               
  Corporation tax at 30%                                                  6.1                            5.1 
  Double taxation relief                                                 (6.1)                          (5.1)
                                                                                   
  Deferred taxation                                                       1.6                           (1.4)
                                                                              
  Prior year adjustments -         Corporation tax          (2.0)                        0.8        
                                   Deferred taxation         0.3                         0.9        
                                                       _________                   _________       
                                                                         (1.7)                           1.7 
                                                                   __________                     __________            
  Total UK taxation                                                      (0.1)                           0.3 
                                                                   __________                     __________            
  Overseas taxation:                                                          
  Current taxation                                                       12.4                           10.6 
  Deferred taxation                                                      (1.6)                           0.4 
                                                                   __________                     __________            
                                                                         10.8                           11.0 
  Prior year adjustments -         Current taxation         (1.3)                       (1.7)       
                                   Deferred taxation        (0.3)                        1.3        
                                                       _________                   _________       
                                                                         (1.6)                          (0.4)
                                                                   __________                     __________            
  Total Overseas taxation                                                 9.2                           10.6 
                                                                   __________                     __________            
  Associated companies taxation                                             -                            0.1 
                                                                   __________                     __________            
                                                                          9.1                           11.0 
  _______________________________  ______________                  __________                     _________
 

The tax charge for the year ended 31 December 2001 has been restated to reflect
the adoption of FRS 19 - Deferred tax, resulting in a #0.1 million reduction in
overseas deferred taxation.

The standard rate of current tax for the year, based on the UK standard rate of
corporation tax, is 30% (2001 - 30%).  The current tax charge for the year is
lower than 30% (2001: higher than 30%) for the reasons set out in the following
reconciliation:

___________________________________________________________

  _______________________________  ______________                  __________                     _________
  Profit on ordinary activities before tax                               44.6                         23.0 
  _______________________________  ______________                  __________                     _________
                                                                              
  Tax on profit on ordinary activities at standard rate                  13.4                          6.9 
  Adjusted for the effects of:                                                
  Expenses not deductible for tax purposes (including                     3.1                          3.5 
  goodwill amortisation)                                                      
  Income not liable to taxation                                          (4.2)                        (5.2) 
  Losses not recognised                                                   9.4                          5.4 
  Utilisation of brought forward losses not previously                   (5.2)                        (1.6) 
  recognised                                                                  
  Capital allowances for the year in excess of depreciation              (2.1)                         1.3 
  Other short term timing differences                                    (1.2)                        (2.6) 
  Profits on sale of fixed assets covered by reliefs                     (2.4)                        (3.9) 
  Losses on sales or termination of operations not eligible               2.7                          6.6 
  for relief                                                                  
  Inter-group dividends not covered by double tax relief                  1.2                          1.7 
  Lower rates of tax on overseas earnings                                (2.8)                        (0.6) 
  Withholding tax on remittances                                          2.5                          1.9 
  Corporation taxes not on profits                                        1.7                          1.7 
  Local tax incentives                                                   (1.8)                        (3.8) 
  Other                                                                  (1.9)                        (0.6) 
                                                                   __________                    _________
  Current tax charge for the year                                        12.4                         10.7 
  _______________________________  ______________                  __________                    _________
                                                                              
 

Actuarial losses have been taken to reserves along with the associated tax
credit of #12.3 million (2001 - #1.5 million).

9 Profit for the year
________________________________________________________________   __________                     _________

The Company's loss for the financial year was                          (114.1)                       (122.9)
                                                                                                              
________________________________________________________________   __________                     _________


Under the provisions of Section 230 Companies Act 1985 a Profit and Loss Account
for the Company is not presented.

10 Ordinary dividends

                                                                                        2002          2001
                                                          2002           2001             #m            #m
_____________________________________________           ______        _______       ________     _________
Ordinary shares (equity shares)                                    
   Interim                                                1.50 p         1.50 p         10.6          10.6
   Special second interim                                 2.50 p            - p         17.8             -
   Final                                                     - p         1.50 p            -          10.5
                                                        ______        _______       ________     _________
                                                          4.00 p         3.00 p         28.4          21.1
                                                        ______        _______       ________     _________
                                     


The interim dividend of 1.5p net per share was paid on 6 January 2003.

In connection with the recommended offer, the Board has declared a special
second interim dividend of 2.5p (in lieu of a final dividend for the year).  The
payment of this dividend is conditional on the offer being declared wholly
unconditional.  In the event that this offer is not successful, this special
second interim dividend will not be paid.  In this situation the Board will
propose a final dividend.


11 Earnings per share

                                                                                           2002          2001
                                                                                                     Restated
                                                              2002           2001            #m            #m
_____________________________________________________       ______        _______      ________     _________
Earnings per share are based on profit available for                                    
Ordinary shareholders of:                                                                  29.6          10.2
and on average number of shares of:                          706.4  m       703.6  m            
                                     
resulting in basic and diluted earnings per share of:          4.2  p         1.4  p            
Less:  amortisation of goodwill                               (0.2) p         0.1  p       (1.6)          0.7
          impairment of goodwill                                 -  p         0.2  p          -           1.1
          profit on sale of fixed assets                      (1.2) p        (1.9) p       (8.7)        (13.6)
          losses on sale or termination of                                    
          operations                                           1.4  p         3.8  p       10.1          26.8
          taxation relating to these items                    (0.1) p        (0.1) p       (0.4)         (0.4)
          minority interests relating to these items          (0.3) p        (0.7) p       (2.0)         (5.1)
                                                            ______        _______      ________     _________
Headline earnings per share                                    3.8  p         2.8  p       27.0          19.7
_____________________________________________               ______        _______      ________     _________
                                                            
Headline earnings per share have been calculated in accordance with Statement of
Investment Practice Number 1 issued by The Institute of Investment Management 
and Research and are provided in order to assist users of accounts to identify 
earnings derived from trading activities.

Exercise of outstanding share options and conversion of all the #60.458 million
(2001 - #60.461 million) 6.25% Senior Convertible Bonds of Coats plc would not
result in any dilution of earnings per share.

12 Tangible assets

                                                              Land          Plant,      
                                                               and       machinery      
                                                         buildings      & vehicles        Total
                                                                #m              #m           #m
____________________________________________________     _________     ___________     ________
Group                  
Cost                  
At beginning of year                                         211.3           661.7        873.0
Exchange difference                                           (9.0)          (33.1)       (42.1)
Subsidiaries acquired                                            -             0.7          0.7
Subsidiaries disposed                                         (0.7)          (14.9)       (15.6)
Additions                                                      4.8            52.1         56.9
Disposals                                                     (7.1)          (35.9)       (43.0)
____________________________________________________     _________     ___________     ________
At 31 December 2002                                          199.3           630.6        829.9
____________________________________________________     _________     ___________     ________
                   
Depreciation                  
At beginning of year                                          74.6           395.9        470.5
Exchange difference                                           (3.5)          (16.2)       (19.7)
Subsidiaries acquired                                            -             0.5          0.5
Subsidiaries disposed                                         (0.3)          (11.9)       (12.2)
Charge for the year                                            5.0            37.0         42.0
Impairment of fixed assets                                       -             1.9          1.9
Disposals                                                     (4.2)          (28.7)       (32.9)
____________________________________________________     _________     ___________     ________
At 31 December 2002                                           71.6           378.5        450.1
____________________________________________________     _________     ___________     ________
                   
Net book value                  
At 31 December 2002                                          127.7           252.1        379.8
____________________________________________________     _________     ___________     ________
                   
At beginning of year                                         136.7           265.8        402.5
____________________________________________________     _________     ___________     ________
                   
                                                                              2002         2001
Land and buildings                                                              #m           #m
____________________________________________________                   ___________     ________
Cost                  
Freehold                                                                     163.4        173.1
Long leasehold                                                                14.1         14.3
Short leasehold                                                               21.8         23.9
____________________________________________________                   ___________     ________
                                                                             199.3        211.3
____________________________________________________                   ___________     ________
Accumulated depreciation                  
Freehold                                                                      56.4         59.1
Long leasehold                                                                 4.2          3.9
Short leasehold                                                               11.0         11.6
____________________________________________________                   ___________     ________
                                                                              71.6         74.6
____________________________________________________                   ___________     ________
                   


The cost of long leasehold land and buildings includes capitalised interest of
#1.4 million.
(2001 #1.4 million).

Plant, machinery and vehicles

The net book value of capitalised finance leases included in plant, machinery
and vehicles is #0.8 million (2001 #1.5 million).

13   Investments

                                                     Associated                
                                                      companies    Other     Total 
                                                                              
                                                             #m       #m        #m 
  _________________________________________________  __________  _______  ________

  Group                                                                       
  Cost                                                                        
  At beginning of year                                      0.7      8.7       9.4 
  Exchange                                                    -     (0.2)     (0.2) 
  Transfer to investment in subsidiaries                      -     (0.1)     (0.1) 
  Disposals                                                   -     (0.4)     (0.4) 
                                                                              
  _________________________________________________  __________  _______  ________

  At 31 December 2002                                       0.7      8.0       8.7 
  _________________________________________________  __________  _______  ________
  Provisions                                                                  
  At beginning of year                                        -     (4.8)     (4.8) 
  Exchange                                                    -        -         - 
  _________________________________________________  __________  _______  ________

  At 31 December 2002                                         -     (4.8)     (4.8) 
  _________________________________________________  __________  _______  ________

  Share of profits/(losses) retained                                          
  At beginning of year                                      1.7        -       1.7 
  Share of losses for the year                             (0.1)       -      (0.1) 
  _________________________________________________  __________  _______  ________

  At 31 December 2002                                       1.6        -       1.6 
  _________________________________________________  __________  _______  ________

  Net book value                                                              
  At 31 December 2002                                       2.3      3.2       5.5 
  _________________________________________________  __________  _______  ________

  At beginning of year                                      2.4      3.9       6.3 
  _________________________________________________  __________  _______  ________

  Including investments listed on a recognised                                
  Stock Exchange                                                              
  At 31 December 2002                                         -      2.3       2.3 
  _________________________________________________  __________  _______  ________

  At beginning of year                                        -      2.5       2.5 
  _________________________________________________  __________  _______  ________


Other fixed asset investments include an investment of #0.3 million (2001 - #0.3
million) in the Company's own shares held by the Employee Share Ownership Plan.

                                                                        Other fixed      
                                                       Subsidiaries            Asset      
                                                   Shares       Loans    Investments           Total
Company                                                #m          #m             #m              #m
_____________________________________________     _______     _______     __________     ___________
Cost                        
At beginning of year                               1622.2       493.6            6.2          2122.0
Additions                                             8.5       298.4              -           306.9
Group transfers                                    (829.5)          -              -          (829.5)
Repaid                                                  -      (293.7)             -          (293.7)
_____________________________________________     _______     _______     __________     ___________
At 31 December 2002                                 801.2       498.3            6.2          1305.7
_____________________________________________     _______     _______     __________     ___________
Provisions                        
At beginning of year                                    -           -           (5.3)           (5.3)
Provided in the year                                (44.0)      (94.7)             -          (138.7)
_____________________________________________     _______     _______     __________     ___________
At 31 December 2002                                 (44.0)      (94.7)          (5.3)         (144.0)
_____________________________________________     _______     _______     __________     ___________
Net book value                        
_____________________________________________     _______     _______     __________     ___________
At 31 December 2002                                 757.2       403.6            0.9          1161.7
_____________________________________________     _______     _______     __________     ___________
At beginning of year                               1622.2       493.6            0.9          2116.7
_____________________________________________     _______     _______     __________     ___________
                         

Loans to subsidiaries include #nil million (2001 - #2.4 million) in respect of
back-to-back finance leases. The maturity profile of these leases is shown in
note 18.


14 Stocks
                                               Group                   Company
                                                ________    ________    ________    ________
                                                    2002        2001        2002        2001
                                                      #m          #m          #m          #m
____________________________________________    ________    ________    ________    ________
Raw materials and consumables                       52.8        66.7           -           -
Work in progress                                    66.1        67.9           -           -
Finished goods and goods for resale                136.7       157.3           -           -
____________________________________________    ________    ________    ________    ________
                                                   255.6       291.9           -           -
____________________________________________    ________    ________    ________    ________



15 Debtors
                                               Group                   Company
                                                ________    ________    ________    ________
                                                    2002        2001        2002        2001
                                                      #m          #m          #m          #m
____________________________________________    ________    ________    ________    ________
Debtors due within one year:
Trade debtors                                      189.4       185.7           -         0.1
Amounts owed by subsidiaries                           -           -         3.4         3.5
Amounts owed by associated companies                 0.4         1.5           -           -
Corporation and overseas tax recoverable             9.2        12.1           -         0.6
Other debtors                                       31.1        28.4         0.1         0.5
Prepayments and accrued income                      11.7        11.3           -         0.3
____________________________________________    ________    ________    ________    ________
                                                   241.8       239.0         3.5         5.0
____________________________________________    ________    ________    ________    ________
Debtors due in more than one year:
Trade debtors                                        0.6         1.0           -           -
Amounts owed by associated companies                 0.8           -           -           -
Other debtors                                        8.4        15.0           -         0.7
Prepayments and accrued income                       0.2         0.2           -           -
____________________________________________    ________    ________    ________    ________
                                                    10.0        16.2           -         0.7
____________________________________________    ________    ________    ________    ________

16 Current asset investments
                                                       Group                  Company
                                                ________    ________    ________    ________
                                                    2002        2001        2002        2001
                                                      #m          #m          #m          #m
____________________________________________    ________    ________    ________    ________
Listed investments                                  23.7        23.8           -           -
Unlisted investments                                 0.6         0.7           -           -
____________________________________________    ________    ________    ________    ________
                                                    24.3        24.5           -           -
____________________________________________    ________    ________    ________    ________
Market value of listed investments                  24.2        25.4           -           -
____________________________________________    ________    ________    ________    ________

17 Other creditors (amounts falling due within one year)
                                                      Group                  Company
                                               ________    ________    ________    ________
                                                   2002        2001        2002        2001
                                                     #m          #m          #m          #m
___________________________________________    ________    ________    ________    ________
Trade creditors                                   118.4       105.1           -         0.1
Loans and loan stock ( note 19 )                   74.1       117.0        55.4        76.5
Amounts owed to subsidiaries                          -           -           -         0.1
Amounts owed to associated companies                0.7         0.4           -           -
Bills of exchange                                   5.6         8.2           -           -
Corporation tax and overseas taxation              23.2        22.3        10.0        10.0
Other taxation and social security                 15.7        23.4           -           -
Payments in advance                                 0.6           -           -           -
Other creditors                                    30.0        21.5         0.4         0.4
Accruals and deferred income                       33.5        37.7         2.9         2.4
Proposed dividends                                 28.3        21.1        28.3        21.1
Finance lease obligations (note 18)                 0.6         0.8         0.3         0.5
Leaving indemnities (note 20)                       4.6         3.0           -           -
___________________________________________    ________    ________    ________    ________
                                                  335.3       360.5        97.3       111.1
___________________________________________    ________    ________    ________    ________

Convertible debt
Coats plc - #60.458m 6.25% senior
convertible
bonds due 2003 (see note)                          60.4           -        60.4           -
___________________________________________    ________    ________    ________    ________



Note

On 9 August 1993, Coats plc issued #75.625m 6.25% senior convertible bonds.


As a result of redemptions and conversions since the issue, the value of bonds
currently in issue is #60.458 million (2001 - #60.461 million).


These bonds are convertible into ordinary shares of Coats plc at a price of 270p
per share at any time up to

2 August 2003. The conversion price was adjusted in accordance with the Trust
Deed with effect from 17 May 1994 as a result of the dilution effect of the
enhanced share dividend. The bonds then outstanding will be redeemed at their
principal value on 9 August 2003. The company has the power to redeem the bonds
in whole or in part at any time after 31 August 1998.


In accordance with FRS4, the expenses of the issue have been deducted from the
gross proceeds of the issue and, together with the finance costs, are allocated
to the profit and loss account over the life of the debt at a constant rate on
the carrying amount.


18 Other creditors (amounts falling due after more than one year)
                                               Group                  Company
                                                _______    ________    ______    _______
                                                   2002        2001      2002       2001
                                                     #m          #m        #m         #m
____________________________________________    _______    ________    ______    _______

Trade creditors                                     0.1         0.7         -          -
Loans and loan stock (note 19)                      3.0        10.7         -          -
Amounts owed to subsidiaries                          -           -     423.0     1243.2
Other creditors                                     1.3         5.0         -        0.2
Accruals and deferred income                        2.0         2.5         -          -
Finance lease obligations                           1.7         3.4       0.4        1.9
____________________________________________    _______    ________    ______    _______
                                                    8.1        22.3     423.4     1245.3
____________________________________________    _______    ________    ______    _______



The amounts owed to subsidiaries have no specified dates of repayment but are
repayable only on receipt of twelve months' notice and do not bear interest.

Finance lease obligations are repayable as
follows:

Within one year                                      0.6         0.8       0.3        0.5
Between one and two years                            0.7         1.0       0.4        0.7
Between two and five years inclusive                 0.5         1.5         -        0.9
Over five years                                      0.5         0.9         -        0.3
____________________________________________    ________    ________    ______    _______
                                                     2.3         4.2       0.7        2.4
____________________________________________    ________    ________    ______    _______

Convertible debt
Coats plc - #60.458 million 6.25% senior
convertible
bonds due 2003 (note 17)                               -        60.2         -       60.2
____________________________________________    ________    ________    ______    _______

19 Borrowings and financial instruments

(a) Loans and loan stock
                                                       Group                Company
                                                ________    ________    ________    _____
                                                    2002        2001        2002     2001
                                                      #m          #m          #m       #m
____________________________________________    ________    ________    ________    _____
Loans                                               77.1       118.5        55.4     76.5
Loan stock                                             -         9.2           -        -
                                                ________    ________    ________    _____
                                                    77.1       127.7        55.4     76.5
Repayable within one year                          (74.1)     (117.0)      (55.4)   (76.5)
____________________________________________    ________    ________    ________    _____
Amounts falling due after more than one year         3.0        10.7           -        -
____________________________________________    ________    ________    ________    _____
Repayable as follows:
Between one and two years                            2.3         0.9           -        -
Between two and five years                           0.7         0.6           -        -
After five years                                       -         9.2           -        -
____________________________________________    ________    ________    ________    _____
                                                     3.0        10.7           -        -
____________________________________________    ________    ________    ________    _____

Loans
Repayable within five years:
Bank loans                                          73.4       112.0        52.3     73.1
Other loans                                          3.7         6.1         3.1      3.4
Not wholly repayable within five years:
Bank loans                                             -         0.4           -        -
____________________________________________    ________    ________    ________    _____
                                                    77.1       118.5        55.4     76.5
____________________________________________    ________    ________    ________    _____

Loans repayable after one year:
Other                                                3.0         1.5           -        -
____________________________________________    ________    ________    ________    _____



The rates of interest paid on the above loans conform to the terms ruling in
each country and the repayment dates extend to 2007.

                                                       Group                 Company
                                                ________    ________    ________    ______
                                                    2002        2001        2002      2001
                                                      #m          #m          #m        #m
____________________________________________    ________    ________    ________    ______
Loan stock
Not wholly repayable within five years:
Coats Patons Ltd 6.75% unsecured stock 2002/           -         6.5           -         -
2007
Coats Patons Ltd 4.5% unsecured stock 2002/            -         2.7           -         -
2007
____________________________________________    ________    ________    ________    ______
                                                       -         9.2           -         -
____________________________________________    ________    ________    ________    ______
Net debt
Loans and loan stock                                77.1       127.7        55.4      76.5
Bank overdrafts                                     26.8        24.9        26.5      22.6
Lease finance                                        2.3         4.2         0.7       2.4
____________________________________________    ________    ________    ________    ______
                                                   106.2       156.8        82.6     101.5
Convertible debt                                    60.4        60.2        60.4      60.2
____________________________________________    ________    ________    ________    ______
Total borrowings                                   166.6       217.0       143.0     161.7
Cash and short-term deposits                       (62.2)      (88.9)       (3.1)    (19.7)
Net debt                                           104.4       128.1       139.9     142.0
____________________________________________    ________    ________    ________    ______


                                                                  Group
                                                          ________      ______
                                                              2002        2001
                                                                #m          #m
                                                          ________      ______
Maturity of debt
Total borrowings are repayable as follows:
Within one year                                              161.9       142.7
Between one and two years                                      3.0        62.1
Between two and five years                                     1.2         2.1
After five years                                               0.5        10.1
____________________________________________              ________      ______
                                                             166.6       217.0
____________________________________________              ________      ______
Total secured indebtedness                                     9.5         9.3
____________________________________________              ________      ______
Total indebtedness guaranteed by parent company               30.5        25.1
____________________________________________              ________      ______



(b) Financial instruments


Group

The Group's policies as regards derivatives and other financial information are
set out in the Financial review and the Statement of accounting policies. The
Group does not trade in financial instruments.


Short term debtors and creditors have been omitted from all disclosures other
than the currency profile.


Details of non-equity shares issued by the Group are given in note 22.


Maturity profile of financial liabilities

The maturity profile of the Group's total borrowings is stated in note 19(a).
Total borrowings include the Group's finance lease obligations and convertible
debt; the payment profile of both of these liabilities is further analysed in
note 17 and 18.


The 4.9% Cumulative preference shares issued by Coats plc are not redeemable
(see note 22).


Undrawn committed borrowing facilities

At 31 December 2002 the Group had undrawn committed borrowing facilities of
#117.8 million (2001 - #86.5 million) expiring in more than one year.


Currency analysis of net assets

The analysis of net assets by currency is as follows:

                                                               2002         2001
                                                                        Restated
                                                                 #m           #m
______________________________________________________    _________    _________
Currency analysis of net assets
Sterling                                                      141.8        172.1
US dollar and dollar related                                  211.0        264.0
Euro                                                           72.2         71.3
Indian rupee                                                   31.1         44.3
Other                                                         120.1        126.3
______________________________________________________    _________    _________
                                                              576.2        678.0
______________________________________________________    _________    _________

Interest rate and currency profile

The interest rate and currency profile of the Group's financial liabilities and
assets by principal currency is stated after taking into account the various
interest rate and currency swaps entered into by the Group.


In this analysis, fixed rate financial liabilities and assets are defined as
those where the interest rate is fixed for a period of more than one year from
the balance sheet date.

                                               Fixed    Floating    Non-interest
                                                rate        rate         bearing      Total
Financial liabilities at 31 December              #m          #m              #m         #m
2002
________________________________________    ________    ________     ___________    _______
Sterling cross currency swaps                      -      (144.8)              -     (144.8)
Sterling                                         2.0        60.7               -       62.7
US dollar and related                           36.7       142.4             0.4      179.5
Euro                                             5.8         9.0             0.2       15.0
Other                                            0.4        53.7             0.1       54.2
________________________________________    ________    ________     ___________    _______
Gross financial liabilities                     44.9       121.0             0.7      166.6
________________________________________    ________    ________     ___________    _______


                                                   Fixed rate               Non-interest
                                                                               bearing
                                         _____________    ______________     _____________
                                                                Weighted
                                              Weighted    average period          Weighted
                                               Average     for which the    average period
                                         interest rate     rate is fixed    until maturity
Financial liabililities at 31 December               %             Years             Years
2002
_____________________________________    _____________    ______________     _____________
Sterling                                           7.8               3.2                 -
US dollar and related                              4.4               2.5                 -
Euro                                               5.0               1.9               2.3
Other                                             12.0               3.8                 -
_____________________________________    _____________    ______________     _____________

Interest on floating rate liabilities is based on the relevant inter bank
offered rate.

                                                 Fixed     Floating    Non-interest
                                                  rate         rate         bearing        Total
Financial liabilities at 31 December                #m           #m              #m           #m
2001
_____________________________________    _____________    _________     ___________    _________
Sterling cross currency swaps                        -       (172.5)              -       (172.5)
Sterling                                          71.8         21.7               -         93.5
US dollar and related                             42.0        202.5               -        244.5
Euro                                               3.5         11.9             0.2         15.6
Other                                              1.3         34.6               -         35.9
_____________________________________    _____________    _________     ___________    _________
Gross financial liabilities                      118.6         98.2             0.2        217.0
_____________________________________    _____________    _________     ___________    _________


                                        Fixed rate                               Non-interest

                                                                                      bearing
                                          ____________    _______________    ________________
                                                                 Weighted
                                              Weighted     average period            Weighted
                                               average      for which the      average period
                                         interest rate      rate is fixed      until maturity
Financial liabilities at 31 December                 %              Years               Years
2001
_____________________________________     ____________    _______________    ________________
Sterling                                           6.3                2.2                   -
US dollar and related                              4.7                3.5                   -
Euro                                               5.3                3.0                 2.8
Other                                             10.2                2.6                   -
_____________________________________     ____________    _______________    ________________

Interest on floating rate liabilities is based on the relevant inter bank
offered rate.


The financial liabilities other than borrowings in creditors falling due after
more than one year and other provisions are not material.

                                           Fixed    Floating    Non-interest
                                            rate        rate         bearing      Total
Financial assets at 31 December               #m          #m              #m         #m
2002
__________________________________    __________    ________      __________    _______
Sterling cross currency swaps                  -       (25.7)              -      (25.7)
Sterling                                       -         4.5               -        4.5
US dollar and related                          -        16.6             3.7       20.3
Euro                                           -        34.2             1.3       35.5
Other                                          -        21.2             6.4       27.6
__________________________________    __________    ________      __________    _______
Gross financial assets                         -        50.8            11.4       62.2
__________________________________    __________    ________      __________    _______

                                           Fixed    Floating    Non-interest
                                            rate        rate         bearing      Total
Financial assets at 31 December               #m          #m              #m         #m
2001
__________________________________    __________    ________      __________    _______
Sterling cross currency swaps                  -       (33.7)              -      (33.7)
Sterling                                       -        11.4               -       11.4
US dollar and related                          -        33.0             1.2       34.2
Euro                                           -        47.9             2.3       50.2
Other                                          -        17.8             9.0       26.8
__________________________________    __________    ________      __________    _______
Gross financial assets                         -        76.4            12.5       88.9
__________________________________    __________    ________      __________    _______

Interest on floating rate bank deposits is based on the relevant national inter
bank rates and is fixed in advance for periods of up to one year.

All of the non-interest bearing financial assets mature within one week of the
balance sheet date.


Fair values of financial assets and liabilities

Set out below is a comparison by category of book value and estimated fair value
of the Group's financial assets and liabilities:

                                                                 2002                      2001
___________________________________________    ________    __________    ________      ________
                                                   Book     Estimated        Book     Estimated
                                                  value    fair value       value    fair value
                                                     #m            #m          #m            #m
Primary financial instruments held or
issued to finance the Group's operations:
Cash and short term deposits                      (62.2)        (62.2)      (88.9)        (88.9)
___________________________________________    ________    __________    ________      ________
Loans and loan stock                               77.1          77.1       127.7         127.6
Lease finance                                       2.3           2.4         4.2           4.3
Convertible debt                                   60.4          60.3        60.2          59.8
Bank overdrafts                                    26.8          26.8        24.9          24.9
___________________________________________    ________    __________    ________      ________
                                                  166.6         166.6       217.0         216.6
___________________________________________    ________    __________    ________      ________


Derivative financial instruments held to
manage the
Group's interest rate and currency profile:
Forward foreign exchange contracts                  (3.3)          (3.3)       (1.4)       (1.3)
Interest rate swaps                                    -            3.6         0.4        (0.3)
____________________________________________    ________    ___________    ________    ________
                                                    (3.3)           0.3        (1.0)       (1.6)
____________________________________________    ________    ___________    ________    ________
Coats plc 4.9% Cumulative Preference Shares         14.6            9.9        14.6        11.1
____________________________________________    ________    ___________    ________    ________

Market values have been used to determine the estimated fair values of forward
exchange contracts, all swaps and listed instruments held or issued. The
estimated fair value of all other items has been calculated by discounting
expected cash flows at the interest rates prevailing at the year end.


Hedging

The aggregate unrecognised loss at 31 December 2002, being the difference
between book value and estimated fair value of the above derivative financial
instruments, is #3.6 million (2001 - #0.6 million gain). Of this approximately
#1.1 million loss (2001 - approximately #0.3 million gain) will be recognised in
the profit and loss account for the year ending 31 December 2003.


Currency exposures

The main functional currencies of the Group are sterling, US dollar and the
euro. The following analysis of net monetary assets and liabilities shows the
Group's currency exposures after the effects of forward contracts and other
financial derivatives used to manage the currency exposure. The amounts shown
represent the transactional exposures that give rise to the net currency gains
and losses recognised in the profit and loss account. Such exposures comprise
the monetary assets and monetary liabilities of the Group which are not
denominated in the functional currency of the operating unit involved, other
than certain non-sterling borrowings treated as hedges of net investments in
overseas operations.

                                       Sterling     US Dollar       Euro      Other       Total

31 December 2002                              #m           #m         #m         #m          #m
____________________________________    ________    _________    _______    _______    ________
Sterling                                       -         (4.8)      (0.6)         -        (5.4)
US dollar                                    0.4            -       (0.8)       1.3         0.9
Euro                                           -         (0.6)         -          -        (0.6)
Other                                        0.1         12.8        4.9       (0.1)       17.7
____________________________________    ________    _________    _______    _______    ________
                                             0.5          7.4        3.5        1.2        12.6
____________________________________    ________    _________    _______    _______    ________

                                        Sterling    US Dollar       Euro      Other       Total
31 December 2001                              #m           #m         #m         #m          #m
____________________________________    ________    _________    _______    _______    ________
Sterling                                       -         (1.6)       2.4        0.3         1.1
US dollar                                      -            -       (2.1)       0.4        (1.7)
Euro                                        (0.4)        (0.3)         -        0.2        (0.5)
Other                                        0.9          2.8        4.8       (1.1)        7.4
____________________________________    ________    _________    _______    _______    ________
                                             0.5          0.9        5.1       (0.2)        6.3
____________________________________    ________    _________    _______    _______    ________

( ) represents uncovered monetary
liabilities.


20 Provisions for liabilities and charges
                                        Deferred       Closures and        Leaving
                                         taxation    reorganisation    indemnities       Total
                                         Restated                                     Restated
                                               #m                #m             #m          #m
_____________________________________    ________     _____________    ___________    ________
Group
At beginning of year as originally           (2.8)             35.6            5.0        37.8
reported
Prior period adjustment (deferred tax)       30.9                 -              -        30.9
                                         ________     _____________    ___________    ________
At beginning of year as restated             28.1              35.6            5.0        68.7
Exchange difference                          (1.6)             (1.0)          (0.5)       (3.1)
Provided - deferred tax                         -                 -              -           -
- reorganisations                               -              17.1              -        17.1
- sale or termination of operations             -              10.1              -        10.1
- discounting interest                          -               0.1              -         0.1
- other                                         -               2.3            1.8         4.1
Transfer from current tax                     0.1                 -              -         0.1
Transfer to pension liabilities              (4.0)             (1.1)             -        (5.1)
Utilised                                        -             (34.6)          (3.1)      (37.7)
_____________________________________    ________     _____________    ___________    ________
At 31 December 2002                          22.6              28.5            3.2        54.3
_____________________________________    ________     _____________    ___________    ________


                                                                         Total
                                                                            #m
                                                                      ________
Company
At beginning of year                                                       1.5
Provided                    - sale or termination of operations            0.6
                            - other                                       (0.1)
Utilised                                                                  (0.8)
__________________          ______________________________            ________
At 31 December 2002                                                        1.2
__________________          ______________________________            ________


                                                                           2002        2001
                                                                                   Restated
Analysis of Group deferred tax liability                                     #m          #m
_______________________________________________________________    ____________    ________
Capital allowances in excess of depreciation                               26.8        26.4
Other timing differences                                                    2.5         5.5
Losses carried forward                                                     (6.7)       (3.8)
_______________________________________________________________    ____________    ________
                                                                           22.6        28.1
_______________________________________________________________    ____________    ________



The Group has unutilised tax losses of #137.7 million (2001 - #117.0 million)
and unrecovered advance corporation tax of #69.1 million (2001 - #63.0 million)
that have not been recognised since it is more likely than not that there will
be no suitable future taxable profits against which they may be offset.


Other provisions

Provisions for reorganisations and closures will usually be utilised within one
year.


In many countries including India and much of South America, there are legal
requirements to make payments to employees on the termination of their
employment by retirement, redundancy, or otherwise. These payments are commonly
based on the number of years service with the company that each employee has.
The Group's policy is to accrue for this liability on a service basis and to
charge amounts actually paid out against the provisions. The resultant
provisions are included above under the heading "leaving indemnities".


The maturity profile of provisions for leaving indemnities is as follows:

                                                                     #m            #m
                                                            ___________    __________
Payable between one and two years                                   0.3           0.6
Payable between two and five years                                  0.4           0.9
Payable in more than five years                                     2.5           3.5
________________________________________________________    ___________    __________
                                                                    3.2           5.0
________________________________________________________    ___________    __________

21 Goodwill

                                                                    Fair     Fair value
                                                    Book           value         to the
The fair values attributed to the net              value     adjustments          Group
tangible assets
acquired during the year were:                        #m              #m             #m
___________________________________________    _________    ____________    ___________
Fixed assets                                         0.2               -            0.2
Current assets                                       2.2             0.1            2.3
Creditors and provisions                            (1.3)              -           (1.3)
Pension liabilities                                 (1.4)              -           (1.4)
Cash                                                 0.4               -            0.4
Minority interest                                   22.3               -           22.3
___________________________________________    _________    ____________    ___________
                                                    22.4             0.1           22.5
___________________________________________    _________    ____________    ___________


Fair value of consideration:  Cash                                               11.5

                              transfer from fixed asset investments               0.1
___________________________   ________________________________________    ___________
                                                                                 11.6
___________________________   ________________________________________    ___________
Goodwill arising during the                                                     (10.9)
year
___________________________   ________________________________________    ___________
                              Positive                                              -
                              Negative                                          (10.9)
___________________________   ________________________________________    ___________
                                                                                (10.9)
___________________________   ________________________________________    ___________



The fair value adjustments relate to minor adjustments to stock valuations in
respect of 2001 acquisitions.


The goodwill capitalised in the balance sheet is as follows:

                                                              Amortisation
                                                  Cost      and impairment            Net
Positive goodwill                                   #m                  #m             #m
________________________________________    __________    ________________    ___________
At beginning of year                              60.3                 8.5           51.8
Exchange                                          (0.8)               (0.1)          (0.7)
Amortised in the year                                -                 2.8           (2.8)
Disposals                                         (0.9)               (0.9)             -
________________________________________    __________    ________________    ___________
Carried forward at 31 December 2002               58.6                10.3           48.3
________________________________________    __________    ________________    ___________



Negative goodwill
________________________________________
At beginning of year                               7.1                 2.4            4.7
Exchange                                          (0.2)               (0.2)             -
Acquisitions                                      10.9                   -           10.9
Amortised in the year                                -                 4.4           (4.4)
________________________________________    __________    ________________    ___________
Carried forward at 31 December 2002               17.8                 6.6           11.2
________________________________________    __________    ________________    ___________



Of the negative goodwill arising during the year, #3.7 million (2001- #1.9
million) has been identified as relating to working capital and released during
the year. The balance has been capitalised in accordance with FRS 10 and will be
amortised over 10 years.


There was no purchased goodwill attributable to businesses sold or terminated
during the year (2001 - #12.5 million). As at 31 December 2002, the cumulative
amount of goodwill on acquisitions made prior to 1 January 1998 charged to
reserves is #192 million (2001 - #192 million).

                                                             Number          2002            Number        2001
22 Called up share capital                                of shares            #m         of shares          #m
_________________________________________             _____________      ________       ___________    ________
Authorised:
Ordinary shares of 20p each                             876,952,750         175.4       876,952,750       175.4
4.9% Cumulative Preference shares of #1 each             14,609,450          14.6        14,609,450        14.6
_________________________________________             _____________       _______                      ________
                                                                            190.0                         190.0
_________________________________________             _____________       _______                      ________
Allotted and fully paid:
Ordinary shares of 20p each - equity shares             707,973,426         141.6       705,360,873       141.1
4.9% Cumulative Preference shares of #1 each             14,609,449          14.6        14,609,449        14.6
- non equity shares
_________________________________________             _____________       _______                      ________
                                                                            156.2                         155.7
_________________________________________             _____________       _______                      ________



The 4.9% Cumulative Preference Shares of #1 each confer on the holders thereof
the right to receive a cumulative preferential dividend at the rate of 4.9 per
cent on the capital for the time being paid up thereon and the right on a
winding up or repayment of capital to a return of the capital paid thereon
(together with a premium calculated at the rate of #0.125 for every #1 of such
capital) and a sum equal to any arrears or deficiency of the fixed dividend
thereon calculated down to the date of the return of capital subject to such
taxes as shall be in force at that date and to be payable whether such dividend
has been declared or earned or not in priority to any payment to the holders of
the Ordinary Shares, but the Preference Shares shall not entitle the holders to
any further or other participation in the profits or assets of Coats plc.


The Preference Shares shall not entitle the holders thereof to attend or vote at
any general meeting unless either:


(i)         at the date of the meeting, the fixed dividend on the Preference
Shares is six months in arrears, and so that for this purpose such dividend
shall be deemed to be payable half-yearly on the 31 March and the 30 September
in every year; or


(ii)        the business of the meeting includes the consideration of a
resolution for winding up or reducing the capital of Coats plc or directly and
adversely affecting any of the special rights or privileges for the time being
attached to the Preference Shares.


The Preference Shares shall nevertheless entitle the holders thereof to receive
notice of every general meeting. At a general meeting at which the holders of
Preference Shares are entitled to attend and vote the Preference Shares shall,
in voting upon a poll, entitle a holder thereof or the proxy to the vote only
for every Preference Share held.


The conversion rights attaching to the #60.458m 6.25% Senior Convertible Bonds
issued by Coats plc are detailed in note 17.


Options granted for ordinary shares not exercised are as follows:

                                                                                                     Number
                                    Options granted       Price per share    Period of option     of shares
                                      _____________       _______________       _____________     _________
1984 Executive Share Option            1993 to 1994    223.41p to 256.08p        2003 to 2004       135,320
Scheme
Overseas Executive Share Option        1993 to 1994    223.41p to 256.08p        2003 to 2004       389,774
Scheme
1994 Executive Share Option            1994 to 2001     33.75p to 214.50p        2003 to 2011    13,475,677
Scheme
Sharesave Scheme                       1995 to 1997    110.00p to 156.00p                2003       557,269
2002 Executive Share Option Plan               2002      52.50p to 54.75p        2003 to 2012     6,750,000
________________________________      _____________       _______________       _____________     _________
                                                                                                 21,308,040
________________________________      _____________       _______________       _____________     _________

Options exercised during the year totalled 2,611,443 (2001 - 1,734,073). The
consideration was #1.0 million (2001: #0.6 million).


In addition 1,110 shares were issued on conversion of 6.25% convertible bonds
due 2003.


23 Other reserves
                                            Share                Other

                                                  premium      capital      Pension
                                                  account      reserve      reserve        Total
                                                                           Restated     Restated
                                                       #m           #m           #m           #m
_________________________________________    ____________    _________    _________    _________
Group
At beginning of year as originally                  206.7         34.1         (2.2)       238.6
reported
Prior period adjustment (Deferred tax -                 -            -          3.1          3.1
note 29)
_________________________________________    ____________    _________    _________    _________
At beginning of year as restated                    206.7         34.1          0.9        241.7
Shares issued during the year                         0.5            -            -          0.5
Actuarial losses (note 29)                              -            -        (28.5)       (28.5)
Transfer from profit and loss account                   -            -         (2.2)        (2.2)
_________________________________________    ____________    _________    _________    _________
At 31 December 2002                                 207.2         34.1        (29.8)       211.5
_________________________________________    ____________    _________    _________    _________

Company
At beginning of year                                206.7         35.6            -        242.3
Shares issued during the year                         0.5            -            -          0.5
_________________________________________    ____________    _________    _________    _________
At 31 December 2002                                 207.2         35.6            -        242.8
_________________________________________    ____________    _________    _________    _________



24 Profit and loss account
                                                                            Group       Company
                                                                         Restated
                                                                               #m            #m
_______________________________________________________    _______    ___________    __________
At beginning of year as originally reported                                 148.4         303.4
Prior year adjustment (Deferred tax)                                        (30.4)            -
_______________________________________________________    _______    ___________    __________
At beginning of year as restated                                            118.0         303.4

Foreign currency translation (losses)/gains
- overseas net assets*                                       (34.4)
- related hedging                                              9.0
_______________________________________________________    _______
                                                                            (25.4)          0.3
Retained profit/(loss) for the year                                           1.2        (143.2)
Transfer to pension reserve                                                   2.2             -
_______________________________________________________    _______    ___________    __________
At 31 December 2002                                                          96.0         160.5
_______________________________________________________    _______    ___________    __________
Retained in Group companies (including # 40.9 million                        94.4
overseas)
Retained in associated companies                                              1.6
_______________________________________________________    _______    ___________
                                                                             96.0
_______________________________________________________    _______    ___________

*Including # 17.5 million of net exchange gains arising on foreign currency
borrowings less deposits.


25 Equity minority interests
                                                            Group
                                                             ___________    __________
                                                                    2002          2001
                                                                              Restated
                                                                      #m            #m
_________________________________________________________    ___________    __________
Equity minority interests                                           37.9          65.3
_________________________________________________________    ___________    __________



The reported equity minority interest at 31 December 2001 was #65.8 million. The
restated balance of #65.3 million reflects an adjustment of #0.5 million
relating to the adoption of FRS 19 - Deferred tax.


26 Future capital expenditure
                                                    Group                      Company
                                             ___________    __________    __________    ________
                                                    2002          2001          2002        2001
                                                      #m            #m            #m          #m
_________________________________________    ___________    __________    __________    ________

Contracted but not provided for                      6.8           3.3             -           -
Authorised but not contracted for                   45.5          12.5             -           -
                                             ___________    __________    __________    ________
                                                    52.3      15.8                 -           -
_________________________________________    ___________    __________    __________    ________



27 Contingent liabilities
                                                           Group                   Company
                                                    _________    ________    _________    ________
                                                         2002        2001         2002        2001
                                                           #m          #m           #m          #m
________________________________________________    _________    ________    _________    ________
Loan, overdraft and finance lease
guarantees in respect of certain subsidiaries
(see
note 19)                                                    -           -         30.5        25.1
Others including performance guarantees and
documentary
credits on overseas contracts                            22.0        28.9          4.0         8.0
Company undertaking relating to deferred tax
liabilities
of UK subsidiaries (note 20)                                -           -          5.0        10.2
________________________________________________    _________    ________    _________    ________

28 Operating lease rentals
                                                   Group                   Company
                                                    ________    ________    ________    _________
                                                        2002        2001        2002         2001
                                                          #m          #m          #m           #m
________________________________________________    ________    ________    ________    _________

The committed amounts payable during 2003 are:
Leases of land and buildings expiring:
Within one year                                          1.3         2.8           -            -
Within two to five years inclusive                       5.1         6.4           -            -
Over five years                                         12.2        13.3           -            -
                                                    ________    ________    ________    _________
                                                        18.6        22.5           -            -
________________________________________________    ________    ________    ________    _________

Other operating leases expiring:
Within one year                                          0.8         1.9           -            -
Within two to five years inclusive                       3.0         2.7           -            -
                                                    ________    ________    ________    _________
                                                         3.8         4.6           -            -
________________________________________________    ________    ________    ________    _________



29 Pensions
                                                               Group
                                                                __________    ___________
                                                                      2002           2001
                                                                                 Restated
                                                                        #m             #m
                                                                __________    ___________

Pension assets                         UK                             11.5           24.4
                                       North America                  19.6           26.3
                                                                __________    ___________
                                                                      31.1           50.7
____________________________________   _____________________    __________    ___________

Pension and other post retirement                                     60.9           49.8
liabilities
____________________________________   _____________________    __________    ___________

Following the adoption of FRS 19 - Deferred tax, the pension related deferred
tax assets at 31 December 2001 and 31 December 2000 have been increased by
#3.1million to #5.4 million and #3.4 million to #6.0 million respectively. The
Group operates a number of defined benefit and defined contribution plans
throughout the world. The principal defined benefit arrangements are in the UK
and North America and the assets of these plans are mainly held under
self-administered trust funds and hence are separated from the Group's assets.
The Group accounts for pension costs in accordance with FRS 17 - Retirement
Benefits and therefore the costs in respect of defined benefit plans have been
assessed in accordance with the advice of independent, professionally qualified
actuaries and consultants.


(a) UK


The Group operates a defined benefit scheme in the UK. A full actuarial
valuation was carried out at 1 April 2000 and updated to 31 December 2002 by a
qualified independent actuary. The major assumptions used by the actuary were:

                                                   At          At          At
                                             31.12.02    31.12.01    31.12.00
                                             ----------  ----------  ----------

Rate of increase in salaries                     3.80%       4.00%       4.00%
Rate of increase in pensions in payment          2.30%       2.50%       2.50%
Discount rate                                    5.60%       6.00%       6.00%
Inflation assumption                             2.30%       2.50%       2.50%


The assets in the scheme and the expected rate of return were:

                 Long-term                  Long-term                  Long-term
                   rate of                    rate of                    rate of
                    return    Value at         return    Value at         return    Value at
                  expected    31.12.02       expected    31.12.01       expected    31.12.00
               at 31.12.02          #m    at 31.12.01          #m    at 31.12.00          #m
                 _________    ________     __________    ________     __________     _______
Equities              6.00%      406.2           6.50%      719.3           6.50%      915.2
Corporate             5.00%      883.4           5.40%      719.2           5.50%      654.6
bonds and
gilts
                              ________                   ________                    _______
Total market                    1289.6                     1438.5                     1569.8
value of
assets
Actuarial                      (1273.1)                   (1219.5)                   (1177.8)
value of
scheme
liabilities
                              ________                   ________                    _______
Gross                             16.5                      219.0                      392.0
surplus
Adjustment                           -                     (184.1)                    (352.6)
due to
surplus cap
                              ________                   ________                    _______
Recoverable                       16.5                       34.9                       39.4
surplus in
the scheme
Related                           (5.0)                     (10.5)                     (11.9)
deferred tax
liability
                              ________                   ________                    _______
Net pension                       11.5                       24.4                       27.5
asset
                              ________                   ________                    _______



The analysis of amounts charged to operating profit and credited to other
finance income are summarised in 29(d) and 29(e) below.

Analysis of amounts recognised in the statement of    Group
total
recognised gains and losses are:                             2002         2001
                                                               #m           #m
                                                       __________    _________
Actual return less expected return on assets               (160.1)      (139.1)
Experience gains and losses on liabilities                  (10.0)       (25.1)
Changes in assumptions                                      (38.0)           -
                                                       __________    _________
Actuarial loss                                             (208.1)      (164.2)
Adjustment due to surplus cap                               184.1        159.6
                                                       __________    _________
Actuarial loss recognised in statement of total             (24.0)        (4.6)
recognised gains and losses
                                                       __________    _________


The movements in the gross and  Gross surplus           Recognised surplus
recognised
surpluses during the year were:      2002        2001         2002        2001

                                       #m          #m           #m          #m
                                 ________    ________    _________    ________
At the beginning of the year        219.0       392.0         34.9        39.4
Movement in year:
Current service cost                 (6.4)       (7.7)        (6.4)       (7.7)
Contributions                           -         0.1            -         0.1
Cost of benefit improvements            -        (8.9)           -           -
Other finance income                 12.0        24.0         12.0         7.7
Actuarial loss                     (208.1)     (180.5)       (24.0)       (4.6)
                                 ________    ________    _________    ________
At the end of the year               16.5       219.0         16.5        34.9
                                 ________    ________    _________    ________



The actuarial valuation at 31 December 2002 showed a decrease in the gross
surplus in the scheme from #219.0 million to #16.5 million and a fall in the
recognised recoverable surplus from #34.9 million to #16.5 million. The
recognised recoverable surplus in 2001 was restricted to the present value of
the anticipated long term contribution holiday relating to the Group's core UK
business.


No improvements in benefits were made in 2002 (2001 - #8.9 million). In 2001 the
costs were charged against the unrecognised surplus in the scheme. It has been
agreed with the trustee that the contribution holiday will continue until the
next formal actuarial review of the scheme.

                                                            Group
                                               _________    _______    _______
                                                    2002       2001       2000
The history of experience gains and losses            #m         #m         #m
has been:
                                               _________    _______    _______

Difference between the expected and actual        (160.1)    (139.1)     (95.0)
return on scheme assets
Percentage of scheme assets                          (12)%       (9)%       (6)%

Experience gains and losses on scheme              (10.0)     (25.1)     (13.3)
liabilities
Percentage of scheme liabilities                      (1)%       (2)%       (1)%

Total amount recognised in statement of total      (24.0)      (4.6)       4.5
recognised gains and losses
Percentage of scheme liabilities                      (2)%        -          -

As it is not possible to allocate the assets and liabilities of the UK pension
scheme between individual companies, the above amounts are reflected on
consolidation only. As a result there are no pension assets or liabilities
included in the accounts of the Company.

(b) North America

The Group operates defined benefit schemes in the USA and Canada. Full actuarial
valuations were carried out at 31 December 2002 by a qualified independent
actuary. The major assumptions used by the actuary were:

                                        At                At                At
                                  31.12.02          31.12.01          31.12.00
                            ______________    ______________    ______________
Rate of increase in                   5.00%             6.00%             4.25%
salaries
Discount rate                         6.75%             7.25%             7.50%


The assets in the scheme and the expected rate of return were:

                 Long-term                  Long-term                  Long-term
                   rate of                    rate of                    rate of
                    return    Value at         return    Value at         return    Value at
                  expected    31.12.02       expected    31.12.01       expected    31.12.00
               at 31.12.02          #m    at 31.12.01          #m    at 31.12.00          #m
                  ________     _______      _________     _______      _________     _______
Equities              8.00%       83.1           9.25%      114.4           9.00%      129.5
Corporate             5.50%       54.0           6.50%       60.5           6.50%       65.0
bonds
Other                 3.50%        4.8           5.75%        6.4           5.50%        3.8
                               _______                    _______                    _______
Total market                     141.9                      181.3                      198.3
value of
assets
Actuarial                       (110.2)                    (117.7)                    (118.3)
value of
scheme
liabilities
                               _______                    _______                    _______
Gross                             31.7                       63.6                       80.0
surplus
Adjustment                        (0.5)                     (21.5)                     (41.5)
due to
surplus cap
                               _______                    _______                    _______
Recoverable                       31.2                       42.1                       38.5
surplus in
the scheme
Related                          (11.6)                     (15.8)                     (14.9)
deferred tax
liability
                               _______                    _______                    _______
Net pension                       19.6                       26.3                       23.6
asset
                               _______                    _______                    _______


The analysis of amounts charged to operating profit and credited to other
finance income are summarised in 29(d) and 29(e) below.
                                                          Group
                                                           _______    ________
                                                              2002        2001
                                                                #m          #m
                                                           _______    ________
Analysis of amounts recognised in the statement of total
recognised gains and losses are:
Actual return less expected return on assets                 (22.1)      (19.2)
Experience gains and losses on liabilities                     2.2        (0.3)
Changes in assumptions                                        (6.7)       (1.4)
                                                           _______    ________
Actuarial loss                                               (26.6)      (20.9)
Adjustment due to surplus cap                                 17.2        20.6
                                                           _______    ________
Actuarial loss recognised in statement of total               (9.4)       (0.3)
recognised gains and losses
                                                           _______    ________



The movements in                       Gross surplus      Recognised surplus
the gross
and recognised                          2002       2001        2002       2001
surpluses
during the year                           #m         #m          #m         #m
were:
                                     _______    _______    ________    _______
At the beginning                        63.6       80.0        42.1       38.5
of the year
Movement in
year:
                 Current service        (2.0)      (2.7)       (2.0)      (2.7)
                 cost
                 Contributions             -        0.1           -        0.1
                 Cost of benefit        (3.1)      (0.5)          -          -
                 improvements
                 Other finance           2.1        5.8         2.1        5.8
                 income
                 Actuarial loss        (26.6)     (20.9)       (9.4)      (0.3)
                 Transfer from           1.9          -         1.9          -
                 pension
                 liabilities
                 Exchange               (4.1)       1.8        (3.5)       0.7
                 difference
                                     _______    _______    ________    _______
At the end of                           31.8       63.6        31.2       42.1
the year
                                     _______    _______    ________    _______



The actuarial valuation at 31 December 2002 showed a decrease in the gross
surplus in the scheme from #63.6 million to #31.8 million and a decrease in the
recognised recoverable surplus from #42.1 million to #31.2 million. The
recognised recoverable surplus has been restricted to the present value of the
anticipated long term contribution holiday. Improvements in US benefits costing
#3.1 million were made in 2002 (2001 - #0.5 million). In both years the costs
were charged against the unrecognised surplus in the scheme. It has been agreed
with the trustee that the contribution holiday will continue until the next
formal actuarial review of the scheme.

                                             Group

                                                   2002      2001         2000
The history of experience gains and losses           #m        #m           #m
has been:
                                              _________    ______    _________

Difference between the expected and actual        (22.1)    (19.2)       (10.1)
return on scheme assets
Percentage of scheme assets                         (16)%     (11)%         (5)%

Experience gains and losses on scheme               2.2      (0.3)         2.5
liabilities
Percentage of scheme liabilities                      2%        -            2%

Total amount recognised in statement of            (9.4)     (0.3)         7.0
total recognised gains and losses
Percentage of scheme liabilities                     (9)%       -            6%


(c) Other schemes


The Group operates defined benefit schemes in other countries, mainly in Europe.
In the majority of cases, as is normal local practice, these schemes are
unfunded and provisions are carried in the balance sheets of the companies
concerned.


These liabilities have been reassessed in line with FRS 17 at 31 December 2002
with the assistance and advice of independent qualified actuaries. The average
major assumptions made by the actuaries were:

                                                  At           At           At
                                            31.12.02     31.12.01     31.12.00
                                           _________    _________    _________
Rate of increase in salaries                    3.00%        3.00%        3.00%
Rate of increase in pensions in payment         2.00%        2.00%        2.00%
Discount rate                                   5.50%        6.00%        6.00%

The net liabilities of these schemes        Value at     Value at     Value at
(including pensions
and other post retirement benefits) were:   31.12.02     31.12.01     31.12.00

                                                         Restated
                                                  #m           #m           #m
                                           _________    _________    _________
Assets:
Equities                                         2.2          2.4          1.0
Corporate bonds                                  4.1          2.3          1.1
Other                                            0.6          0.7          0.4
                                           _________    _________    _________
Total market value of assets                     6.9          5.4          2.5
Actuarial value of scheme liabilities          (72.5)       (60.6)       (60.6)
                                           _________    _________    _________
                                               (65.6)       (55.2)       (58.1)
Related deferred tax asset                       4.7          5.4          6.0
                                           _________    _________    _________
Net pension liabilities                        (60.9)       (49.8)       (52.1)
                                           _________    _________    _________



The analysis of amounts charged to operating profit and credited to other
finance income are summarised in 29(d) and 29(e) below.

Analysis of amounts recognised in the statement                Group

of total recognised gains and losses are:                   2002          2001
                                                              #m            #m
                                                      __________    __________
Actual return less expected return on assets                (1.0)         (0.2)
Experience gains and losses on liabilities                  (3.5)          0.1
Changes in assumptions                                      (3.4)         (0.2)
                                                      __________    __________
                                                            (7.9)         (0.3)
Adjustment due to surplus cap                                0.5             -
                                                      __________    __________
Actuarial loss recognised in statement of total
recognised gains and losses                                 (7.4)         (0.3)
                                                      __________    __________

The movements in net defined benefit liabilities
during the year were:
Liabilities of the schemes at the beginning
of the year                                                (55.2)        (58.1)
Movement in year:
Current service cost                                        (4.0)         (4.7)
Settlements and curtailments                                 0.7             -
Past service credit                                          0.1             -
Contributions                                               14.6           9.8
Other finance income                                        (3.7)         (3.4)
Actuarial loss                                              (7.4)         (0.3)
Companies acquired                                          (1.4)            -
Transfer from creditors                                     (4.2)            -
Transfer from reorganisation provisions                     (1.2)            -
Transfer to pension assets                                  (1.9)            -
Exchange difference                                         (2.0)          1.5
                                                      __________    __________
Liabilities of the schemes at the end of the year          (65.6)        (55.2)
                                                      __________    __________



(d) Analysis of amounts charged to operating profit

                                                       Group

                                                              2002        2001
                                                                      Restated
                                                                #m          #m
                                                        __________    ________

Current service cost       UK - continuing operations          4.5         5.3
                           million)
                           (including #2.8 million
                           (2001 - #3.0
                           for Thread businesses)
                           - discontinued operations           1.9         2.4
                           North America                       2.0         2.7
                           Other overseas assets                 -         0.4
                           Other scheme liabilities            4.0         4.7
                                                        __________    ________
                                                              12.4        15.5

Past service cost                                              3.1         9.4
Covered by unrecognised                                       (3.1)       (9.4)
surplus
                                                        __________    ________
                                                                 -           -
Settlements and         Other scheme liabilities              (0.7)          -
curtailments
Past service credit     Other scheme liabilities              (0.1)          -
                                                        __________    ________
Total operating charge                                        11.6        15.5
                                                        __________    ________



(e) Other finance income


Analysis of net returns on pension schemes:

                                                     Group

                                                            2002          2001
                                                              #m            #m
                                                      __________    __________
Analysis of net returns on
pension schemes:

Expected return on pension       UK                         83.0          76.7
scheme assets
                                 North America              10.1          14.5
                                 Other overseas                -           0.3
                                 assets
                                 Other scheme                0.5             -
                                 liabilities
                                                      __________    __________
                                                            93.6          91.5
                                                      __________    __________

Interest on pension              UK                        (71.0)        (69.0)
liabilities
                                 North America              (8.0)         (8.7)
                                 Other overseas                -          (0.2)
                                 assets
                                 Other scheme               (4.2)         (3.4)
                                 liabilities
                                                      __________    __________
                                                           (83.2)        (81.3)
                                                      __________    __________
                                                      __________    __________
Refund received from                                         3.9             -
discontinued scheme
                                                      __________    __________
                                                      __________    __________
Net return                                                  14.3          10.2
                                                      __________    __________



(f) Actuarial gains and losses charged to statement of total recognised gains
and losses

UK                                                   (24.0)              (4.6)
North America                                         (9.4)              (0.3)
Other overseas assets                                    -               (0.7)
Other scheme liabilities                              (7.4)              (0.3)
                                                __________         __________
Total actuarial losses                               (40.8)              (5.9)
Related deferred tax movement                         12.3                1.5
                                                __________         __________
Net loss                                             (28.5)              (4.4)
                                                __________         __________



30 Related party transactions


There are no individual transactions with related parties which are material to
the Group. Set out in the table is an aggregation of related party transactions
defined by type and relationship.

                                                                  Associated     Associated
                                                                   companies      companies
                                                                        2002           2001
Group                                                                     #m             #m
_____________________________________________________________    ___________    ___________
Sales to                                                                 1.0            0.5
Purchases from                                                           3.3            3.3
Other income                                                             1.4            1.0

Debtors                                                                  1.2            1.5
Creditors                                                                0.7            0.4


Company

The Company has taken advantage of the exemption allowed by FRS8, Related Party
Transactions, whereby the Company is exempted from disclosure of related party
transactions when any such relevant items are included within the Group's
disclosure.


Directors

In 1992, the Company, through a subsidiary, acquired a joint interest in a
property with Martin Flower on his taking permanent residence in England. The
subsidiary's investment was #180,000. Under the agreement, Martin Flower has the
option to purchase the Group's interest at market value. The Group's investment
was reduced to #75,000 in January 1994 following partial exercise of Martin
Flower's option. In 1999, the Company, through a subsidiary, acquired a joint
interest in properties with Jonathan Lea and Bryan Anderson respectively. The
subsidiary's investment in both cases was #75,000 and Jonathan Lea and Bryan
Anderson have an option to purchase the Group's interest at market value.


31 Notes to the cash flow statement

(a) Reconciliation of operating profit to net cash inflow from operating
activities

                                                                      2002       2001
                                                                        #m         #m
______________________________________________________________    ________    _______
Operating profit                                                      40.2       35.9
Dividends from associated companies                                      -        0.1
Depreciation                                                          42.0       45.5
Amortisation of goodwill                                              (1.6)       0.7
Reorganisation costs                                                  17.1       31.6
Impairment of fixed assets                                             1.9       (0.1)
Other exceptional items                                                0.1        1.0
Decrease/(increase) in stocks                                         22.4       (7.4)
(Increase)/decrease in debtors                                        (9.4)      30.4
Increase/(decrease) in creditors                                       5.8      (33.1)
Refund from discontinued pension scheme                                3.9          -
Other non-cash movements                                              (2.9)       9.8
______________________________________________________________    ________    _______
Net cash inflow from normal operating activities                     119.5      114.4
______________________________________________________________    ________    _______
Continuing operations                                                125.1      116.7
Discontinued operations                                               (5.6)      (2.3)
______________________________________________________________    ________    _______
                                                                     119.5      114.4
______________________________________________________________    ________    _______
Net cash outflow in respect of reorganisation costs:-

Utilisation of provisions            - closures and                     (19.2)     (29.5)
                                     reorganisation
                                     - other                                -        0.1
                                     - non-cash asset write               0.4        1.9
                                     downs
__________________________________   ___________________________    _________    _______
                                                                        (18.8)     (27.5)
__________________________________   ___________________________    _________    _______
Net cash inflow from operating                                          100.7       86.9
activities
__________________________________   ___________________________    _________    _______

(b) Analysis of financing cash flows
Issue of ordinary share capital                                        1.0        0.6
Issue of shares to minorities                                          0.6        0.1
______________________________________________________________    ________    _______
                                                                       1.6        0.7
______________________________________________________________    ________    _______


Decrease in            - new short term loans                           19.5      116.1
borrowings:
                       - repayment of amounts borrowed                 (61.9)    (126.9)
                       - capital element of finance lease rental        (2.0)     (24.4)
                       payments
____________________   _________________________________________    ________    _______
                                                                       (44.4)     (35.2)

_____________________________________________________________     _________    _______
Net cash outflow from financing                                        (42.8)     (34.5)
_______________________________________________________________    _________    _______


                                             Acquisitions
                           At 1                /disposals       Other                   At 31
                        January      Cash    (excl. cash/    non-cash                December
(c) Analysis of net        2002      flow     overdrafts)     changes    Exchange        2002
debt
____________________    _______    ______     ___________    ________    ________    ________
Cash at bank and in        63.0                                                          49.4
hand
Bank overdrafts           (24.9)                                                        (26.8)
                        _______                                                      ________
Net cash                   38.1     (15.3)                                   (0.2)       22.6

Short-term deposits        25.9     (12.0)                                   (1.1)       12.8

Loans and loan stock     (127.7)     42.4                                     8.2       (77.1)
Convertible debt          (60.2)        -                        (0.2)          -       (60.4)
Lease finance              (4.2)      2.0                        (0.2)        0.1        (2.3)
                                   ______
                                     44.4
                        _______    ______     ___________    ________    ________    ________
               Total     (128.1)     17.1               -        (0.4)        7.0      (104.4)
____________________    _______    ______     ___________    ________    ________    ________



(d) Purchase of subsidiary undertakings                              2002        2001
                                                                       #m          #m
____________________________________________________________     ________    ________
Tangible fixed assets                                                 0.2         6.3
Stocks                                                                0.9        10.4
Debtors                                                               1.0        13.2
Current asset investment                                              0.4         0.8
Cash at bank and in hand                                              0.4         3.5
Loans                                                                   -        (0.4)
Creditors                                                            (1.3)      (11.1)
Provisions                                                              -        (2.3)
Pension liabilities                                                  (1.4)          -
Minority shareholders interests                                      22.3        10.5
____________________________________________________________     ________    ________
                                                                     22.5        30.9
Goodwill                                                            (10.9)       (6.1)
____________________________________________________________     ________    ________
                                                        Total        11.6        24.8
____________________________________________________________     ________    ________
Satisfied by:
Cash                                                                 11.6        22.4
Loan notes issued                                                       -         2.5
Transfer from deferred consideration                                 (0.1)       (0.1)
Transfer from fixed asset investments                                 0.1           -
____________________________________________________________     ________    ________
                                                                     11.6        24.8
____________________________________________________________     ________    ________


(e) Sale of subsidiary undertakings
_____________________________________________________________
Goodwill                                                                -         3.7
Tangible fixed assets                                                 3.4        21.8
Stock                                                                 3.4        29.9
Debtors                                                               1.2        33.8
Cash at bank and in hand                                                -         3.5
Creditors                                                            (1.3)      (18.0)
Provisions                                                           (1.7)      (23.4)
Current and deferred taxation                                           -        (0.9)
_____________________________________________________________    ________    ________
                                                                      5.0        50.4
Loss on disposal                                                    (10.1)      (26.8)
Profit on sale of fixed assets                                          -         4.0
Write-back of purchased goodwill                                        -        12.5
_____________________________________________________________    ________    ________
                                                                     (5.1)       40.1
_____________________________________________________________    ________    ________
Satisfied by:
Cash                                                                  1.0        36.6
Deferred consideration                                                  -         4.8
Fixed asset investments                                                 -         0.1
Transfer from deferred consideration                                 (6.1)       (1.4)
_____________________________________________________________    ________    ________
                                                                     (5.1)       40.1
_____________________________________________________________    ________    ________


(f) Cash flow relating to exceptional items
_____________________________________________________________    ________    ________
Profit on sale of fixed assets                                        8.7        13.6
Book value of fixed assets sold                                       4.6        11.7
Less: included in sale of operations                                    -        (6.8)
_____________________________________________________________    ________    ________

Proceeds of sale of fixed assets                                     13.3        18.5
_____________________________________________________________    ________    ________

Proceeds of sale or termination of operations (note e)                1.0        36.6
_____________________________________________________________    ________    ________



32 Post balance sheet events


The Group completed the disposal of the majority of its Fashion Retail
businesses on 23 January 2003 for a nominal consideration. The net assets of the
businesses sold totalled approximately #36.0 million and the loss on disposal of
approximately #38.0 million, including expenses, will be reflected in the
accounts for the year ending 31 December 2003.


On 28 February 2003, the Group completed its acquisition of the industrial
thread business of Vicunha Textil, Brazil's largest textile manufacturer for
approximately #6.0 million. Goodwill of approximately #5.0 million arises on
this acquisition, and this will be accounted for in the accounts for the year
ending 31 December 2003.


33 Basis of preparation


The above accounts are an abridged version of the Company's full accounts which
carry an unqualified report, which do not contain a statement under s237(2) or
(3) of the Companies Act 1985 and which will be filed in due course with the
Registrar of Companies.


The 2001 figures are extracted from the restated comparative figures contained
in the Company's full accounts for 2002, referred to above.


PRINCIPAL SUBSIDIARY UNDERTAKINGS

             Country of incorporation or                         Country of incorporation or
            registration and principal                           registration and principal
                 country of operation                                 country of operation

Holding and Finance                    Thread continued
Companies
                             
------------------           -------    -----------------        ----     -----
*Coats Finance Company 
Limited                      England    Coats American Inc.               US

                             
------------------           -------   -----------------          ----   -----
Coats Holdings Limited      England    Coats & Clark Inc.                US
------------------           -------   -----------------          ----   -----
Jaeger Holdings Limited     England    Coats Phong Phu Co Ltd     75%  Vietnam
------------------           -------   -----------------          ----   -----
Tootal Thread Limited       England
------------------            ------
*Viyella Holdings Limited   England    Fashion Retail
------------------            ------   -----------------          ----    ------
Coats Deutschland GmbH      Germany    The Jaeger Company              England
                                       Limited
------------------            ------   -----------------          ----  ------
                                       
*Coats Patons Limited       Scotland   The Jaeger Company's            England
                                       Shops Limited
------------------            ------   -----------------          ----  ------
                                       
J. & P. Coats, Limited      Scotland   William Hollins & Company       England
                                       Limited
------------------            ------   -----------------          ----  ------
                                       
*Coats Invers SLU            Spain     Jaeger Sportswear                 US
                                       Limited
------------------            ------                              ----  ------
                                       -----------------
Coats North America            US
Consolidated Inc.
                              
------------------            ------
                                       Bedwear
                                       -----------------          ----    ------
                                       Dorma Group Limited             England
                                       -----------------          ----  ------


Thread                                         Other
------------------    ------   -------         -------------      -----    -----
Coats (UK) Limited             England         Madura Coats                India
                                               Limited
------------------    ------    -------
Coats Bangladesh        80%   Bangladesh       Ordinary Shares     93%
Ltd
                      ------    -------
------------------
Coats Cadena SA               Argentina        (Thread and India
                                               Textiles)
------------------    ------    -------                           
                                               -------------      -----    -----
Coats Australian Pty          Australia
Ltd
                      
------------------    ------    -------
Coats Corrente                  Brazil
Ltda
                      
------------------    ------    -------
Coats Canada Inc                Canada
------------------    ------    -------
Coats Cadena SA         60%     Chile
------------------    ------    -------
Guangzhou Coats         90%     China
Limited
                      
------------------    ------    -------
Guangying Spinning      50%     China
Company Limited
                      
------------------    ------    -------
Jinying Spinning        50%     China
Company Limited
                      
-----------------     ------    -------
Coats France SA                 France
-----------------     ------    -------
Coats GmbH                     Germany
--------------------            -------

China Thread Development      Hong Kong
Company Limited
----------------       -----    -------

Coats Hong Kong               Hong Kong
Limited
                       
----------------       -----    -------
Coats Hungary                  Hungary
Limited
                       
----------------       -----    -------
PT Coats Rejo                 Indonesia
Indonesia
                       
----------------       -----    -------
Coats Cucirini SpA    72.8%     Italy
----------------       -----    -------
Coats Thread            51%    Malaysia
(Malaysia) Sdn Bhd
                       
----------------       -----    -------
Grupo Coats Timon,              Mexico
S.A. De C.V.
                       
----------------       -----    -------
Cia de Linha Coats &           Portugal
Clark Lda
                       
---------------        -----    -------
Coats South Africa           South Africa
(Pty) Ltd
                       
---------------        -----    -------
Coats Fabra SA        98.9%     Spain
---------------        -----    --------
Coats Thread Lanka    86.8%   Sri Lanka
(Private) Ltd
                       
---------------        -----    --------
Coats (Turkiye)       76.8%     Turkey
Iplik Sanayii AS


All the above companies carry on businesses, the consolidated results of which,
in the opinion of the Directors, principally affect the amount of the profit or
the amount of the assets of the Group. All companies are wholly owned unless
otherwise stated; percentage holdings shown represent the ultimate interest of
Coats plc.


A complete list of subsidiary undertakings and companies in which Coats plc
holds more than 10% of the equity share capital will be filed with the next
annual return.


Companies marked with an asterisk are direct subsidiaries of Coats plc.







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