Slide 1: Repositioning the Portfolio
Coventry Group Ltd For personal use only ABN 37 008 670 102 “REPOSITIONING THE PORTFOLIO” Roger Flynn Tony Hockley Executive Chairman Chief Financial Officer Market Update May 2011
Slide 2: The Inheritance – The Journey Begins (mid 2007)
The Inheritance – The Journey Begins (mid 2007) A DIFFICULT STARTING POINT IN 2007 For personal use only • Group revenues $450m • EBIT Pre „NRIs‟ $20m • 4 bus segments - industrial - auto (in 4 states/territories) - bitumen - gaskets BUT • - Costly and flawed ERP (Oracle) implementation had cost $18
Slide 3: Actions Taken (Prior to current transactions)
Actions Taken (Prior to current transactions) For personal use only EARLY CHANGES WERE MADE TO THE BUSINESS PORTFOLIO • Exit Bitumen Products (at premium to NTA) – acquirer (Downer EDI) much better positioned to develop – required capex was significant if stayed in • Exit Auto QLD (at premium to NTA
Slide 4: Addressed the Balance Sheet & Eliminated Debt
ADDRESSED THE BALANCE SHEET & For personal use only ELIMINATED DEBT Net debt reduced from peak of $83m to $6m by: Net Debt 50 • Halting dividends (recommenced September 09 40 and maintained since) 30 $M • Minimising CAPEX 20 • Sale of businesses 10 without potential 0 • Sale of freehold properties /
Slide 5: Operational Issues Have Been Addressed
For personal use only OPERATIONAL ISSUES HAVE BEEN ADDRESSED • Change in senior executive team – CEO, CFO, CIO and GMs auto and gaskets but also next level of management • Driving the ERP implementation – completed in June 2009 – total cost $25m – now very stable and strong support to businesses • M
Slide 6: Snakes and Ladders Along the Way
SNAKES AND LADDERS ALONG THE WAY For personal use only The “Speed Bumps” • GFC impacted some businesses severely especially industrial fasteners and the legacy remains still (depressed construction, off-shore fabrication, etc) • The move of the auto WA business (including DC) was highly disruptive •
Slide 7: Exiting Auto Businesses in WA/SA
Exiting Auto Businesses in WA/SA For personal use only THE DECISION TO EXIT AUTO WA/SA STEMMED FROM A RATIONAL ASSESSMENT OF THE CHANGED INDUSTRY STRUCTURE & OUTLOOK • Tough decision as auto was foundation of Coventry Group • Business had been profitable in 20th century • However in 21st century the
Slide 8: The Factors in the Decision to Exit
The Factors in the Decision to Exit BURSON & AHG CAN ACHIEVE MAJOR SYNERGIES For personal use only NOT AVAILABLE TO CYG & THUS VALUE PAY ABOVE THE CONTINUING VALUE TO CYG SHAREHOLDERS • Both auto businesses in Western Australia and South Australia had returned to low levels of profitability • The op
Slide 9: Financial Implications
Financial Implications IF SALE TO AHG COMPLETES ON For personal use only SCHEDULE MOST OF $70M INFLOW EXPECTED JULY – DEC 2011 • Key mile stones are: – early May completion of sale of South Australian business – early July completion of sale of Western Australian business targeted – July onwards act
Slide 10: The Continuing Businesses: Coventry Fasteners & HPF
The Continuing Businesses COVENTRY FASTENERS & HPF ARE STRONG LEADING For personal use only PLAYERS WELL POSITIONED FOR CYCLICAL RECOVERY • Geographic Markets : All states of Australia (QLD/WA largest), New Zealand • Divisional Office : Perth, (56 branches) • Dimensions : Sales $130m Employees 500 E
Slide 11: The Continuing Businesses: Cooper Fluid Systems
The Continuing Businesses (Cont’d) COOPER FLUID SYSTEMS IS WELL LED & WELL For personal use only PLACED TO CONTINUE GROWING • Geographic Markets : WA, QLD, SA and small amount of export • Divisional Office : Brisbane, (7 branches) • Dimensions : Sales $60m Employees 120 EBIT strong % Cap Empl $16m •
Slide 12: The Continuing Businesses: Artia
The Continuing Businesses (Cont’d) ARTIA (CABINET FURNITURE AND HARDWARE) For personal use only HAS A SMALL MARKET SHARE WITH GROWTH POTENTIAL • Geographic Markets : All states of Australia and New Zealand • Divisional Office : Melbourne, (8 branches) • Dimensions : Sales $30m Employees 95 EBIT is c
Slide 13: The Continuing Businesses: Gaskets
The Continuing Businesses (Cont’d) GASKETS IS THE MARKET LEADER For personal use only & PERFORMING WELL • Geographic Markets : Australia and New Zealand • Divisional Office : Melbourne, (2 branches) • Dimensions : Sales $12m Employees 60 EBIT strong (≈20%) Cap Empl $12m • Key Markets : Auto repairer
Slide 14: Stocktake of Coventry's Key Strengths
Stocktake of Coventrys Key Strengths For personal use only SKILLS WE WILL LOOK TO LEVERAGE • Good understanding of Australian and New Zealand industrial “landscape” • Good manager of complex transaction driven businesses ie. large numbers of: – employees – customers – suppliers – SKU‟s – locations/d
Slide 15: Repositioning the Portfolio: Coventry Group Going Forward
Repositioning the Portfolio Coventry Group Going Forward For personal use only Post the auto transactions the Coventry Group will have the resources to: • undertake capital management initiatives – the Group has $19m in franking credits ie. enough to fully frank $44m of dividends • invest in selecte
Slide 16: Repositioning the Portfolio: Going Forward (Cont)
Repositioning the Portfolio Coventry Group Going Forward (Cont) For personal use only Seeking investment opportunities for some time but hindered by: • the paucity of opportunity • unrealistic price expectations • the lack of ready capital funds to invest • senior management pre-occupation with tran