Coventry Group Limited · ASX:CYG
Coventry — H1 FY2005 Earnings Presentation
22 slides from Coventry's earnings presentation, February 2005
Slide 1: Results for Half-Year Ended 31 December 2004
ABN 37 008 670 102 Results for Half-Year Ended 31 December 2004 Chris Glenn Managing Director Stephen Cooper Chief Financial Officer 1
Slide 2: Results Summary
Results Summary z Net profit before tax and significant items of $8.8M (2003: $10.7M) z Earnings before interest, tax and significant items down 17% to $9.5M. z Interim dividend of 18 cents fully franked, up from 16 cents, fully franked. 2
Slide 3: Financial Overview
Financial Overview FY04 FY05 % Change $M FY03 H1 H2 TOTAL H1 Sales 415.5 217.0 216.9 433.9 238.4 9.9 ↑ EBITA (before significant items) 20.6 12.2 12.5 24.7 10.6 13.1 ↓ Tax 6.0 3.2 3.6 6.8 2.6 Net Profit After Tax (before outside equity 10.9 7.5 7.7 15.2 9.9 32.0 ↑ interest) EPS – cents 31.5 21.1 21.
Slide 4: Financial Overview (continued)
Financial Overview (continued) FY04 FY05 FY03 H1* H2* TOTAL H1* % % % % % EBITA/sales 4.9 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 signific
Slide 5: Cash Flow and Gearing
Cash Flow and Gearing FY03 FY04 FY05 $M $M $M H1 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 15.2 (EBITA before significant items/net inte
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. z Current policy is to distribute high proportion of profits. z Dividend reinvestment plan suspended for the time bein
Slide 7: Capital Employed
Capital Employed CAPITAL EMPLOYED - 31 DECEMBER 2004 RETURN ON Gaskets Corporate* CAPITAL EMPLOYED % $8.2M $10.9M (June 2004: 30 25.6 26.3 23.2 (June 2004: 21.7 $8.0M) $23.7M) 25 Bitumen 16.7 $5.0M 20 (June 2004: 14.3 $5.1M) % 15 11.2 10 3.9 5 Industrial $71.4M Automotive 0 (June 2004: $80.5M Automo
Slide 8: Capital Employed (continued)
Capital Employed (continued) FY03 FY04 FY05 H1 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 z Higher level of capital expenditure due to purchase of regional manager’s residence ($0.5M), “in-sourcing” of NS
Slide 9: Automotive
Automotive FY03 FY04 FY05 % $M H1 H2 TOTAL H1 Change Sales 227.6 118.2 122.2 240.4 137.0 15.9 ↑ EBIT * - Parent 9.4 5.8 5.4 11.2 4.1 29.3 ↓ (WA/SA/NT) - CAP (NSW/QLD) (5.8) (2.4) (1.7) (4.1) (2.9) 20.8 ↓ 3.6 3.4 3.7 7.1 1.2 EBIT/Sales Margin 1.6% 2.9% 3.0% 2.9% 0.9% * Before significant items (nil i
Slide 10: Automotive
Automotive z WA – 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 fo
Slide 11: Automotive (continued)
Automotive (continued) z SA – Modest sales growth but low margins negatively impacted result. – Pricing and sales mix strategies have been implemented to improve margins for the second half. z NT – Improved margins achieved at Independent Motor Mart post-acquisition, but sales marginally below expec
Slide 12: Automotive (continued)
Automotive (continued) Coventry Auto Parts z New General Manager appointed with sole focus on CAP business. z NSW – Annual cost savings of $1M will result from restructuring initiatives implemented during the first half and in January 2005. – Blacktown distribution centre has been closed and absorbe
Slide 13: Automotive (continued)
Automotive (continued) z NSW (continued) – Contract delivery service has been brought “in-house” to reduce costs and improve customer service. z 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 FY03 H1 H2 TOTAL H1 Change Sales 165.3 88.4 83.3 171.7 90.5 2.4 ↑ EBIT 13.7 8.1 7.8 15.9 8.7 7.4 ↑ EBIT/Sales Margin 8.3% 9.1% 9.3% 9.2% 9.6% 14
Slide 15: Industrial
Industrial z 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. z Margins
Slide 16: Bitumen
Bitumen FY03 FY04 FY05 % $M H1 H2 TOTAL H1 Change Sales 13.6 5.9 7.1 13.0 6.3 6.8 ↑ EBIT 1.4 0.4 0.9 1.3 0.4 - EBIT/Sales Margin 10.7% 6.2% 13.3% 10.1% 6.6% z Emulsion spraying business continuing to achieve strong volumes. z Asphalt business forecasting higher second half sales from recent local go
Slide 17: Gaskets
Gaskets FY04 FY05 % $M FY03 H1 H2 TOTAL H1 Change Sales 12.5 6.4 6.0 12.4 6.7 4.7 ↑ EBIT 1.2 0.9 0.9 1.8 1.0 11.1 ↑ EBIT/Sales Margin 9.9% 13.3% 16.1% 14.6% 14.3% z Continued focus on production efficiency has resulted in good margins being maintained. 17
Slide 18: Strategy
Strategy z Operations – Information and Communications Technology: Information and Communication Technology strategy in place Disaster Recovery project completed ERP scoping study completed March 2005 18
Slide 19: Strategy
Strategy z 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 19
Slide 20: Strategy
Strategy z 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 20
Slide 21: Strategy
Strategy z 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 21
Slide 22: Strategy
Strategy z 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 22