Coats : Notice of 2023 AGM

This document is important and requires your immediate attention. If you are in any doubt as to the action you should take, you should consult with your independent financial advisor, stockbroker, bank manager, solicitor, accountant, or other financial adviser authorised under the UK Financial Services and Markets Act 2000. If you are outside the UK, you should immediately consult an appropriately authorised independent financial adviser.

If you have sold or otherwise transferred all of your Coats Group plc shares, please send this document, together with the accompanying documents (but not the personalised Form of Proxy), as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee.

COATS GROUP PLC

(Incorporated and registered in England & Wales

with registered number 00103548)

Notice of Annual General Meeting

To be held on Wednesday 17 May 2023 at 2:30 p.m. At FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD, UK

A Form of Proxy for use at the Annual General Meeting is enclosed. To be valid, the Form of Proxy should be completed and returned in accordance with the instructions to the Company's Registrar at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY as soon as possible but in any event so as to arrive not later than 2:30 p.m. on Monday 15 May 2023.

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Letter from the Chair of Coats Group plc

(Incorporated and registered in England & Wales with registered number 00103548)

The Pavilions,

Bridgwater Road, Bristol,

BS13 8FD

30 March 2023

Dear Shareholder

Notice of Annual General Meeting

I am pleased to be writing to you with details of our Annual General Meeting (AGM or Meeting) which will be held at 2:30 p.m. on Wednesday 17 May 2023 at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD, UK. The Meeting will also be webcast live. The formal notice of AGM is set out on pages 6 to 8 of this document.

How to participate in the AGM remotely

To continue to support engagement with our shareholders should they wish to participate remotely, this year the AGM will be webcast live to allow shareholders (or their duly appointed representatives) to see the presentations and listen to the business of the AGM.

To join the webcast, please log on to:https://www.investis-live.com/coats/6405b75d4aa86d150080c8e9/aesd

Please note that any such shareholder participation via the webcast will not constitute formal attendance in relation to the AGM and shareholders will not be able to vote through that facility. We therefore encourage you to register your vote in advance in one of the ways described in this document. Those who are attending the Meeting in person will be able to vote via the poll as set out below in the 'How to vote' section.

Please monitor your health in the run up to the AGM. If you feel unwell or are displaying any symptoms of COVID-19, flu or colds, we strongly advise that you stay home and appoint a proxy to exercise all or any of your rights to attend, vote and speak at the AGM by using one of the methods set out in the notes on pages 9 to 11 of this document.

How to ask questions

We welcome shareholders' questions in advance of the Meeting as well as during the question and answer session due to be held at the end of the AGM. Shareholders can submit their questions in advance of the Meeting to the Board by email to AGM@coats. com by no later than 2:30 p.m. on Monday 15 May 2023. Please include your full name and your shareholder reference number in your email. We will consider all questions received and, if appropriate and relating to the business of the AGM, give an answer at the AGM, or provide a written response or publish answers on our website. We will also maintain a list of 'questions and answers' on our website (www.coats.com/agm2023).

How to vote

Your vote is important to us and there are a number of ways that you can vote at or before the Meeting as set out in the notes on pages 9 to 11 of this document. Shareholders attending the Meeting in person will be able to vote via the poll. If you would like to vote on the resolutions but cannot attend the AGM in person, we strongly encourage you to appoint a proxy to exercise all or any of your rights to attend, vote and speak at the AGM by using one of the methods set out in the notes to this document. Shareholders can also register their votes and appoint the Chair of the Meeting as their proxy online, via CREST or by post to vote on their behalf in accordance with the instructions set out in the notes on pages 9 to 11 of this document.

Explanation of resolutions

The purpose of this letter is to explain certain elements of the business to be considered at the AGM. Resolutions 1 to 15 inclusive will be proposed as Ordinary Resolutions and Resolutions 16 to 19 inclusive will be proposed as Special Resolutions.

Resolution 1 - Annual Report and Accounts

For each financial year, the Directors must present the Directors' Report, the audited Financial Statements and the independent auditor's report to shareholders at a General Meeting. The Directors' Report and the audited Financial Statements have been approved by the Directors, and the independent auditor's report has been approved by the Auditor, copies of which may be found in the Annual Report 2022 which was published onwww.coats.comon 9 March 2023.

Resolution 2 - Directors' Remuneration Report

The Company is required to seek shareholder approval for the Annual Report on Remuneration which can be found on pages 85 to 97 (inclusive) of the Annual Report 2022. The Annual Report on Remuneration discloses how the Company's existing Directors'

Remuneration Policy is implemented and sets out details of each Director's remuneration during the year under review. In accordance with the relevant regulations, this resolution is an advisory vote and the Directors' entitlement to remuneration is not conditional upon it.

Letter from the Chair of Coats Group plc continued

Resolution 3 - Approval of the Directors' Remuneration Policy

In accordance with the UK Companies Act 2006 (UK Companies Act), the Company proposes an ordinary resolution to approve the Directors' Remuneration Policy contained in the Directors' Remuneration Report. The proposed policy is set out on pages 98 to 104 of the Annual Report 2022. The vote on this resolution is binding and, if passed, will mean that remuneration payments and payments for loss of office can only be made to Directors or former Directors in accordance with the approved policy. The Company is required to ensure that a vote on its remuneration policy takes place at least every three years, unless it is proposed that the policy is to be changed before the expiry of the three-year period in which case the Company will propose a new resolution to approve the amended policy. The previous vote on the Company's existing Directors' Remuneration Policy was held in 2020 and the policy is due to expire at the close of the AGM. Subject to approval at the AGM, the proposed Directors' Remuneration Policy will take effect from 17 May 2023 and will replace the existing policy as approved by shareholders in 2020.

Resolution 4 - Dividend

The Company paid an interim dividend of 0.70 US cents on each ordinary share of £0.05 each in the Company (Ordinary Share)

in November 2022. The Board recommends a final dividend of 1.73 US cents on each Ordinary Share in respect of the year ended 31 December 2022 to be paid to shareholders recorded on the Register of Members on 28 April 2023 and to be paid on 25 May

2023. This brings the total dividend for the year ended 31 December 2022 to 2.43 US cents per Ordinary Share.

Resolutions 5 to 12 - Re-election and election of Directors

Resolutions 5 to 12 deal with the re-election and election of the Directors. In accordance with the provisions of the 2018 UK Corporate Governance Code (Code) and the Company's Articles of Association, all Directors will submit themselves for election or re-election at the AGM. Stephen Murray, who was appointed to the Board on 1 September 2022 as a Non-Executive Director, is submitting himself for election at the AGM. Heather Lawrence, who was appointed to the Board on 7 November 2022 as a Non-Executive Director, will step down from the Board on 31 March 2023. Further information on the Board, including the roles of the Directors, can be found in the Corporate Governance Report on pages 57 to 70 of the Annual Report 2022. The Chair confirms that following reviews, as outlined on pages 69 and 70 of the Annual Report 2022, he is satisfied the Directors seeking re-election and election are performing effectively and demonstrate commitment to the role and that the balance of skill, experience, diversity, independence and knowledge of the Company group is sufficient to enable the Directors to discharge their respective duties and responsibilities effectively. The Chair is satisfied that each Non-Executive Director is independent in accordance with the criteria set out in the Code and that there are no relationships or circumstances likely to affect their character or judgement. A summary of the skills and experience of each of the Directors seeking re-election and election can be found in Appendix 1 on pages 12 to 14 of this document.

Resolutions 13 and 14 - Appointment of Auditor and Auditor's Remuneration

As reported in the Annual Report 2021, the Board agreed to tender the external audit contract for the Company during 2022.

The Audit and Risk Committee oversaw a formal and comprehensive tender process for the external audit appointment. On recommendation of the Audit and Risk Committee, the Board is recommending to shareholders the appointment of Ernst & Young

LLP as the Company's new auditors for the financial year commencing 1 January 2023.

Deloitte LLP (the Company's auditors for the 52 weeks ended 31 December 2022) will not seek reappointment and will therefore cease to hold office at the conclusion of the AGM. Deloitte LLP has given a statement of reasons in connection with their ceasing to hold office as auditor, which is set out in Appendix 2 on page 15 of this document.

The UK Companies Act requires that an auditor be appointed at each General Meeting at which accounts are laid, to hold office until the next such meeting. Resolution 13 therefore seeks shareholder approval for the appointment of Ernst & Young LLP following a competitive tender process, the details of which are set out in the Audit and Risk Committee Report on page 75 of the Annual Report 2022.

Resolution 14 gives the Directors the authority to determine the remuneration of the Auditor. The amount of the remuneration paid to the Auditor for the next financial year will be disclosed in the next audited accounts of the Company.

Resolution 15 - Allotment of share capital

The UK Companies Act provides that the Directors are not permitted to allot shares (or other relevant securities such as rights to subscribe for, or convert securities into, Ordinary Shares) unless they are authorised to do so by the Company's shareholders in a General Meeting.

Paragraph (i) of Resolution 15 seeks to renew the Directors' general authority to allot shares and grant rights to subscribe for or convert any security into shares up to an aggregate nominal amount of £26,627,510 as permitted by the Company's Articles of Association and pursuant to the provisions of section 551 of the UK Companies Act. This amount represents approximately 33.33%

(i.e. one-third) of the Company's issued share capital (excluding treasury shares) as at 20 March 2023 (being the latest practicable date before publication of this document (Latest Practicable Date)).

Letter from the Chair of Coats Group plc continued

Paragraph (ii) of Resolution 15 would give the Directors authority to allot shares and grant rights to subscribe for or convert any securities into shares in connection with a rights issue in favour of shareholders up to an aggregate nominal amount equal to £53,255,020 (representing approximately 1,065,100,403 Ordinary Shares), as reduced by the nominal amount of any shares issued under paragraph (i) of the resolution). The Directors are aware of the latest Investment Association Share Capital Management Guidelines published in February 2023, which update the previous guidance to incorporate all fully pre-emptive offers, not just fully pre-emptive rights issues. The Directors have decided that they will limit the relevant limb of the allotment authority to rights issues in line with past practice but will keep emerging market practice under review.

This amount (before any reduction) represents approximately 66.66% (i.e. two-thirds) of the Company's issued share capital (excluding treasury shares) as at the Latest Practicable Date.

Resolution 15 will be proposed as an Ordinary Resolution. The Directors have no present intention of allotting new shares except in connection with the employee share option schemes. However, renewal of this authority will ensure that the Directors continue to have flexibility in managing the Company's capital resources and so that the Directors may act in the best interests of shareholders generally. If passed, this Resolution 15 will renew the authority given by the shareholders to the Directors at the 2022 AGM.

The authorities sought under this resolution will expire on 30 June 2024 or at the conclusion of next year's AGM, whichever is the earlier (unless previously renewed, varied or revoked by the Company in a General Meeting).

Resolutions 16 and 17 - Disapplication of statutory pre-emption rights

Resolution 16, which will be proposed as a Special Resolution, is to enable the Directors to allot shares and other equity securities pursuant to the authority granted under Resolution 15 either in connection with a rights issue or other offer of securities to existing shareholders (up to the specified amount) for cash, without first offering them to existing shareholders exactly in proportion to their existing shareholdings. Under s.561(1) of the UK Companies Act, if the Directors wished to allot shares or other equity securities

(other than pursuant to an employee share scheme), they must in the first instance offer them to existing shareholders in proportion to their holdings. There may be occasions, however, when the Directors need the flexibility to finance business opportunities by the issue of shares without a pre-emptive offer to existing shareholders. This cannot be done under the UK Companies Act unless the shareholders have first waived their pre-emption rights, as is anticipated by this Resolution 16. This resolution, if passed, will renew the Directors' authority (given by shareholders at the 2022 AGM) to allot shares and other equity securities for cash, in appropriate circumstances, subject to the maximum amount set out in the resolution. The maximum amount is approximately 5% of the issued share capital (excluding treasury shares), being 79,890,519 Ordinary Shares, as at the Latest Practicable Date.

Resolution 17, which will be proposed as a Special Resolution, is to enable the Directors to allot shares pursuant to the authority granted under Resolution 15, and in addition to the right under Resolution 16, for cash (up to the specified amount), without first offering them to existing shareholders exactly in proportion to their existing shareholdings (which would otherwise be required under statutory pre-emption rights contained in the UK Companies Act, and as outlined above) to be used only in connection with an acquisition or specified capital investment which is announced contemporaneously with the issue, or which has taken place in the preceding 12 months and is disclosed in the announcement of the issue. Resolution 17, if passed, will give the Directors an authority in addition to that proposed by Resolution 16 to allot shares and other equity securities for cash, in appropriate circumstances, subject to the maximum amount set out in the resolution. The maximum additional amount is approximately 5% of the issued share capital (excluding treasury shares), being 79,890,519 Ordinary Shares, as at the Latest Practicable Date.

The Pre-Emption Group published a revised statement of principles for the disapplication of pre-emption rights (Principles) in

November 2022. At this time, the Directors consider it appropriate to retain the previous limits of 5% of the issued ordinary share capital of the Company in Resolutions 16 and 17 and have not adopted the increased limits of 10% set out in the Principles, nor do the resolutions specifically provide for follow-on offers. The Directors will keep emerging market practice under review.

The Directors have continued to seek annual renewal of the authority to disapply pre-emption rights in order to react quickly and efficiently should the needs of the business require. The Directors have no present intention of exercising these authorities. If the powers are used in relation to a non-pre-emptive offer, the Directors confirm their intention to follow the shareholder protections in Part 2B of the Principles. While the resolutions do not specifically provide for follow-on offers, where relevant, the Directors confirm their intention to follow the expected features of a follow-on offer as set out in paragraph 3 of Part 2B of the Principles. The renewal of the existing authority under Resolution 16 and the additional authority sought under Resolution 17 will ensure that the Directors have flexibility in managing the Company's capital resources, so that the Board can act in the best interests of shareholders generally.

If passed, the authorities will expire on 30 June 2024 or at the conclusion of next year's AGM, whichever is the earlier.

Resolution 18 - Authority to purchase own shares

This resolution, which will be proposed as a Special Resolution, gives the Company general authority to buy back its own shares in the market as permitted by the UK Companies Act. This renews the authority granted at last year's AGM which expires on the date of this AGM. The authority limits the number of shares that could be purchased to a maximum of 159,781,039 (representing approximately 10% of the Company's issued share capital (excluding treasury shares) as at the Latest Practicable Date). This resolution also sets minimum and maximum prices in accordance with the UK Listing Rules.

The authority granted pursuant to Resolution 18 will expire on 30 June 2024 or at the conclusion of next year's AGM, whichever is the earlier.

Letter from the Chair of Coats Group plc continued

UK-listed companies purchasing their own shares are allowed to hold them in treasury as an alternative to cancelling them.

If Resolution 18 is passed at the AGM, and the Company buys back its own shares, it is the Company's current intention to cancel all of the shares it may purchase pursuant to the authority granted to it. However, in order to respond properly to the Company's capital requirements and prevailing market conditions, the Directors will reassess at the time of any and each actual purchase whether to hold the shares in treasury or cancel them, provided it is permitted to do so.

The Board is focused on achieving a strategy which will involve capital management initiatives as the Company's group's cash flows permit. The Directors have no present intention of exercising the authority to purchase the Company's shares but will keep the matter under review, considering the cash reserves of the Company, the Company's share price and other investment opportunities. The Directors would only authorise such purchases after careful consideration, taking account of other investment opportunities, appropriate gearing levels, the overall financial position of the Company and whether the effect would be in the best interests of shareholders generally.

The total number of warrants and options to subscribe for shares that are outstanding under the Coats Group plc share option schemes is 45,402,161 as at the close of business on the Latest Practicable Date. These options equate to 2.84% of the issued share capital of the Company.

If the authority to purchase the Company's Ordinary Shares being sought in Resolution 18 and the existing authority to purchase shares taken at last year's AGM (which expires at the end of this year's AGM) were to be exercised in full, the warrants and options to subscribe for shares that are outstanding would represent 3.51% of the Company's issued share capital (excluding treasury shares).

As previously notified to shareholders, the Company will continue to look to support its share-based long term incentives programme by funding an employee benefit trust to buy shares in the open market. As the employee benefit trust is an independent entity outside of the Company's group, it will not be relying on this authority when purchasing shares.

Resolution 19 - Length of notice of meeting

Resolution 19 is a resolution to allow the Company to hold General Meetings (other than AGMs) on 14 clear days' notice.

The minimum notice period for General Meetings of listed companies is 21 clear days, but companies may reduce this period to 14 clear days (other than for AGMs) provided that two conditions are met. The first condition is that the company offers a facility for shareholders to vote by electronic means. This condition is met if the company offers a facility, accessible to all shareholders, to appoint a proxy by means of a website. The second condition is that there is an annual resolution of shareholders approving the reduction of the minimum notice period from 21 clear days to 14 clear days.

The Board is therefore proposing Resolution 19 as a Special Resolution to approve 14 clear days as the minimum period of notice for all General Meetings of the Company other than AGMs. The approval will be effective until the conclusion of next year's AGM, when it is intended that the approval be renewed. The Board will consider on a case by case basis whether the use of the flexibility offered by the shorter notice period is merited, taking into account the circumstances, including whether the business of the meeting is time-sensitive and whether it is thought to be to the advantage of shareholders as a whole.

Recommendation

The Board considers the resolutions will promote the success of the Company and are in the best interests of the Company and its shareholders as a whole. The Directors unanimously recommend that you vote in favour of the resolutions as they intend to do in respect of their own holdings.

Voting on all resolutions at the AGM will again be by way of a poll using poll cards. We believe that this is a more transparent method of voting as shareholder votes are counted according to the number of shares held and this will ensure an exact and definitive result.

David Gosnell

Chair

Coats Group plc 30 March 2023