Coventry Group Limited · ASX:CYG
Coventry — Investor Presentation (April 2024)
41 slides from Coventry's investor presentation, Apr 15, 2024
Slide 1: Acquisition of Steelmasters and Equity Raising
Coventry Group Acquisition of Steelmasters and Equity Raising INVESTOR PRESENTATION | 15 April 2024 Delivering specialised industrial products, services and customised solutions ASX: CYG
Slide 2: Disclaimer
Disclaimer Reliance on third party information Non-lFRS Financial Information The information and views expressed in this presentation were prepared by Coventry Group Ltd (ACN 008 The Company uses certain measures to manage and report on its business that are not recognised under 670 102) (the Compa
Slide 3: Disclaimer
Disclaimer Bell Potter Securities Limited and Petra Capital Pty Ltd are joint lead responsibility and liability (including, without limitation, any liability arising You acknowledge and agree that by accessing this presentation: managers, underwriters and bookrunners to the Placement (the Joint from
Slide 4: Contents
Contents 01 HY22 summary 02 03 Transaction Overview Coventry Overview Steelmasters Overview 04 05 06 Pro Forma Financials Offer Overview Appendices
Slide 5: Transaction Overview
01 Transaction Overview
Slide 6: Transaction Highlights
Transaction Highlights Coventry Group Limited (“CYG”) is undertaking the acquisition of Steel Masters Auckland Ltd (“Steelmasters”), including subsidiaries Galvmasters Ltd, Profast Pty Ltd and Boltmasters Pty Ltd. ▪ Coventry Group to acquire the shares of Steel Masters Auckland Ltd (“Steelmasters”),
Slide 7: Transaction Overview
Transaction Overview ▪ ▪ CYG to acquire 100% of the shares in Steelmasters. Consideration comprises: Pro-forma Combined Revenue (A$m)2,3 84 396.5 400.2 Transaction ▪ A cash payment of NZ$45.0m with NZ$2.25m held for 18 months against warranties and indemnities 357.3 38.0 37.7 Summary (equivalent to
Slide 8: Coventry Overview
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Slide 9: About Coventry
About Coventry QLD 86 locations across Fluid Systems: 5 KAA: 13 Australia and New Zealand 1929 18 Coventry Group founded 12 NSW Fluid Systems: 1 4 10 WA KAA: 9 SA Fluid Systems: 4 Fluid Systems: 1 KAA: 7 1 ACT KAA: 3 11 DC: 1 KAA: 1 970 VIC Fluid Systems: 3 KAA: 7 10 TAS Fluid Systems: 1 Nubco: 7 18
Slide 10: Coventry Overview
Coventry Overview Corporate Snapshot1 Fluid Systems Share price (12 April 2024): A$1.47 Fluid Systems is an innovative service provider to the Mining and Resources, Renewable Energy, Agriculture and Aquaculture, Defence and Food & Shares on issue: 95.3m Beverage Manufacturing and allied industries M
Slide 11: Historical performance – a growth story
Historical performance – a growth story Group Revenue up 11.2% to A$358.5m Revenue (A$322.3m FY22) Group EBITDA1 up 9.7% to A$17.0m (A$15.5m FY22) EBITDA1 Note 1: EBITDA is earnings before interest, tax, depreciation, amortisation before significant items and has been adjusted to exclude the impact
Slide 12: Trading Update and Outlook
Trading Update and Outlook FY24F EBITDA of between $19.0m and $20.0m $357.5m - $367.5m Forecast FY24 Sales (mid-point up 1.2% from prior period) $19.0m - $20.0m FY24 Guidance Forecast FY24 EBITDA1 (mid-point up 14.7% from prior period) Forecast FY24 NPAT2,3 $9.2m - $10.2m ▪ Positive EBITDA growth du
Slide 13: Steelmasters Overview
03 Steelmasters Overview
Slide 14: Steelmasters Overview
Steelmasters Overview Steelmasters is a leading supplier of industrial & specialty fasteners in Australia and New Zealand across 4 key brands. 84 Overview Key Statistics ▪ Founded in 1973, Steelmasters is an Australasian business Steelmasters providing a full range of quality fasteners and industria
Slide 15: Financial Overview
Financial Overview Steelmasters has a solid growth and cash generation profile. Revenue (A$m) EBITDA (A$m) 8.0 40.0% 6.9 6.9 7.0 35.0% 38.0 37.7 5.9 40.0 35.0 6.0 30.0% 31.9 5.0 4.5 25.0% 30.0 18.1% 18.3% 4.0 16.9% 20.0% 14.1% 20.0 3.0 15.0% 2.0 10.0% 10.0 1.0 5.0% 0.0 0.0 0.0% Actual Actual Actual
Slide 16: Sales mix
Sales mix Steelmasters is well diversified by geography, customers and suppliers FY23 Revenue Split FY23 Customer Concentration FY23 Supplier Concentration Largest Customer Largest 9% Supplier 11% Customers 2-5 7% Customers 6- 10 3% New Zealand Other 46% Suppliers Suppliers 2-5 47% 26% Australia 54%
Slide 17: Business and Product Summary
Business and Product Summary Boltmasters Pty Ltd Profast Pty Ltd Core Products ▪ Two branches in Brisbane and Perth ▪ Six branches in Brisbane, Townsville, Cairns, Emerald, Melbourne, ▪ Supplies mainly trade customers and Nuts, Bolts & Washers Rockhampton retailers (B2B) with high volumes of Austral
Slide 18: Strategic rationale
Strategic rationale The acquisition of Steelmasters is consistent with Coventry’s strategic priorities and aligns with the Company’s M&A strategy. This acquisition is a significant milestone for Coventry and will provide complementary scale and opportunities for further value creation. 1. Aligns wit
Slide 19: Pro Forma Financials
04 Pro Forma Financials
Slide 20: Pro forma FY24F Financial Metrics
Pro forma FY24F Financial Metrics EPS (cents) EBITDA (A$m) 40.9% increase in 31.1% accretion EBITDA 27.5 13.4 10.2 19.5 CYG Standalone Post-acquisition Pro-forma CYG Standalone Post-acquisition Pro-forma EBITDA Margin (%) Net Debt / EBITDA (x) 27.7% increase in 1.9x EBITDA Margin (%) 6.9% 1.7x 5.4%
Slide 21: Pro Forma Balance Sheet
Pro Forma Balance Sheet • CYG has established a new NAB Revolving Cash Advance Pro forma Pro forma Proposed A$000’s CYG Funding2 CYG Facility of A$25.0m to accommodate the acquisitions. Acquisition Jun-24 Jun-24 ‒ Maturity date 31/07/2027 Assets ‒ Minimum $6.0m repayable annually Cash & cash equival
Slide 22: Offer Overview
05 Offer Overview
Slide 23: Funding Summary
Funding Summary The acquisition of Steelmasters will be funded with a combination of equity and a new NAB Revolving Cash Advance facility Transaction Funding Sources & Uses ▪ The acquisition of Steelmasters will be fully funded via the Institutional Placement and new Sources (A$m) A$m NAB Revolving
Slide 24: Offer Summary
Offer Summary $25.0 million fully underwritten two-tranche placement (“Institutional Placement”) and a $2.0 million non-underwritten Share Offer structure and size1 Purchase Plan (“SPP”), (the “Equity Raising”). Approximately 17.2m New Shares to be issued (approximately 18.1% of current issued c
Slide 25: Indicative Timetable
Indicative Timetable Event Date1 Record Date for SPP 7.00pm Friday, 12 April 2024 Trading halt, Equity Raising announced and investor presentation lodged to the ASX Monday, 15 April 2024 Institutional Placement bookbuild Monday, 15 April 2024 Trading halt lifted Wednesday, 17 April 2024 Settlement o
Slide 26: Appendix 1 Other information
06 Appendix 1 Other information
Slide 27: Coventry Board of directors
Coventry Board of directors Neil Cathie James Todd Robert Bulluss Tony Howarth Alex White Independent Non- Independent Non- CEO and MD Non-Executive Director Non-Executive Director Executive Chairman Executive Director • Appointed in September • Appointed in September • Appointed CEO in May • Appoin
Slide 28: Coventry Leadership Team
Coventry Leadership Team Rod Jackson Renee Monkman- Ken Lam Mike Wansink Brody Sewell Nick Daw Chris Smith Chief Financial Officer Straub Chief Information General Manager General Manager General Manager General Manager Chief People Officer Officer Konnect and Artia New Fluid Systems Nubco Konnect a
Slide 29: Appendix 2 Risk Factors
06 Appendix 2 Risk Factors
Slide 30: Key Factors
Key Factors The risk factors summarised in this section may materially affect the financial performance of CYG and the market price of its shares. To that extent, the shares in CYG carry no guarantee with respect to the payment of dividends or return on capital. Potential investors should note that
Slide 31: Key Factors
Key Factors C: CYG risks Work Health & Safety There may be a workplace incident or accident resulting in serious injury that may result in a fine imposed by a regulatory authority, an interruption to business operations, or a worker’s compensation claim, a work health and safety claim or a damages c
Slide 32: Key Factors
Key Factors C: CYG risks (continued) Access to finance Depending on economic and business conditions, equity or debt funding may not be available to CYG, on favourable terms or at all. If adequate funds are not available on acceptable terms, CYG may not be able to take advantage of opportunities or
Slide 33: Key Factors
Key Factors C: CYG risks (continued) Liability for defective work and performance CYG’s operations carry a risk of liability for losses arising from defective work, including in some instances indirect or consequential losses suffered by third parties. CYG attempts to decrease its exposure to liabil
Slide 34: Key Factors
Key Factors C: CYG risks (continued) Negative publicity CYG is subject to the risk that negative publicity, whether true or not, may affect stakeholder perceptions of CYG’s past actions and future prospects. Being listed on the ASX means that the CYG is subject to risks relating to market expectatio
Slide 35: Key Factors
Key Factors D: Acquisition risks Completion risk CYG may terminate the share acquisition agreements for the Acquisitions in certain circumstances, including in the circumstance where certain conditions precedent have not been satisfied. If such termination rights are exercised, completion of the acq
Slide 36: Appendix 3 International Offer Restrictions
06 Appendix 3 International Offer Restrictions
Slide 37: International Offer Restrictions
International Offer Restrictions Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commission in Hong Kong
Slide 38: Appendix 4 Placement Agreement Summary
06 Appendix 4 Placement Agreement Summary
Slide 39: Placement Agreement
Placement Agreement The Company has entered into an agreement with the Joint Lead Managers (Placement Agreement) with respect of the Placement. The obligation of the Joint Lead Managers to lead manage the Placement and the obligation of the Joint Lead Manger to fully underwrite the Placement Agreeme
Slide 40: Placement Agreement
Placement Agreement Termination events continued: • A member of the Group is or becomes Insolvent or there is an act or omission which is likely to result in such member of the Group becoming Insolvent; • Responses to the DDQ, the Acquisition Due Diligence Reports or any other information supplied b
Slide 41: Slide 41