Coventry Group Limited · ASX:CYG
Coventry — H1 FY2005 Earnings Presentation
22 slides from Coventry's earnings presentation, Feb 22, 2005
Slide 1: Results for Half-Year Ended 31 December 2004
@ Coventry Group Ltd ABN 37 008 670 102 Results for Half-Year Ended 31 December 2004 Chris Glenn Managing Director Stephen Cooper Chief Financial Officer
Slide 2: Results Summary
Results Summary e Net profit before tax and significant items of $8.8M (2003: $10.7M) e Earnings before interest, tax and significant items down 17% to $9.5M. e Interim dividend of 18 cents fully franked, up from 16 cents, fully franked.
Slide 3: Financial Overview
Financial Overview FY04 FY05 % $M Hi | H2 | TOTAL | H1_ | Change Sales 415.5 | 217.0 | 216.9 | 433.9 238.4 9.97 EBITA (before significant items) 20.6 12.2 12.5 24.7 10.6 13.10 Tax 6.0 3.2 3.6 6.8 2.6 Net Profit After Tax (before outside equity 10.9 7.5 77 15.2 9.9 32.07 interest) EPS — cents 31.5 21
Slide 4: Financial Overview (continued)
Financial Overview (continued) FY04 FY05 Hi* H2* | TOTAL H1i* % % % % EBITA/sales 5.6 5.8 5.7 4.4 Return on Capital Employed (EBITA/equity + net debt) 11.0 13.0 | 13.7 13.6 10.1 Return on Equity (NPAT/equity) 6.6 9.0 9.0 9.0 7.0 * Ratios are annualised where appropriate and are before significant it
Slide 5: Cash Flow and Gearing
Cash Flow and Gearing FY03 FY04 FY05 $M $M $M Hi H2 H1 Operating Cash Flow 22.4 9.5 10.7 2.9 Closing Net Interest Bearing Debt 23.3 21.4 12.5 32.4 Closing Equity 162.8 166.1 169.9 176.0 Net Debt/Equity 14.3% 12.9% 7.3% 18.4% Interest Cover 11.1 17.3 26.5 16.2 (EBITA before significant iterns/net int
Slide 6: Dividends
Dividends FY03 FY04 FY05 H1 H2 H1 EPS — cents 31.5 21.1 21.4 17.0* Dividend per share — cents 30.0 16.0 18.0 18.0 Franking 100% 100% 100% 100% * Excluding gains from property sales. e Current policy is to distribute high proportion of profits. e Dividend reinvestment plan suspended for the time bein
Slide 7: Capital Employed
Capital Employed CAPITAL EMPLOYED - 31 DECEMBER 2004 Gaskets Corporate” $8.2M $10.9M (June 2004: (June 2004: $8.0M) $23.7M) Bitumen $5.0M (June 2004; $5.1M) Industrial ; $71.4M Automotive (June 2004: $80.5M $63.6M) (June 2004: $63.5M) Capital Employed = Assets ~ Creditors and Provisions * Includes l
Slide 8: Capital Employed (continued)
Capital Employed (continued) FY03 FY04 FY05 Hi _| Capital expenditure $8.6M $7.2M $4.9M _| Annual stock turns 3.1 turns | 3.2 turns | 3.2 turns Days sales in trade debtors 54 days 56 days 52 days e@ Higher level of capital expenditure due to purchase of regional manager's residence ($0.5M), “in-sour
Slide 9: Automotive
Automotive FY04 FY05| % $M H1 | H2 | TOTAL| H1. | Change Sales 227.6 | 118.2 | 122.2 240.4 137.0 15.97 EBIT * - Parent 9.4 5.8 5.4 41.2 4.4 29.3. (WA/SA/NT) -CAP (NSW/QLD) | (5.8) | (2.4) | (4.7) | (4.1) | (2.9) | 20.80 3.6 3.4 3.7 7.1 1.2 EBIT/Sales Margin 16% | 2.9% | 3.0% 2.9% 0.9% * Before signi
Slide 10: Automotive
| Automotive - Achieved strong sales growth but at weaker margins due to sales mix (Holden dealer business and greater mining supply sales), and aggressive price competition for trade sales. — New State Manager appointed and senior management reorganisation completed. This will provide greater focus
Slide 11: Automotive (continued)
Automotive (continued) — Modest sales growth but low margins negatively impacted result. — Pricing and sales mix strategies have been implemented to improve margins for the second half. e NT — Improved margins achieved at Independent Motor Mart post-acquisition, but sales marginally below expectatio
Slide 12: Automotive (continued)
Automotive (continued) s.Crrt—“(‘“COsOSCSC—:—C~:~C~C~C—C~CSC~CisiCQ4*szsSOCSCW«COU:i(‘(C;COC#C(U:i*iC( i‘ | Coventry Auto Parts _. e@ New General Manager appointed with sole focus on CAP oe business. — e NSW — Annual cost savings of $1M will result from restructuring initiatives implemented during t
Slide 13: Automotive (continued)
Automotive (continued) e NSW (continued) — Contract delivery service has been brought “in-house” to reduce costs and improve customer service. e QLD — Thompson's Spare Parts/Rod Smith Parts & Bearings business purchased on 1 July 2004 now fully integrated. Duplicated back-office functions now elimin
Slide 14: Industrial
Industrial FY04 FY05 % $M H2 | TOTAL] H1_ | Change Sales 165.3 88.4 83.3 4171.7 90.5 247 EBIT 13.7 8.1 7.8 15.9 8.7 7A EBIT/Sales Margin 8.3% | 9.1% | 9.3% 9.2% 9.6%
Slide 15: Industrial
Industrial _ e Softer sales growth reflects mixed performance across the regions. Good growth achieved in Victoria and New Zealand, but slight sales decline from other Australian states. Queensland sales impacted by lower project activity and South Australia by lower manufacturing activity. - @ Marg
Slide 16: Bitumen
Bitumen FY04 FY05 % $M H2 |TOTAL| H1 | Change Sales 13.6 5.9 7.4 13.0 6.3 6.87 EBIT 1.4 0.4 0.9 1.3 0.4 - EBIT/Sales Margin 10.7% | 6.2% | 13.3% | 10.1% 6.6% e Emulsion spraying business continuing to achieve strong volumes. e Asphalt business forecasting higher second half sales from recent local g
Slide 17: Sales
Sales EBIT 1.2 0.9 0.9 1.8 1.0 11.47 EBIT/Sales Margin 9.9% | 13.3% | 16.1% | 14.6% | 14.3% @ Continued focus on production efficiency has resulted in good margins being maintained.
Slide 18: Strategy
Strategy _ @ Operations — Information and Communications Technology: » Information and Communication Technology strategy in place » Disaster Recovery project completed » ERP scoping study completed March 2005
Slide 19: Strategy
_ Strategy e Operations (continued) — Distribution Centre Review « Morley site sold for $16M « 5 suitable sites identified — Centralised Purchasing = Implemented in Automotive and Industrial » Leverage size and buying power of Automotive business
Slide 20: Strategy
Strategy _ @ Operations (continued) : — Human Resources » Training and development programme rolled out » Succession planning » Staff retention — Business process improvement initiatives » Stock accuracy » Stock mix and location » Supply chain
Slide 21: Strategy
Strategy e Growth — Organic sales growth focus — Bolt-on acquisition growth — Larger acquisition opportunities in existing businesses — currently expensive — Acquisition opportunities which leverage the company’s core competencies
Slide 22: Strategy
Strategy e Outlook — Ongoing focus on underperforming business units — Stronger trading in second half — Automotive WA buoyant — CAP improvement with a lower cost base — Industrial easing with slow construction activity — Bitumen improving and Gaskets steady