Coventry Group Limited · ASX:CYG
Coventry — FY2009 Earnings Presentation
27 slides from Coventry's earnings presentation, September 2009
Slide 1: Results for Full Year Ended 30 June 2009
COVENTRY GROUP LTD ABN 37 008 670 102 Results for Full Year Ended 30 June 2009 Roger Flynn Tony Hockley Executive Chairman Chief Financial Officer SEPTEMBER 2009
Slide 2: Key Messages
KEY MESSAGES 4\ ¢ By end F’09 Company in best operational shape for years, but ¢ F’09 market conditions worst for years ¢ F10/H1 still tough — expect H2 improvement and well placed to benefit ¢ Conservative balance sheet and low CAPEX needs ¢ Restarted dividends ¢ Trading at 60% discount to NTA with
Slide 3: F'09 Summary - A Watershed Year
F’?09 SUMMARY —- A WATERSHED YEAR 4\ DELIVERED ON INTERNAL IMPROVEMENTS ¢ IT rollout completed Attacked cost base Net debt reduced 67% to $15m ¢ Stock & debtors greatly reduced ¢ Profitable sale of properties ¢ Extended bank facility to July 2010 ¢ Lost time injuries halved over 2 years HELD BACK BY
Slide 4: Some Metrics
SOME METRICS 4. ¢ Trading 80 years ¢ 116 branches, Australia & NZ ¢ 1,600 employees (2,200 in 2007) ¢ 3,100 shareholders ¢ Market cap - $56m (@ $1.45/share) ¢ Simple Group structure — only 3 subsidiary companies
Slide 5: Business Profile
BUSINESS PROFILE LEADING DISTRIBUTOR OF: ¢ Automotive aftermarket parts (including manufactured gaskets) * Fasteners ¢ Fluid system products ¢ Cabinet & furniture hardware CHARACTERISED BY: * Large range (>100,000 SKU’s) ¢ Large number of world leading suppliers ¢ Large number of customers * Time/pl
Slide 6: Group Business Units
GROUP BUSINESS UNITS LA &® Coventry Group Ltd °4\) Coventrys Automotive, Mining and Industrial Supplies °4\) Drivetrain Truck and Trailer Parts Specialists 4\) Motor Traders Automotive Parts, Tools and Equipment Coventry Fasteners Manufacturing | Coventry Fasteners WA, SA, NSW, VIC, QLD, TAS, NT lyl
Slide 7: Group Network
GROUP NETWORK Brisbane 5 7 Number of w South Wales Bney r 8 Metropolitan Branches Number of { a Aucltand @ Industrial Regional Branches Victoria Cay) piiaelvs ey) Industrial @ Gaskets Tasmania New Zealand 14) Automotive LOCATION NUMBERS FEBRUARY 2009
Slide 8: Revenue F'09
REVENUE F’09 4 (Continuing Operations) Automotive $163.3M Industrial $247.1M Manufacturing $11.8M Total $422.8M
Slide 9: EBIT F'09
EBIT F’09 (from continuing operations — pre 4 individually significant items) $M H1 H2 Year Industrial 9.9 1.2 11.1 Automotive (3.3) 0.5 (2.8) Gaskets 0.9 1.2 2.1 Corporate (1.2) (1.2) (2.4)
Slide 10: Five Year Financial Summary
FIVE YEAR FINANCIAL SUMMARY ar (1) (1) (1) (2) (2) Year Ended 30 June 2009 2008 2007 2006 2005 Revenue from sale of goods $M 419.1 448.8 468.3 502.0 470.8 Profit before tax $M 1.0 8.4 1.9 14.7 24.1 (before minority interest) (Loss)/profit after tax $M (1.0) 6.9 (1.2) 9.6 17.7 (after minority interes
Slide 11: F'09 A 'Watershed Year' - Net Debt Reduction
F’09 A ‘WATERSHED YEAR’ Continuing Net Debt Reduction Net debt reduced from peak of oeein to $15m by: ¢ Halting dividends (recommencing September ’09) 1g, ¢ Minimising CAPEX * Sale of businesses ” in without potential 60.0 * Sale of freehold properties/ = g) a motor vehicle fleet a ¢ Working capital
Slide 12: F'09 A 'Watershed Year' - Continuing Debt Reduction
F’09 A ‘WATERSHED YEAR’ Z\y Continuing Debt Reduction ¢ Net debt 31.12.08 - $37m, net debt 30.06.09 - $15m. Reduction $22m. ¢ Real estate sales - 8 in F’09, 1 in second half, yielding $11m ¢ Net debtors at 30.06.09 - $64m down $10m from Dec ’08 (as foreshadowed at Dec ‘08 - $10m excessive) ¢ Net sto
Slide 13: New leadership matched to tasks
F’09 — A ‘WATERSHED YEAR’ New leadership matched to tasks and creating a stable team coe GGM Logistics Manager 4
Slide 14: IT Roll Out Complete
F’09 — A ‘WATERSHED YEAR’ A IT Roll Out Complete *Initial budget $13.7m «Commenced January 2005 — planned implementation ~ 3 years «Completed June 2009 *Total expenditure ~ $25m (F’09 $3.2M) eCarrying value $14m at 30.06.09 BUT Now giving operational data to enable business processes/costs and worki
Slide 15: Attacking the Cost Base
F’09 — A ‘WATERSHED YEAR’ bi Attacking the Cost Base 48 Industrial Auto Branches closed 11 2* Headcount reduction # 112 122 = $5m+ $5m+ insavings in savings * Includes Branch amalgamation # Full time equivalents including hire labour
Slide 16: F'09 Cashflows
F’09 Cashflows 600 B inflow @ Outflow 500 400 300 200 100 ST Customers Goods Employees Expenses Capex Interest Tax Property Sales Net Cash Flow 0
Slide 17: F'10 - Continuing to Make Assets Work
F’10 — CONTINUING TO YO MAKE ASSETS WORK \ ¢ Net Debt June ’09 = $15m ¢ Real Estate Owned June ’09 = $14m at Book Value = $30m at March‘08 appraisal - Willing buyers but unwilling property lenders slowing sales - Rental yield expectations yet to moderate relative to interest rates ¢ Depreciation $4m
Slide 18: F'10 - Continuing Operational Improvements
F’10 — CONTINUING OPERATIONAL Lda IMPROVEMENTS \ ° Service Levels — Market Share ¢ Better Sourcing - COGS our dominant cost (>60% of Sales $) ¢ Rationalise Costs - People (59% of expenses) (Our No. 2 Cost) -Sites (7% of expenses) ¢ Optimise Pricing Structure ANNUAL EBIT SENSITIVITIES * 1% Change in
Slide 19: F'10 - Even More Outward Looking
F’10- Even More Outward Lookin & ¢ Facing our customers & suppliers for mutual benefit ¢ Improving after being too internalised ¢ Reviewing each of our locations to align network to real customer needs
Slide 20: F'10 - Being Countered by Economic Slowdown
F’10 - Being Countered by ILA Economic Slowdown * Sales are customer “need” driven AND * hesitancy by all particularly felt from November ’08 * Actual & potential deferment of infrastructure projects (particularly WA/QlId resource base) BUT ¢ New car “bubble” from 3-4 years ago brings service potent
Slide 21: F'10 - Growth Path
F’10 - GROWTH PATH 4 ¢ Organic - Customers - Products - Locations ¢ Complimentary acquisitions matched to our: Knowledge’/skills - Capacity to fund Leverage growth from major WA projects ¢ Active capital management Current Bank facilities next due for renewal July 2010. (They were renewed during H2
Slide 22: F'10 - Trading Outlook: Auto & Gaskets
F’10 - Trading Outlook Auto & Gaskets 4 @-= SNAKES & S\ _LADDERS External Internal External Internal «Depressed *Slower than *New car bubble | sLower cost resource sector re mining supply Vehicle service deferrals desired inventory reduction of early 2000’s requiring service eLower new car sales mea
Slide 23: F'10 - Trading Outlook: Fasteners
F’10 - Trading Outlook & Fasteners : C= SNAKES & SQ LADDERS External Internal External Internal *GFC impacting | Debtor exposure «Government *Lower cost resource related | «Slower than announced base infrastructure / desired inventory support for «Project manufacturers reduction infrastructure oppor
Slide 24: Future - Trading Outlook: Fluids
FUTURE | - Trading Outlook 4\ Fluids Cys SNAKES : LADDERS External Internal External Internal *GFC impacting | Lower sales *Certain market | «Oracle system key markets, drives need to sectors still will give control especially restructure buoyant benefits Kalgoorlie «Large market | sComplementary sh
Slide 25: Future - Trading Outlook: Cabinet & Furniture Hardware
FUTURE - Trading Outlook 4. Cabinet & Furniture Hardware (Artia) > Css SNAKES & Ss LADDERS External Internal External Internal *GFC adversely | *Debtor exposure *New housing *New General impacting *Slower than boost Manager brings discretionary desired inventory | | *Great market greater spend reduc
Slide 26: Future - Trading Outlook: New Zealand
FUTURE New Zealand - Trading Outlook 4 Gres SNAKES LADDERS External Internal External Internal “Economy in Debtor exposure | | "New *Standardised recession Government systems with *Declining brings consumer | Australia manufacturing confidence ‘Oracle will segments *Closer economic | bring control t
Slide 27: Disclaimer
Disclaimer y Statements contained in this presentation, particularly those regarding possible or assumed future performance, estimated company earnings, potential growth of the company, industry growth or other trend projections are or may be forward looking statements. Such statements relate to fut