Right. Good afternoon, everyone, and welcome to Coats' Sustainability Focus Session. Thank you very much for joining us. We've got with us today Rajiv Sharma, the Group CEO, Adrian Elliott, the President of Apparel and Footwear, and Andrew Morgan, Head of Sustainability. Before we start, if you can ask questions in the normal way by pressing the button on the Zoom calls, those will come through to me, and we'll cover as many questions as we can. Rajiv, may we just start by discussing a few of the recent events because quite a lot's happening in the world at the moment. A lot of inflation, post disaster war with Ukraine. We've got COVID in China. You've had some very good results and a very significant cost reduction program announced. Maybe we touch on those first before getting into the heart of the seminar on sustainability. Absolutely. Thank you very much, Charles, and good afternoon, everyone. Let me maybe spend about four or five minutes talking about last year's results and, more importantly, about the outlook this year at Coats. Last year was a strong year. It was a year of robust demand across the world in all categories, but it was also a year of significant and unprecedented supply chain challenges. I'll explain you know a bit later. We ended the year with $1.5 billion of sales, which was 29% growth over the previous year. That 29% broke up into 24% coming from volume and the balance 5% coming from price and mix here. We also had 200 basis points or two percentage points of market share gains within the Apparel and Footwear business, which was the highest that we have seen in a very long time. Our normal run rate of market share gains for the last decade has been between 50 and 70 basis points a year, and that's largely been from the long tail of customers that we've had. You know, 2021 was a very unusual year in the sense that we took 100 basis points of market share from our near competitors. That's basically the number two, three, four, and five thread companies in the world. The reason why we were able to take market share from them was largely because of our ability to flex our supply chain and assure customers of the delivery on time, which the other players were not able to do that. We also had about 30 odd basis points of market share gains through our sustainable products and our innovation pipeline that we delivered last year. The balance 60, 70 basis points continued to come from the long tail of competitors that we have here. A standout performance last year was $96 million of EcoVerde sales. Now, EcoVerde sales is our recycled premium polyester thread. This was a program that we launched in 2019, where we had $2 million of sales, and in a matter of two years, that has risen to $96 million. We'll talk a little bit more about that in you know Adrian's section here. Broadly, 2/3 of this $96 million was targeted to an anchor European customer of Coats, where we were defending pretty high market shares. The balance 1/3 was essentially market share gains, where we went in with new customers or existing customers and new programs where we essentially got a 9% price premium. Going into this year, you'll see an increase in our EcoVerde sales. My expectation is that it should be around $150 million this year. You'll see the market share proportion of this year's results to be much higher compared to last year. I think we're on the right track, and we're using sustainable products right now to gain market share or to win new customers that we hadn't been, you know, sort of addressing in the past. We also had a strong year as far as innovation is concerned. 21 new products launched that delivered a total of $37 million of sales. Again, you know, a strong year from that standpoint. Our EBIT was almost at the 2019 levels. You know, we ended with an EBIT of $193 million last year. The only reason why it did not exceed the 2019 levels was because we had two months of shutdown in India during the first half, sort of, you know, linked to COVID. In the second half, we had, you know, one of our factories in Vietnam shut down for three months. Had those not happened, we would have comfortably exceeded our 2019 EBIT levels. We also had very strong cash generation last year. I think this is one of the hallmarks about Coats. The ability to generate cash, even in difficult times, is a massive strength of the company. Last year, we ended the year with about $113 million of adjusted free cash flow, and our leverage was about 0.7 times. Now, that clearly is lower than our target range of 1-2 times. The intention is clearly to make sure that we deploy the financial horsepower of a balance sheet to make the appropriate acquisitions. The board has also proposed a 15% growth in our final dividend. Again, this is a reflection of confidence and strength in the medium term of the company here. The outlook statement that we published in early March this year reflected continued growth. Now, clearly, in the last three, four weeks, we've seen the world, you know, going through a few sort of issues here. I'll touch upon that in about 60 seconds here. I think despite all that, we still see continued growth happening in this year. It will be a year where inflation is gonna be higher than last year. I think as sort of adequately demonstrated by Coats in the last decade. W e have a playbook that you know, using price and productivity, we are able to offset majority of the inflation. You know, it happened last year, and I've got no doubt it's gonna happen again this year. More interestingly, for the benefit of our audience here, we announced the commencement of strategic projects. Essentially what we said is that we will spend about $35 million of exceptional cash costs between this year and next year, which will result in a $50 million incremental EBIT in 2024. Now let me explain what that $50 million incremental breaks up. Now, this is on top of whatever your models had for EBIT in 2024. Half of this $50 million is gonna come from a footprint optimization in the U.S. where we have flagged for the last two years that we have been having labor availability issues. Essentially what we'll be doing there is relocating three of our five factories, or maybe even three and a half of our five factories, south of the border to Mexico, where we have no issues with respect to labor. Half of our $50 million will come from the migration of these factories from U.S. to Mexico. The other half of the $25 million is gonna come from hardwiring the productivity gains that the organization realized during the last two years during COVID. It's about making sure that our SG&A functions are fit for purpose. We probably don't need as much real estate that we have in terms of offices, et cetera. I think consolidation of offices, you know, offshoring, outsourcing of some of the transactional processes within Coats, that's gonna deliver the balance $25 million that we have here. The projects have started, and we will be regularly updating the market as we go along here. Now let me come to the topic of Ukraine and Russia here. We don't have any manufacturing presence in either of the countries. We have a warehouse in Ukraine. We have eight employees there. Of the eight employees, six are safe. They've been moved to, you know, safe locations inside and outside of Ukraine. Our focus is clearly the safety and the well-being of those employees here. Two, for reasons known to themselves, decided to stay back in Kyiv, and our prayers are with them, and we have made sure that they've got enough of medicine, water, and food with them while they're staying in Kyiv here. Currently, the operations in Ukraine are suspended because sort of you know, nothing goes in or out of Ukraine at this point in time. We also have a warehouse in Russia, in Moscow. We have 11 employees there. We have taken a decision to wind down the business in Russia. The total sales in Russia and Ukraine combined is about $9 million. The EBIT is less than a million. In the grand scheme of things, the direct impact of Coats to, you know, Russia and Ukraine is absolutely minimal here. Having said that, there is, you know, the secondary impact. We've seen the oil price spike to about $129 a barrel in the last three weeks. It's come down to about $111 now. So clearly, as sort of oil prices remain high, the impact of, inflation flowing through our raw materials, energy, and freight continues to be high. Now, when we started the year, we had assumed that we'll have to offset, you know, a higher level of inflation than last year. 90% of our pricing actions for this year were complete in the fourth quarter last year. Now, with the current spike in oil price, clearly we have to adjust some of those pricing and productivity actions, which we are currently doing at this point. Again, I am quite sanguine that we'll be able to offset some of that here. The other impact is the China COVID situation here. I'm glad to report as of this morning, all our factories are up and running. They're running at about 85%-90% capacity utilization. A couple of them were down for a very, very short period, but even in that short period, they were allowed to maintain production within the factory. I think we have not seen any impact to our business or our customers' business in China so far, but we remain sort of, you know, alert to the possibility of COVID cases happening. You know, what's also happened in the last, I think a week or so, the central government in China has really moved in a proactive manner to settle the markets, to settle the businesses, and to be you know, absolutely pragmatic as far as making sure that the business disruptions are minimized. I think that's a really positive thing that we've seen in the last week here. That's on Ukraine, China here. Charles, did I leave anything behind, or have I covered you know, everything that you wanted me to cover? I think that's covered it, Rajiv. If we go on to introduction on sustainability now. Brilliant. Let me, you know, introduce Adrian Elliott. He's our Head of the Apparel and Footwear Business. He's gonna start the presentation on sustainability. That's gonna be followed by, you know, Andrew Morgan, who's the Head of Sustainability. Once they're done, then we'll get into Q&A after that. Adrian, over to you. Well, thank you, Rajiv, and good afternoon to everybody. I'm gonna try and answer sort of two questions. Well, I've got two slides and try to answer two questions. First is this, the question of sustainability to being an industry imperative for the fashion industry, for the apparel and footwear industry, and why is that, and what is driving that, and to what extent is it true? Then the second question is, how are we, Coats, leveraging that or taking advantage of the sustainability and leveraging it for the commercial and financial benefit of the business? Coming to the first question, sustainability is an industry imperative. What is going on here? The first image here is about consumer, and there is definitely a consumer change that is happening. I've got some stats here. Gen Z, people born between 1997 and 2012. 20% of the U.S. population, 32% of the global population. If you add Gen Z and Millennials together, it's over 50% of the global population. What we see is that with those two generations of consumers, well, people, have much higher propensity to favor and look for brands and products that are high on sustainability, and an increasing propensity to spend money to back up those beliefs. In 2019, McKinsey did some research which said that 65% of consumers are now much more likely to favor sustainable brands. 25 back then, or 26, I think, 26% of consumers were actually putting their money behind it. That is increasing willingness to spend to back up the belief. Consumers is a big driver. What does that mean for brands? I think it's now we've got about over 100 of the top companies in the fashion, apparel, and footwear industry who are now fully signed up to Science Based Targets or have their own very strong sustainability goals. That hundred companies, which probably represents about 500 brands, many companies have multiple brands. These are really the industry leaders. I'll give you some examples of that. Inditex, with its whole range of sustainability goals. Nike, with its greenhouse gas, no landfill commitments. H&M on its whole range of environmental and social goals. ASOS, Gildan, Mango committed. There's a whole range. I think if you look at the Higg Index, Higg Index is a standardized measurement of value chain sustainability. You can see there are about 150 brands signed up for that through the Sustainable Apparel Coalition. You've also got Global Fashion Agenda, Better Buying Institute, and also, of course, the UN Fashion Industry Charter for Climate Action. There is a whole wave of brand adoption of sustainability as a core part of their strategy. Of course, that's links back to the consumer point. I think there's a third issue as well, which is around legislation. Just a few examples here. We know, I think in France, the carbon label legislation, which essentially the consumer goods, including textiles and fashion, will have to have a label around the carbon footprint. There's the Anti-Waste Law. There's the EU Waste Directive. In Germany, there's the Green Button Law, which basically sets out 26 social and environmental standards. In June 2021, the German Supply Chain Due Diligence Act, which basically forces larger companies to have mandatory due diligence on their supply chains. In January, just this year, in New York, there is an assembly bill coming forward. It's called the Fashion Sustainability and Social Accountability bill, which does something very similar to those two that French and German legislation as well. It's happening globally, and it is really only going in one direction. In addition to the consumer and the brand drive, there's also a legislation drive that's coming through. I think there's also a fourth one. It isn't on here, and I think it's about investor actually. Investor pressures on companies as well. You guys would know much more about that as well. There are all of these drivers making this such an imperative for the fashion, apparel and footwear industry. We see that. We see that with our brands and with our customers. As I say, I gave you some examples before. You've also got ASOS with net zero. You got Lululemon investing in plant-based nylon startups. Levi's with its Scope 3 Science Based Targets. A whole sort of stuff going on. If we move to the next slide, I'll try to sort of answer that second question, which is how is Coats then leveraging this or positioning ourselves to win and win where it matters? By that I mean it matters to us and I hope matters to all of our supporters and to you as well. There's a whole bunch of stuff we're doing, and Andrew is going to cover some of that in a moment. Let me just focus on the point that Rajiv made earlier about EcoVerde. EcoVerde is our range of recycled products. Here I'm going to talk about thread. We started out in polyester. We're just launching it into nylon as well, which will allow us to move from apparel also into footwear. Rajiv gave some numbers, about $100 million of sales or $96 million of sales last year and $150 million, which is what we'll do now. I'll give you some examples of how that is helping us win, both in terms of share but also in terms of our margins. Just in the last like nine months, through EcoVerde, we've had $8 million of sales with programs that we have never had before, upgrading those customers from competitor much cheaper virgin products to our, what we call Astra EcoVerde. That's $8 million. We've had a European brand where we've made a 20-point share gain because of EcoVerde in basically in a brand that never before specified thread as a brand. There is a UK lifestyle brand where we've managed to gain 15 percentage point share increase and a 9% price premium on the rest of the business that we previously had. There are two very large global sportswear brands where we use sustainability to qualify as a strategic partner, which drives and protects and defends our very high shares with those businesses that are high shares. There's a new online brand that I'm sure many of you would know where we've won just recently $1 million of new business again through sustainability with a company that previously would not have specified thread. The other thing it's allowing us to do is not only to gain share, but to drive margins through those price premiums, but also by the shift of mix into much richer and margin-enhancing products, which is a huge advantage for us. It also is not only from customer. It also obviously lands in some geographies. In one of our mid-size Asian markets, we've now managed to turn that business into an 80% premium product business. 50% of that is already recycled, and we have seen a significant and very high single-digit improvement in the EBIT margins of that business. I think this is only going one way. We talk about the winds of change or the direction of travel. Sustainability, I think we started. Well, I know we started well ahead of many of our competitors in this space. We are ahead. The winds of change are going this way, and I'm absolutely delighted about sustainability and the opportunities that it gives us to win in the market, win where it matters, win that share and improve those margins. With that, let me pass over to Andrew, and he'll sort of take you through not only the recycled product here, but the sort of wider scope of what we do as Coats, which plays into all of the customer needs. Thanks, Adrian. Good afternoon, everybody. I've got two slides as well, both quite simple slides, and I'll just talk through first our sort of strategy and then focus in a little bit on the products that we've got coming through and how those play into winning in the market. First, our strategy has these five pillars here. It's been in place for about five years now, four, five years. Each of these has targets mainly for delivery in 2022 or beyond in one case. These are really the five areas that feed into our brand customers' concerns and, you know, they are, broadly speaking, the issues in the textile industry as a whole. I'm not gonna go into a lot of detail about where we are specifically against our targets for each of these. We're in a good place. We've got strong momentum. We've achieved in a couple of areas pretty much, and we're very confident that during the course of 2022, we will drive on and deliver against our key targets here as the year progresses. We've now gone beyond that. Initially we fixed our targets on a sort of short-term horizon. We're now looking to the next stage, and we've identified our 2030 targets. The first, and I guess the most important at this stage is Science Based Targets for emissions reduction. We have had our targets for Scope 1, Scope 2, and Scope 3 emissions validated by Science Based Targets initiative, and we're now working towards those for delivery in 2030. That's on the COP21, 1.5 degrees Celsius sort of maximum temperature increase pathway, which means essentially a 50% reduction in emissions by 2030. We know the roadmap to deliver that. It's a combination of energy reduction in our operations, conversion to renewable electricity, and continued transition to recycled raw materials as Adrian's already talked about in terms of EcoVerde. The transition from virgin polyester to recycled polyester is a 40% reduction in emissions. It's a very significant driver towards especially the Scope 3 emissions reductions there. We've actually gone beyond the Science Based Targets goals there by also committing that by 2030, 70% of our total energy will be renewable. The Science Based Target renewable electricity conversion takes us to about 63%. We're committing to go beyond that by 2030 and transition more of our heat energy to renewable sources. Very importantly, we're aiming to be not relying on any new oil extraction materials by 2030. This is saying that we will have all of our plastic materials coming from recycled sources. We're gonna achieve that by driving forward on recycled materials, but also shifting from oil-based materials to non-oil-based materials, i.e., biomaterials. On top of that, we're moving towards a more circular product mix, if you like, and I'll talk a little bit more about that on the next slide. Enhancing our social goals towards 2030 and especially looking further up the supply chain at our suppliers' sort of social and environmental performance. There's a whole sort of suite of 2030 targets that we've got there. What we're gonna be doing over the next few months is looking to fix, if you like, the next horizon of interim targets that we set for probably 2026, which is sort of, you know, on our pathway towards those 2030 targets. All of these essentially are driving towards our long-term goal of being net zero by 2050. We're working at the moment on the roadmap for that, which we aim to have externally validated by Science Based Targets initiative during the course of this year. We'll be submitting it in the next few months to them. That's the sort of overview, if you like, of our strategy and the forward-looking targets that we've got there. Now, if we just move on to the next slide, we just want you to focus a little bit on the eco product side here and really what these are and how they fit in. Adrian's already talked about the product on the left-hand side of the screen there, EcoVerde. This is really important to us. We see that continuing to grow over the coming years, and it will play a very large part in that transition that I talked about in terms of no new oil extraction materials by 2030. Now, the second column there, the EcoRegen, this is a product that we launched last year. This is a biomaterial. It's a cellulosic. It's a man-made cellulosic material. Currently comes from wood pulp, but it can come from any source of cellulosic material, which means that it can also come from cotton. This is an important part of the strategy for this product, is that you can produce it from any source of cellulose, including waste textiles, potentially. That's where we see a good future for this. You know, where does this fit into our sort of customer strategy is that it promotes circularity. If you look at a very simple product like a cotton T-shirt at the moment, with a polyester thread there, that polyester thread, although it's a tiny part of the garment, it makes it difficult to recycle. Through EcoRegen, what we're offering is the opportunity to produce mono material products. To shift from a composite like a T-shirt of cotton and polyester to a single material, basically a fully cellulosic T-shirt, which then facilitates the recycling of that at the end of life. That's if you like the positioning for EcoRegen as a product. The next column, Epic Eco-B. This is a biodegradable polyester product. It has a biodegradability enhancer built in there, which means that any material that ends up in the environment will degrade very rapidly. This is of interest because you can't determine where products will end up. You know, the ideal is that everything goes into some kind of a recycling loop. You can't be sure that's gonna happen. There's obviously leakage and will continue to be leakage. This is a technology which will help to deal with that leakage in a way that means that if you've got a product which ends up in landfill or shedding fibers into the environment one way or another, those will disappear and break down. Fundamentally, plastics are made up of carbon, hydrogen, oxygen. Although they don't normally biodegrade, what this technology does is it enables microorganisms to recognize that this is a carboniferous product and that they can actually consume it and break it down into its constituent parts, which is what happens. The fourth column there, EcoCycle. This is a product which we have developed and launched, which is a water-dissolvable thread. The purpose here is that even if you designed a garment to have as few components in it as possible, and if as many of them to be mono-material as possible so that they have the same recycling strategy around them, there will be products there which or components which you can't do that to. To take a simple example, a pair of jeans, you can use a cellulosic thread. The jeans are cotton, but the zip is metal, and the zip is likely always to be metal. Metal, you cannot recycle, obviously, through a cotton recycling route. Therefore, you need to take it out of the garment at the end of life in order to facilitate the recycling of the rest of the garment. That's what EcoCycle does. You just destroy the thread at end of life, remove the parts that you need to remove, and then they can each go into their own recycling process. What we have here on the screen is the first generation of a circular product portfolio, which enables designers, garment designers, brand designers to design circularity into garments at the point of, you know, the earliest stage of the product life cycle. We're now working sort of at the top end of the supply chain there, i.e. with the brand designers, but also right at the end of the supply chain, i.e. with the waste managers who are the ones who effectively need to deal with these products as they come through in future years. It's linking up the supply chain through products which facilitate a circularity in the industry which has never existed before. That was a sort of brief introduction to how these products really fit into the emerging circularity strategy for the textile industry. Thank you. Thanks, Andrew. As a reminder, please use the Q&A function to be able to ask a question. First question is around the level of investment that you've been putting in, Rajiv, in terms of capital, new product development. Are you now at a stage where you're starting to get a return on that investment, and how do you think about a rate of return on sustainability investment? Okay, it's an excellent question, yeah. You know, for the last four or five years, we have been investing at a rate of about $5 million-$6 million of CapEx on. Or sorry, $5 million-$6 million of OpEx on our innovation pipeline. Roughly 20%-25% of that historically has been focused on recycled material or sort of recycled dyes and chemicals. We also had an initial CapEx in terms of our three innovation hubs that we deployed in 2017, 2018. The CapEx was about $3 million for each of the innovation hubs in 2017, 2018. Over the last four or five years, we have seen that our Vitality Index, which essentially is the percentage of sales in the current year coming from products that were launched in the last five years, has gone up from 2%- 14%. Clearly we can see that we are. You know, sort of, you know, innovation is playing a role in terms of our sales growth. In the recent past, in the last couple of years, we have seen that the overall margin of the new products is slightly higher than the group margin. As those new products gain scale, it should be, you know, it should be margin accretive. What we also announced last year, Charles, is a $10 million spend over the next five years, primarily to help scale renewable materials within the textile industry. Now, in our industry, you know, scale matters. There's a lot of clever innovation that's happening upstream to us in terms of the fiber and filament producers, in terms of the polymers, et cetera. But actually leveraging that, applying it to our machines and our manufacturing environment, and then making sure that the products we deliver can also work on our customers' machines. That overall end-to-end, you know, adaptability of the innovation is absolutely crucial. This, you know, $10 million is gonna be spent primarily to work with startups and our upstream suppliers to make sure that the materials that we have are gonna be renewable, are gonna be, you know, very high performance characteristics. As a matter of principle, we have this philosophy that any recycled or renewable material, at the minimum, should be at the same level of performance as that of a virgin material that we have. That's broadly our sort of, you know, philosophy here. In terms of competitive advantage as a result of sustainability, this is gonna. I'll sort of share my personal views here. I think there are four things that are very important for any company to have a massive impact as far as sustainability is concerned and for that to be converted into a competitive advantage. The first thing is values in the company. Are the values aligned with sustainability? Secondly is culture in the company. Is the culture one where it actually embraces sustainability? Third is mindset of the management team and the employees in general. Is this an area where, you know, where the organization is gonna play on the front foot? Last but not the least, having a strong balance sheet. I can say it with a, you know, with a fair degree of authority within our competitive landscape, pretty much all the companies are either missing one or more of these four components here. That, for us, is a massive source of advantage, going forward. A follow-up question to that is, do you see this as a sustainable competitive advantage, or will the competitors start to catch up? I think in terms of values, culture, strong balance sheet, I think it is actually a sustainable competitive advantage. I don't see that actually diminishing in the next sort of, you know, 10 years here. Clearly, the competition is also playing in this area. The next four companies have their own version of recycled polyester thread. Just as a data point here, last year we did $96 million of sales. The next four competitors collectively did around $15 million. We know that they've got quality issues, they've got supply availability issues. I think scale allows us to make sure that we not only have, you know, access to the supply of recycled material, but we're also focusing on the quality and the performance of the product that, you know, that comes out of the factory here. In my view, the gap is gonna increase in the medium term. They will catch up at some point. The quality issues will, you know, will get sorted out. At some point, they will have access to a little bit more supply. However, their lack of scale is gonna limit their ambition. Adrian, this one for you. Could you talk a little bit about how specifying thread actually works in practice? What difference does sustainability make in terms of specifying? Yeah, sure. Well, specifying thread happens at brand or retail level. Basically, let's just say a brand. A brand will look at its material and component base and make decisions as to whether it wants to control that and specify or not. Okay? They could go from fabrics all the way through to buttons and threads and all sorts of things. We basically have a. When we talk about our specification with brands, we see a lot of brands that it looks like a pyramid. Some brands will say, "Okay, I'll do a sort of mandate or a joint mandate. I really only want one supplier or two suppliers of thread." Others will then nominate perhaps three or four depending on the geographical spread. Others will then approve. Maybe they'll approve six or seven, okay? Others, as I say, some players actually don't want to specify at all. What happens when you're running a specification program is you're essentially trying to move the brand up that pyramid. What does that do? Clearly, it gives you a much better strategic position and drives your share. Now, sustainability plays absolutely into that. If you are really clear about who are those top 100 companies, who are those top 500 brands for whom sustainability is really important, you can then use that and play to that in terms of driving specification. Whether it be helping somebody with their waste or their water or their Higg Index KPIs or, as we've seen in terms of their own recycled programs, it drives, and it's one of the most, I would say, in the last five, six years, you know, one of the most important drivers of the specification programs. When you add that to technical, when you add that to quality, and when you add that to global footprint, this is what gives Coats such an advantage, competitive advantage in our view, for these customers. Does that effectively mean that you're embedded into their development of new products and so you're sort of already there when it starts to come to pricing negotiations? Yeah. That's exactly what happens. You get specified. You get in early at design and product development stage. You will ultimately be put on a bill of materials or your products will be put on a bill of materials so that when the manufacturing base gets the orders from the brands, then obviously you're in a pretty good position. This is another for you, Adrian. You've talked a lot about Western brands. Briefly mentioned Asian. How important are Western brands in your business compared to Asian brands? Are Asian brands embracing sustainability as well? Yeah. Well, historically, we've been very strong with Western brands. Right? I mean, that's the U.S. brands and European brands. Increasingly, we've taken a strategic decision to make sure that we are growing and becoming equally important for Chinese brands and Indian brands, particularly in Asia. Our China, what we call our China domestic strategy, which is all about Chinese brands, has been tremendously successful over the last three, four years. The question is, if that's the Asian brand that is growing, obviously we have Japanese brands. I should pick Japanese brands that we've historically been very strong with. In China, definitely and what we are seeing is, I'm sure many people have sort of read the dynamics of foreign brands and Chinese brands in China. That dynamic is pretty interesting. What we see is that for those Chinese brands, some are growing very big and very forward-looking, sustainability is equally as important for them as it is for their Western competitors. In India, my personal opinion, India is a little bit less forward, but there are some really forward-thinking Indian brands as well, and Indian manufacturers like Shahi Exports. I was just reading this morning in terms of what they are doing in terms of their carbon footprint. These winds of change that we talk about and this direction of travel is a global thing, Charles, not just a Western thing. An overall question talking about if we're moving more to a market where Gen Z and Millennials are thinking about sustainability, does that mean that recycling of products is going to become more important? Does that reduce overall demand in the whole apparel and footwear industry? How do you think about that in terms of your long-term growth? If I may. We've just finished a review of that actually, a study of that, where we talked to a lot of industry people. Interestingly, I have to say, when we went into it, we thought that the sustainability and recycling and rental and, you know, all those good things were actually going to kind of dampen down apparel and footwear demand. That's what we were thinking. Actually, what we've seen is that, A. D emographics, Global Demographics, and B. The Economic Power of Asia will far offset those trends. We're kind of seeing a rebalancing a little bit. Overall, we think we're gonna get both volume from demographics and economics and the sustainability. Andrew, question on the supply chain. It has been the case that your supply of materials has struggled to keep pace with demand. Is that still the case? If you've got these ambitious targets for the next few years, how are you going to manage the supply chain? Thanks, Charles. No, it's not the case. We actually have the supply now in place to meet potentially exceed our current demand. It's no longer a constraint on our growth. You're right, it was in the past. We now have, I think, 21 suppliers of recycled polyester that have been qualified for use. That number is growing. We've got at the moment on the nylon side, I think we've got our second qualified supplier just about to come on board. You know, we are basically expanding supply there. It is going to be, you know, the overall. I think the market is gonna be constrained for the next few years. Looking forward to about 2025, I think the expectation is there that the supply of recycled polyester coming through probably from the textile industry will expand rapidly and that will further take away the supply constraints there. I guess a follow-up question to that is there a competitive advantage for you in terms of the supply chain, whereby you're able to access material and some of your competitors are struggling to do so? Yes. I mean, Rajiv alluded to this. I mean, our purchasing power, I guess in our industry means that we do have the ability to wrap up supply potentially more easily than some of our competitors, I guess. Certainly the rate at which we've been able to bring suppliers up to the quality levels that they need to be able to supply the materials that we're looking at mean that we've actually got very close relationships with them. It's a commercial environment. You know, we can't sort of lock people in, obviously. Anybody who wants to be in this market wants to be working for Coats, I think is probably the summary. I guess a similar topic, but maybe for Rajiv to answer. You've talked about getting EcoVerde up to $150 million this year. Where could EcoVerde be in, say, 2025? Brilliant question. If I can maybe just build on the previous question here. When we started EcoVerde in 2019, we had only $2 million of sales. Our total consumption of recycled polyester was less than 20 tons. Last year, we did $96 million of sales, and that's equal to about 4,500 tons. You can see the growth in terms of 20 tons to 4,500 tons. This year, the expectation is we'll do about $115 million. That'll be between 6,500 tons and 7,000 tons. You can see the ramp-up that's happening here. Globally for us, amongst all the materials that we buy, polyester accounts for 75% of the total raw materials that we buy. The recycled materials last year accounted for just under 10% of the total polyester consumption that we had. I think one of the interesting metrics is gonna be h ow fast does that ratio sort of increase, right? It went from less than 1% in 2019 to something like 9.5% last year. It'll continue to increase. In terms of your questions around where do we think it will be by 2025, I would say it's gonna be between $500 million and $600 million total sales. This year will be $150 million. Next year it's gonna be in the mid-200s, and then you'll start to see a pretty steep ramp up. Following on from that, Adrian, question is what do you expect the rate of sales of the other eco products to be? Is there anything that could be on the same scale as EcoVerde, or are these more niche products? Yeah, listen, these are more niche products, and they're much more difficult to forecast, I have to say. Particularly because in terms of circularity and how that industry develops. I think. You know, they're not gonna be on the scale of EcoVerde to start with. The interesting thing is, as technologies advance, which is happening really quickly, the opportunities in the non-recycled areas are going to really expand. That's where you get into some really interesting stuff in the second half of this decade, I think. We, as the leaders, we're kind of, like, ahead of the game a little bit. Once you move. Recycle, I think, is just the first part of a materials transition, not only for us, but for the industry. Really, what everybody's trying to get to is the technology to allow the industry to move beyond recycled into the more renewables and sustainable circular products. That's pretty interesting, and that's where a lot of technology comes in. Hey, early days, as Andrew said, and kind of, you know, technology to advance, but that's probably the more exciting bit as you go forward, actually. How much of a challenge is it to make products out of bio materials, and how much are the customers wanting you to produce materials of this nature? Yeah. Well, I think in terms of everything starts with fabrics and components, right? That's where the interest kind of comes from a brand point of view, and you then need to be able to match that. Is it difficult? Well, yes, of course, it's difficult. People are looking at different sorts of leather. People are looking at more plant-based things, and that's happening. It's about the scale and as technology develops for that. Yeah, as I say, I think that's the more exciting bit in the second half of this decade, actually. Adrian, probably another one for you. How much do you get IP protection from the innovation? How much are you able to gain the long-term advantage? Rajiv, I don't know whether you want to sort of talk beyond apparel and footwear. Yeah. In apparel and footwear, if you're looking at recycled product, IP protection per se is not the issue, right? That is not the game changer. The real issues is around how you can play the customer demands and your supply chain. That's where you get your competitive advantage. Beyond that, in the bigger innovation gate, I don't know if you want to speak to that though, Rajiv. Well, I think most of the IP is either in the material science, so it's upstream from Coats, or it's in the machine designing that happens. If you look at our recent sort of, you know, investment in Twine Solutions, where we are looking at waterless dyeing, right? That's, you know, that's a classic example of where we're trying to disrupt the conventional manufacturing processes in textiles by having a completely waterless dyeing techniques here. I think you'll find a lot of technological breakthroughs in the next sort of, you know, several years. For us, I think if you ask us today, we have a lot of confidence around the recycled materials. You know, we know where the supply is, we know where the manufacturing challenge is. We know how we can build it to scale. I think as Adrian said, currently, you know, our focus is gonna be moving beyond recycled materials and looking at more renewable materials. It's not just about the actual fiber and filament, it's also in the chemistry and the coating and the solvents, et cetera, which are used in the manufacturing processes. You know, we don't have all the answers as far as renewables are concerned, but I think that's gonna be an exciting space, most likely towards the middle of this decade. This question here, probably Rajiv, this one for you. How much do you focus on your customers' sustainability targets, and how rigorous are you about who you work with? Do you have an inability to influence change with the brands? The answer is, you know, it depends in terms of the brands. If you look at those 100 companies that account for about 500 of the large brands, I think broadly it's fair to say that those 100 companies probably account for 80% of the profitability within the apparel and footwear industry. They are clearly the leaders, and there's a clear link between sustainability and their and the company profits. It's these 100 companies that are driving a lot of the change within the apparel and footwear space here. We are partners with all of them. I think it's an area where there's seamless collaboration. I think the good thing is that the brands themselves would be the first to admit that they don't have all the answers. I think one of the advantages of sustainability is that the brands are reaching deeper down into the supply chain and asking for help. You know, it could be in terms of scale, it could be in terms of you know, innovation, et cetera. But I think this has created far more partnership between the brands and the tier one and tier 2 suppliers. I think in the old model, in the previous sort of thing, it was a different relationship between the brands and the rest of the supply chain, where the brand pretty much dictated, "This is, you know, this is the price I need per unit, and this is the number of units that I need." Now it's all about can we work together? Can we sort of jointly fund some of the innovation that's happening and work on that? I think overall it's pretty good. I think these 100 companies are gonna drive a majority of the sustainable impact within our industry. Rajiv, this one's for you as well. You've so far been focused on organic development of new products. Will M&A feature in new products aimed at sustainability? Absolutely. The answer is yes. As a matter of fact, I also said in some of the investor meetings that if we do get into a situation where we see supply constraints, we would not mind in taking, you know, equity positions in certain suppliers. Now, this is gonna be done selectively, and it's largely in the sustainable area, just to make sure that we have enough supply. Because this whole sustainability game, as Adrian has said, is going only in one direction, and scale matters. The answer, in short, is yes. Another one for you, Rajiv. What are the main challenges to be met in order to achieve your climate objectives for 2030? I think if you look at where we have come from. We started in 2018 as the baseline, and we had our five-pillar strategy. It was all around reduction in water, energy, effluent, the social, and recycled material. I think on all those five pillars, we have made significant progress. Yes, there's still some more work to do, but I think we have line of sight to the end game as far as these sort of five pillars are concerned. These five areas I would call as sort of the first generation KPIs or sort of focus areas here. Last year, we raised our ambition, and the new areas that we're looking at are emissions, circularity, and renewable materials. If you look at this decade, for us, the big challenge is how fast can we transition from an oil-based, you know, energy consumption and oil-based material consumption to a non-oil-based consumption there. For us to reduce emissions by 50% this decade, we need to make sure that we go from 31% of our global energy consumption coming from renewables, you know. That needs to get to about 70% odd in the next sort of, you know, six to seven years. Also then on the oil-based materials, we need to make sure that by the end of the decade, all our products are made from either recycled or renewable materials, basically getting off new oil extraction in the future. I think these are the two big challenges. Beyond that, we are dependent on some technological breakthroughs that need to happen in chemistry in terms of machine building, which happen outside of Coats here. You know, overall, I think from a company standpoint, again, those four things which I mentioned, culture, values, mindset, and balance sheet. We have all four in abundance in Coats here. From an internal standpoint, I don't see any kind of barriers here. We will be limited by the pace at which the customers transition to these non-oil based materials, and we will be limited by the technological breakthroughs that are required in the manufacturing processes. On a similar theme, also for you, Rajiv, question is, how much have the sustainability targets been embraced throughout the business, and how difficult is it to make sure that it's embedded given that you work across so many different countries? I think from a Coats standpoint, it's not been difficult. It's not been hard. I think this is one area where truly we had a bottoms-up, you know, sort of embracement of sustainability. I think it is more of a bottoms-up, kind of a project work that happens across all the sites. I don't think we actually spent a lot of energy and effort from a top-down perspective. As a matter of fact, we were constrained because the units, you know, the factories where we are and they were saying, "Bring it on. Can we go faster? Can we do more things," et cetera. For us, it was more about channeling the effort across the factories that we have across the world to make sure that at least in a few KPIs, we have global scale and we can demonstrate progress. I think from a Coats standpoint, zero issues as far as the internal barriers are concerned. I fear our time is up, and we certainly haven't got through, anywhere near through all the questions. What I'll do is send on all the questions to the company, and hopefully get back with some answers. If anyone does have any further questions or wants to discuss points within much more detail, please get in touch with Victoria Hubster. Maybe, Rajiv, we'll finish the session with a closing remark. Yeah. Thank you very much. You know, I'd just like to sort of, you know, close by saying that Coats is on a strong wicket right now. I think coming out of a crisis makes us stronger. We saw that in the last crisis, where the strong became stronger. I think we'll see that again sort of in this time coming out of the pandemic. Clearly, sustainability is now irreversible within the apparel and footwear space. We have a five to six year head start compared to the competition. We are considered the leader in our space, in our industry, and I think this is gonna be a source, along with innovation, I think these are gonna be the two sort of sources of sales growth and margin growth in the future for Coats here. I'm excited about the future and, you know, so are the 18,000 employees in Coats. Thank you very much, Charles. Thanks to you and the audience for, you know, taking time to hear our story. If there are any questions, sort of, you know, we'd be happy to answer them later. Thank you very much, everyone. Thank you. Bye-bye. Bye now. [crosstalk]