FY19 Full Ye a r Re sults Pre se nta tio n Aug ust 2019 De live - - PowerPoint PPT Presentation

FY19 Full Ye a r Re sults Pre se nta tio n

Aug ust 2019 De live ring inno va tive industrial so lutio ns a nd se rvic e s

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Co rpo ra te Sna psho t – Aug ust 2019

SHARE PRIC E

22 Aug ust 2019

$0.92

30.8% 6.4% 6.6% 8.1%

Substa ntia l Sha re holde rs

SHARES ON ISSUE

89.7M

ENT ERPRISE VAL UE

$86.6M

MARKET C APIT AL ISAT IO N

$82.5M

NET DEBT

30 June 2019

$4.1M

Ke y Ma rke t Me tric s

PRO - FO RMA FY19 REVENUE

$ 233.8

EV / FY19 PRO - FO RMA REVENUE

$0.37x

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Fina nc ia l Hig hlig hts

Co ve ntry Gro up’s trading pe rfo rmanc e has impro ve d sig nific antly o ve r FY19.

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Stro ng FY19 sa le s g ro wth +20.4% inc luding a c quisitio ns

• E

xc luding a c q uisitio ns F Y19 sa le s g ro wth +7.0% whic h re pre se nts so lid o rg a nic g ro wth – mo me ntum is b uilding a s o ur va lue pro po sitio n impro ve s.

• T

he Gro up de live re d re c o rd da ily sa le s fo r June .

5.1% 6.0% 9.5%

Q 1 Q 2 Q 3

Qua rte rly sa le s g ro wth (e xc luding a c q uisitio ns)

5.1% 10.9% 25.1%

Q 1 Q 2 Q 3

Qua rte rly sa le s g ro wth (inc luding a c q uisitio ns)

G ro up re turns to pro fita bility FY19 EBIT DA $2.8m

• $12.5m E

BI T DA turna ro und in two ye a rs

• Sig nific a nt c o ntrib utio n e xpa nsio n o ppo rtunity in K
• nne c t a nd Artia

Austra lia a s g ro wth re duc e s fixe d c o sts a s a pe rc e nta g e o f sa le s. Ba la nc e she e t in a stro ng po sitio n - ne t de bt re duc e d to $4.1m a t 30 June 2019

• Ne t a sse ts o f $101.0m
• T

he b usine ss is hig hly c a sh g e ne ra tive with limite d c a pe x a nd $71.9m ta x lo sse s a va ila b le .

• F

uture a c q uisitio ns to b e funde d b y o pe ra ting c a sh flo ws a nd de b t.

• Adva nc e d disc ussio ns unde rwa y with ma jo r b a nks fo r a fle xib le lo w

c o st c o rpo ra te de b t fa c ility. Nubc o a nd T

• rque inte g ra tio ns pro g re ssing to pla n
• Sa le s a nd pro fit ma rg ins in line with e xpe c ta tio ns

39.8%

Q 4 Q 4

7.5%

Busine ss Ove rvie w

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We sup p ly a ra ng e o f fa ste ning syste ms, industria l p ro duc ts a nd hydra ulic s, lub ric a tio n, fire sup p re ssio n a nd re fue ling syste ms, c a b ine t ha rdwa re syste ms a nd o the r p ro duc ts.

FS

Fluid Syste ms (FS)

Co mp rise s Co o p e r Fluid Syste ms (CFS) a nd T

• rq ue Ind ustrie s. De sig ns,

ma nufa c ture s a nd se lls hyd ra ulic s, lub ric a tio n, fire sup p re ssio n a nd re fue lling syste ms a nd p ro d uc ts thro ug h 12 b ra nc he s in Austra lia . Custo me rs a re in the mining , ma nufa c turing , d e fe nc e a nd a g ric ulture se c to rs.

TD

T ra de Distributio n (T D)

Co mp rise s Ko nne c t a nd Artia Austra lia (KAA), Ko nne c t a nd Artia Ne w Ze a la nd (KANZ), a nd Nub c o . Sup p lie s a ra ng e o f fa ste ning syste ms, c a b ine t ha rd wa re syste ms, ind ustria l a nd c o nstruc tio n p ro d uc ts thro ug h a ne two rk o f 48 b ra nc he s in Austra lia a nd 16 b ra nc he s in Ne w Ze a la nd . Custo me rs a re in the ma nufa c turing , c o nstruc tio n, a g ric ulture a nd mining se c to rs.

Visio n / Stra te g ic Dire c tio n

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A c le a r o p p o rtunity e xists to b uild a hig hly fo c use d sc a le d Ind ustria l Sup p ly a nd Se rvic e s b usine ss with le a d ing ma rke t p o sitio ns a c ro ss multip le g e o g ra p hie s, se c to rs a nd p ro d uc ts. T he Bo a rd a nd Exe c utive L e a d e rship T e a m ha ve sig nific a nt e xp e rie nc e in B2B tra d e / ind ustria l sup p ly a nd se rvic e d istrib utio n ma rke ts a nd kno w wha t the b lue p rint fo r suc c e ss lo o ks like . T he Exe c utive L e a d e rship T e a m a lso ha s sub sta ntia l e xp e rie nc e id e ntifying , c o mp le ting a nd inte g ra ting a c q uisitio ns. As the G ro up ha s sta b ilize d p e rfo rma nc e

• ve r re c e nt time s a nd

re turne d to p ro fita b ility, the Bo a rd a nd Exe c utive L e a d e rship T e a m ha ve sp e nt time d e ve lo p ing the visio n fo r the b usine ss o ve r the ne xt five ye a rs. G ro wth c a n b e a c hie ve d thro ug h a c o mb ina tio n o f: O rg a nic g ro wth (ma rke t sha re g a ins, ne w b ra nc he s, ne w p ro d uc ts a nd ne w g e o g ra p hie s); Se nsib le stra te g ic a c q uisitio ns.

EXC IT ING O PPO RT UNIT Y T O BUIL D A L EADING SC AL ED INDUST RIAL SUPPL Y G RO UP

Our visio n is to c re a te a le a ding Industria l Sup p ly a nd Se rvic e s Gro up a c hie ving susta ina b le p ro fita b le g ro wth thro ug h se nsib le o rg a nic de ve lo p me nt a nd a c q uisitio ns.

Ke y Pe o p le

RO BERTBUL L USS

CE O & Ma na g ing Dire c to r

Ap p o inte d C EO in Ma y 2017 a fte r ho ld ing the ro le o f C FO a nd C o mp a ny Se c re ta ry sinc e O c to b e r 2016. 15 ye a rs a s C FO within the Austra lia n d ivisio n o f Bunzl p lc .

NEILC AT HIE

I nde pe nde nt No n- E xe c utive Cha irma n

27 ye a r c a re e r a t Austra lia ’ s la rg e st a nd mo st suc c e ssful p lumb ing a nd b a thro o m d istrib uto r, Re e c e L imite d , in fina nc e a nd g o ve rna nc e ro le s. Dire c to r a t a nd a d viso r to a numb e r o f p riva te c o mp a nie s inc lud ing Bo we ns T imb e r & Ha rd wa re a nd Mid d e nd o rp Ele c tric .

ANDREW NISBET

I nde pe nde nt No n- E xe c utive Dire c to r

Ap p o inte d in Se p te mb e r 2017. Exte nsive c a re e r in se nio r ma na g e me nt ro le s a t Re e c e L imite d .

JAMES T O DD

I nde pe nde nt No n- E xe c utive Dire c to r

Ap p o inte d in Se p te mb e r 2018. Fo rme r Ma na g ing Dire c to r

• f Wo lse le y Priva te Eq uity,

a n ind e p e nd e nt p riva te e q uity firm whic h he c o - fo und e d in 1999. No n-e xe c utive d ire c to r o f ASX liste d c o mp a nie s IVE G ro up Ltd a nd HRL Ho ld ing s L td .

RO D JAC KSO N

CF O

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Ap p o inte d C FO in Se p te mb e r 2017. Sp e nt fo ur ye a rs a s the Fina nc e Dire c to r a t Bunzl O utso urc ing Se rvic e s L td p rio r to jo ining the C o ve ntry G ro up . Be fo re this he wa s the C FO a t L info x.

Our Sto ry

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1929

Mr Ro na ld Ja me s K yle a c q uire s a c a r d e a le rship fro m a liq uid a to r a nd Co ve ntry Mo to r Re p la c e me nts is b o rn. T he b usine ss p ro sp e rs. Ap p o inte d b o th Fo rd a nd Ho ld e n p ro d uc ts distrib uto r. Ac q uire s Ra p ha e ls Pty L td in 1958. G ro ws to six b ra nc he s in WA with 450 p e o p le . L iste d o n the ASX. Ac q uire s a numb e ro f b usine sse s: 1972 – Ind ustria l Sa le s Ho lding s. 1975 – We st Co a st Auto ma tic s. 1977 – Mo to r T ra d e rs in SA (first inte rsta te e xp a nsio n). Nume ro us a c q uisitio ns inc luding d ive rsific a tio n into a numb e r o f Fa ste ne rs b usine sse s a nd Co o p e r Fluid Syste ms. Esta b lishme nt o f Co ve ntry Auto Pa rts (CAP) in 1998. By 1999 the G ro up ha s 1,900 p e o p le . G ro up re ve nue re a c he s $500m. L

• sse s o c c urin

CAP b usine ss. Sa le o f a uto mo tive d ivisio ns. Pe rio d o f d e c lining sa le s in re ma ining b usine sse s. Ne w se nio r ma na g e me nt te a m. Bo a rd re struc ture . Sa le o f AA G a ske ts. K

• nne c t a nd Artia

Austra lia stra te g y re se t. Ac q uisitio n o f T

• rq ue a nd

c a p ita l ra ising . Hig hly fo c use d b o a rd a nd ma na g e me nt te a m. Ac q uisitio n o f Nub c o a nd c a p ita l ra ise . Busine ss is fo c use d o n two ve rtic a ls with ke y c o mp e titive a d va nta g e s. Imp le me nt turna ro und in K

• nne c t a nd Artia

Austra lia a nd d rive susta ina b le p ro fita b le g ro wth.

1966 2017 2018

1929 1965 _ 1967 1983 _ 1984 2000 _ 2000 2006 _ 2007 2016 _ 2019

BEYOND &

De ta ile d F Y19 F ina nc ia l Re sults

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($m) F Y19 inc luding ac quisitions F Y19 e xc luding ac quisitions F Y18

Revenue from sale of goods 202.3 179.8 168.1 EBITDA 2.8

• 1.1
• 4.7

EBIT 1.1

• 2.4
• 6.1

Net loss after tax from Continuing Operations

• 1.4
• 8.3

Net debt

• 4.1

5.0 Net Tangible Assets 53.3 48.4

• Sa le s +20.4% (inc luding a c q uisitio ns)
• Sa le s +7.0% e xc luding a c q uisitio ns
• Sa le s o f $202.3m (F

Y18: $168.1m)

• E

xc e lle nt g ro wth in CF S a nd K ANZ

• K

AA sa le s de c line a rre ste d a nd se t up fo r g ro wth

• Unde rlying E

BI T DA o f +$2.8m (inc luding a c q uisitio ns)

• Unde rlying E

BI T inc luding a c q uisitio ns o f +$1.1m

• Ne t lo ss a fte r ta x fro m c o ntinuing
• pe ra tio ns –$1.4m
• L
• ss re duc e d b y +$6.9m fro m -$8.3m lo ss in

F Y18 fro m c o ntinuing o pe ra tio ns

• No inte rim divide nd de c la re d
• Sub sta ntia l impro ve me nt in E

BI T DA run ra te in se c o nd ha lf o f F Y19

Ba la nc e She e t a nd Ca sh F lo w

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• Ne t de b t po sitio n a t 30 June 2019 o f $4.1m
• Sc o tPa c fa c ility inc re a se d to $25.0m
• I

n a dva nc e d disc ussio ns with ma jo r b a nks to se c ure a fle xib le lo w c o st c o rpo ra te de b t fa c ility

• T

he Gro up is no w c a sh flo w po sitive

• T

he Gro up ha s a stro ng wo rking c a pita l po sitio n with Curre nt Asse ts e xc e e ding Curre nt L ia b ilitie s b y $50.8m a s a t 30 June 2019

• T

a x lo sse s o f $71.9m a va ila b le fo r use in Austra lia

• F

ra nking c re dits a va ila b le $10.8m

($m) Jun-17 Jun-18 Jun-19 Cash & cash equivalents 5.1 5.0 5.3 Inventories 49.3 46.4 59.9 Trade and other receivables 29.3 30.5 39.5 Total current assets 83.7 81.9 104.7 Property, Plant & Equipment 4.7 4.6 5.9 Intangible assets 5.9 6.1 46.5 Deferred tax assets 6.7 6.1 1.2 Other non-current assets 0.1

• Non-current assets

17.4 16.8 53.6 Total assets 101.1 98.7 158.3 Trade and other payables 23.8 30.5 38.2 Debtor finance facility 8.0

• 9.4

Other non-current liabilities 4.4 4.2 6.3 Non-current liabilities 36.2 34.7 53.9 Deferred tax liability

• Other non current liabilities

3.3 3.4 3.4 Non current liabilities 3.3 3.4 3.4 Total Liabilities 39.5 38.1 57.3 Net Assets 61.6 60.6 101.0 Issued capital 108.1 107.8 149.6 Retained earnings & reserves

• 48.7
• 47.2
• 48.6

Non-controlling interest 2.2

• Total equity

61.6 60.6 101.0 NTA per share (cents) 1.30 1.30 0.59

Co rpo ra te Upda te

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• K

e n L a m a ppo inte d a s CI O

• I

T func tio n re lo c a te d to Me lb o urne . Ne w q ua lifie d a nd e xpe rie nc e d I T te a m in pla c e

• Dig ita l c usto me r e ng a g e me nt pro je c t inc luding inte rne t
• rde ring , mo b ility, CRM a nd POS unde rwa y
• Busine ss o ptimiza tio n pro je c t c o ntinuing
• Sa ving s pla nne d fro m syste m mig ra tio ns to the c lo ud

fro m da ta c e nte rs

• F

ina nc e a nd HR te a ms ha ve b e e n stre ng the ne d

• Sig nific a nt impro ve me nt in e mplo ye e e ng a g e me nt
• Sig nific a nt re duc tio n in e mplo ye e turno ve r
• Co rpo ra te c o sts $9.7m ($8.2m F

Y18). F Y18 po sitive ly impa c te d b y insura nc e c la im $500k. F Y19 ne g a tive ly impa c te d b y Re dc liffe inc o me lo ss o f $221k.

E mploye e e ngage me nt ne t pr

• mote r

sc or e

FY17: -31% Now: +16%

E mploye e voluntar y tur nove r

FY17: 37.0% Last 6 months: 18.8%

T ra de Distrib utio n – Busine ss Ove rvie w

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L a rg e st fa ste ne r tra de distributio n spe c ia list in Austra lia a nd Ne w Ze a la nd Why use a spe c ia list fa ste ne r distributo r?

• T

he suita b ility o f a fa ste ne r is hig hly de pe nde nt o n its a pplic a tio n.

• T

he se le c tio n pro c e ss must e sta b lish the stre ng th re q uire d (ma te ria l g ra de ), c o rro sio n fa c to rs (pro te c tive c o a ting s), he a d type a nd thre a d fo rm fit whic h o fte n re q uire s sig nific a nt pro fe ssio na l e xpe rtise a nd a la rg e sto c k ra ng e tha t is typic a lly no t a va ila b le a t a g e ne ra list ha rdwa re / industry supply c o mpa ny.

• K
• nne c t ha s 80,000 fa ste ne r SK

Us c o mpa re d to ~10,000 a t mo st ha rdwa re re ta ile rs. Ke y a dva nta g e s o f sc a le inc lude :

• L

a rg e r ra ng e a nd supe rio r sto c k a va ila b ility.

• E

xpe rtise .

• E

xte nsive ne two rk de live rs b e tte r c usto me r se rvic e o utc o me s.

• Supe rio r purc ha sing (inc luding dire c t o ffsho re b uying ) re sults in mo re c o mpe titive pric e s.

T he busine ss is tra de fo c use d – the re a re sig nific a nt a dva nta g e s o f tra de distributio n busine sse s o ve r B2C re ta ile rs inc luding :

• Custo me rs o fte n re q uire sig nific a nt spe c ia lize d a dvic e whic h ma ke s the m mo re immune to the thre a t o f o nline

b usine sse s.

• Pro pe rty c o sts a re typic a lly a lo t lo we r g ive n b ra nc he s a re lo c a te d in industria l lo c a tio ns a nd K
• nne c t o nly

re q uire s a sma ll b ra nc h fo o tprint.

• Gro ss ma rg ins a re a ttra c tive a s pric e is o f le ss impo rta nc e in b uying de c isio ns tha n sto c k a va ila b ility a nd K
• nne c t

se lls typic a lly re pre se nts a ve ry sma ll pro po rtio n o f the o ve ra ll c o st o f a jo b .

T ra de Distrib utio n – Bra nc h & DC Ne two rk

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• Ne w b ra nc he s o pe ne d in Austra lia

(K a lg o o rlie ) a nd Ne w Ze a la nd (Ro to rua a nd Silve rda le )

• Pla ns fo r two ne w b ra nc he s in H1

F Y20

• Re -c o nfig uring Pinke nb a b ra nc h

a pplying Nub c o sto re me rc ha ndising , ma rke ting a nd pro mo tio n c o nc e pts

• Po p-up sto re c o nc e pt b e ing

te ste d in Mt Ga mb ie r

• E

xpa nde d Auc kla nd CBD a nd Ca nb e rra b ra nc he s in F Y19

• Pla ns to e xpa nd a numb e r o f

b ra nc he s in F Y20

• Adde d se ve n ne w lo c a tio ns

thro ug h Nub c o a c q uisitio n

• Pro g ra m to c lo se unpro fita b le

b ra nc he s c o mple te d – T ho ma sto wn, Burnie a nd L a unc e sto n

KANZ 16 br a nc he s Nubc o 7 br a nc he s KAA 41 br a nc he s

T ra de Distrib utio n – F ina nc ia l Ove rvie w

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Ko nne c t a nd Artia Ne w Ze a la nd FY19 sa le s g ro wth +13.3%

• E

BI T DA impro ve me nt o f 16.0% F Y19 Ko nne c t a nd Artia Austra lia sa le s in line with pc p

• E

xc luding o ne -o ff pro je c t sa le s to Che vro n in WA in H1 F Y18 ($1.282m) a nd the impa c t o f unpro fita b le sto re c lo sure s ($1.467m)

• E

BI T DA impro ve me nt o f $2.7m in F Y19

• T

a rg e ting a b re a k e ve n o r b e tte r re sult fo r FY20

($m) F Y19 inc luding ac quisitions F Y19 e xc luding ac quisitions F Y18

Revenue from sale of goods 119.1 104.2 102.6 EBITDA 3.3 0.8

• 2.5

Nubc o FY19 sa le s o f $14.9m

• Pro -fo rma sa le s o f $42.0m

K AA – K e y Stra te g ic I nitia tive s

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Drive pro fita ble sa le s g ro wth

• Sig nific a nt fo c us o n impro ving se rvic e le ve ls in K
• nne c t Austra lia a nd Artia - g re e n sho o ts e me rg ing with July sa le s

g ro wth o f 8.4% o n the PCP.

• I

mpro ve d c a pa b ility is o pe ning o ppo rtunitie s in la rg e c o nstruc tio n, infra struc ture a nd mining a nd re so urc e s pro spe c ts.

• K

e y se nio r ma na g e me nt a nd b usine ss de ve lo pme nt hire s in NSW, QL D, VI C a nd WA. Re turn o f a numb e r o f e xpe rie nc e d e x-Co ve ntry Gro up pe rso nne l.

• Ope ning ne w sto re s – two ne w sto re s pla nne d fo r H1 F

Y20

• T

he Gro up ha s a sma ll ma rke t sha re (<10%) in the industria l tra de supply ma rke t with lo ts o f o ppo rtunitie s fo r g ro wth. O ptimize e xisting bra nc h ne two rk a nd DC fo o tprint

• T

ria ling re po sitio ning se le c te d ma inla nd K

• nne c t b ra nc he s to mo re g e ne ra l industria l supply b ra nc he s with the

he lp o f the Nub c o te a m. I f the y pro ve to b e suc c e ssful the n we will c o nside r a la rg e r ro llo ut o f the c o nc e pt thro ug h the b ra nc h ne two rk.

• Co ntinue d o ptimiza tio n o f DC fo o tprint – a ntic ipa te a furthe r $1.5m sa ving s o ve r the ne xt two ye a rs.

Pro c ure me nt sa ving s a nd pric e ha rmo niza tio n

• $1.0m o f pro c ure me nt sa ving s de live re d a s a re sult o f Nub c o a c q uisitio n a nd o ve rse a s b uying initia tive s. T

he full run-ra te b e ne fit fro m 1Q F Y20.

• I

mpro ving tra ding a nd re b a te te rms with lo c a l a nd o ve rse a s supplie rs.

• Re duc ing fre ig ht c o sts.

F luid Syste ms – Busine ss Ove rvie w

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Ve ry we ll run divisio n with a g re a t ma na g e me nt te a m in pla c e

• In FY19 the d ivisio n g re w its sa le s b y 27.3% a nd EBIT

DA b y a ve ry stro ng 64.7%.

• O p e ra ting le ve ra g e is sub sta ntia l with 18% o f inc re me nta l re ve nue d ro p p ing thro ug h to the C o ntrib utio n line

(i.e . EBIT DA g ro wth o f $3.2m o n re ve nue g ro wth o f $17.9m).

• EBIT

DA ma rg in o f 9.9%. T he busine ss still ha s substa ntia l ro o m to g ro w bo th thro ug h o rg a nic e xpa nsio n a nd a c quisitio n

• ppo rtunitie s
• De live ry o f a d d itio na l se rvic e s a nd g e o g ra p hic b ra nc h e xp a nsio n to inc re a se ma rke t sha re .
• Exp a nd hyd ra ulic c ylind e r ma rke t sha re – inve stme nt a lre a d y ma d e into re q uire d e q uip me nt.
• Exp a nd hyd ra ulic s, fluid d isp e nsing a nd re fue lling syste ms c a p a b ilitie s a nd c usto me rs.
• Inc re a se e xp o sure to o the r se c to rs o utsid e o f mining suc h a s a g ric ulture , o il & g a s, d e fe nc e a nd

ma nufa c turing .

• M&A o p p o rtunitie s to d ive rsify a wa y fro m mining a nd re so urc e s.

O ptimize bra nc h ne two rk fo r g ro wth

• Re lo c a ting a nd inte g ra ting T
• rq ue a nd Co o pe r F

luid Syste ms Ade la ide o pe ra tio ns into a b e tte r q ua lity c usto mize d fa c ility in 2020. Re lo c a ting Hunte r Va lle y b ra nc h to a la rg e r c usto m b uilt fa c ility.

• Re lo c a te d Ne wma n b ra nc h to a la rg e r fa c ility a nd ta king a dditio na l spa c e in Ma c ka y to c a te r fo r g ro wth.

F luid Syste ms – Bra nc h Ne two rk

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• Re lo c a ting a nd inte g ra ting

T

• rq ue a nd Co o pe r F

luid Syste ms Ade la ide o pe ra tio ns into a b e tte r q ua lity c usto mize d fa c ility in 2020.

• Re lo c a ting Hunte r Va lle y

b ra nc h to a la rg e r c usto m b uilt fa c ility.

• Re lo c a te d Ne wma n b ra nc h to

a la rg e r fa c ility.

• T

a king a dditio na l spa c e in Ma c ka y to c a te r fo r g ro wth.

T

• r

que 1 br a nc h Coope r s F luid Syste ms 12 br a nc he s T

• r

que 1 br a nc h Coope r s F luid Syste ms 12 br a nc he s

F luid Syste ms – F ina nc ia l Ove rvie w

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C o o pe r Fluid Syste ms sa le s g ro wth +15.7%

• E

BI T DA impro ve me nt o f 34.1% F Y19.

($m) F Y19 inc luding ac quisitions F Y19 e xc luding ac quisitions F Y18

Revenue from sale of goods 83.3 75.6 65.4 EBITDA 8.8 7.4 5.5 T

• rque FY19 sa le s o f $7.6m
• Pro -fo rma sa le s o f $12.0m.

Fluid Syste ms sa le s g ro wth +27.3%

• E

BI T DA impro ve me nt o f 58.7% F Y19.

Ac q uisitio ns

We a re a c tive ly a sse ssing a c quisitio n o ppo rtunitie s

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Se nsible stra te g ic a c quisitio ns

• T

he Gro up will ta ke a hig hly disc ipline d a ppro a c h to a c q uisitio ns with stric t c rite ria .

• T

e a m in pla c e who ha ve a ve ry suc c e ssful histo ry o f g ro wing b usine sse s thro ug h se nsib le a nd stra te g ic a c q uisitio ns.

• We ha ve a pipe line o f inte re sting
• ppo rtunitie s.
• F

unding will b e thro ug h de b t a nd

• pe ra ting c a sh flo ws.

F

• c us on ne w ge ogr

aphie s and industr ie s Pr

• fitable & c ash flow

positive E ar nings ac c r e tive L ike minde d c ultur e & c omple me nta ry skillse ts

Ca n he lp to a c c e le ra te o ur e ntry into ne w industrie s a nd g e o g ra phie s. Stro ng unde r- lying b usine ss funda me nta ls with g ro wth o ptio ns. Min $10M re ve nue . Industria l supply fo c use d ta rg e ts. Whe n a ppro pria te re ta in a nd a lig n ve ndo r / ke y ma na g e me nt with CYG sha re s.

Outlo o k

T he o utlo o k is po sitive - the G ro up e xpe c ts a sig nific a nt impro ve me nt in fina nc ia l pe rfo rma nc e in FY20.

• T

he b usine ss ha s sub sta ntia l o p e ra ting le ve ra g e a s sa le s g ro w. T he re a re limite d a d d itio na l o p e ra ting c o sts re q uire d to sup p o rt sa le s g ro wth – the ma jo rity o f inc re me nta l g ro ss ma rg in sho uld d ro p to the EBIT DA line .

• T

he re a re sig nific a nt g ro wth o p p o rtunitie s a c ro ss a ll a sp e c ts o f the b usine ss – ma rke t sha re g a ins, ne w b ra nc he s, p ro d uc t ra ng e e xte nsio n, a nd a c q uisitio ns.

• T

e a m in p la c e who ha ve a ve ry suc c e ssful histo ry o f g ro wing b usine sse s thro ug h se nsib le a nd stra te g ic a c q uisitio ns. Pip e line o f inte re sting o p p o rtunitie s. Fund ing will b e thro ug h d e b t a nd o p e ra ting c a sh flo ws.

• T

he o utlo o k fo r o ur e nd ind ustry e xp o sure s (c o mme rc ia l c o nstruc tio n, infra struc ture a nd mining a nd re so urc e s) is p o sitive . T he G ro up ha s ne g lig ib le e xp o sure to the re sid e ntia l c o nstruc tio n ma rke ts.

• A sig nific a nt imp ro ve me nt in p ro fita b ility is fo re c a st fo r FY20 with the inc lusio n o f re c e nt a c q uisitio ns fo r a full 12

mo nths, c o ntinue d sa le s g ro wth, p ro c ure me nt sa ving s a nd c o ntinue d o p timiza tio n o f the d istrib utio n fo o tp rint.

• FY20 EBIT

DA fo re c a st $10m+ a ssuming c o ntinua tio n o f c urre nt tre nd s a nd no a d ve rse b ro a d e r ma rke t d e ve lo p me nts.

• $20m EBIT

DA fo re c a st turna ro und sinc e FY17.

• Me d ium-te rm ta rg e t to a c hie ve 7.5% g ro up EBIT

DA ma rg ins.

• Sig nific a nt ta x lo sse s a va ila b le to o ffse t a g a inst future p ro fits.
• Enc o ura g ing sta rt to FY20 fo r KAA +8.4% sa le s g ro wth in July.

ASX: CYG

Pe e r Co mpa riso ns

Cove ntr y Gr

• up

Re e c e Supply Ne twor ks Bapc or F aste nal

Market capitalisation A$82.5m A$5.7bn A$164m A$1.78bn US$17.5bn Enterprise Value A$86.6m A$7.3bn A$170m A$2.12bn US$18.0bn FY19 Revenue (f) A$233.8m A$5.4bn A$126m $1.30bn US$5.4bn EV / LTM Revenue 0.37x 1.3x 1.3x 1.6x 3.3x

ASX: CYG

C o ve ntry G ro up tra de s a t a sig nific a nt disc o unt to c o mpa ra ble tra de distributio n c o mpa nie s

500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0 3,500.0 4,000.0 4,500.0 5,000.0 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Fastenal Sales (US$m)

Fa ste na l (NYSE:FAST ) C a se Study

Fa ste na l is a dire c t pe e r fo r Ko nne c t in the US a nd pro vide s a n e xa m ple o f wha t is po ssible if we c a n e xe c ute o ur busine ss stra te g y we ll

• Fa ste na l ha s o ve r 2,300 b ra nc he s a nd o ve r 20,000 e mp lo ye e s se lling ind ustria l fa ste ne rs a nd o the r re la te d ind ustria l sup p lie s
• In FY18 Fa ste na l d e live re d US$4.9b n o f sa le s a nd US$998m o f EBIT

a t a sta g g e ring 20% EBIT ma rg in

Fa ste na l ha s be e n o ne o f the be st pe rfo rm ing sto c ks o n the US m a rke t o ve r the pa st 20 ye a rs

• Fa ste na l still re ma ins a “ ma rke t d a rling ” with a ma rke t c a p o f ~US$17 b illio n a nd tra d e s o n a n EBIT

multip le o f o ve r 17x

Fa ste na l ha s a c hie ve d ve ry c o nsiste nt stro ng sa le s g ro wth thro ug h the o rg a nic ro llo ut o f its bra nc h ne two rk

• T

he ir suc c e ss ha s b e c o me a se lf fulfilling p ro p he c y – the b ig g e r the y g e t the b e tte r the ir p urc ha sing te rms g e t a nd the b e tte r the ir se rvic e g e ts (thro ug h mo re b ra nc he s c lo se r to c usto me rs a nd la rg e r sto c k ra ng e ) Source: Capital IQ

Disc la ime r

Re lia nc e on third pa rty informa tion

T he info rma tio n a nd vie ws e xp re sse d in this p re se nta tio n we re p re p a re d b y Co ve ntry G ro up L td (the Compa ny) a nd ma y c o nta in info rma tio n tha t ha s b e e n d e rive d fro m p ub lic ly a va ila b le so urc e s tha t ha ve no t b e e n ind e p e nd e ntly ve rifie d. No re p re se nta tio n o r wa rra nty is ma d e a s to the a c c ura c y, c o mp le te ne ss o r re lia b ility o f the info rma tio n. No re sp o nsib ility o r lia b ility is a c c e p te d b y the Co mp a ny, its o ffic e rs, e mp lo ye e s, a g e nts o r c o ntra c to rs fo r a ny e rro rs, missta te me nts in o r o missio ns fro m this p re se nta tio n.

Pre se nta tion is a summa ry only

T his p re se nta tio n is info rma tio n in a summa ry fo rm o nly a nd d o e s no t p urp o rt to b e c o mp le te . It sho uld b e re a d in c o njunc tio n with the Co mp a ny’ s 2019 fina l fina nc ia l re p o rt. Any info rma tio n o r o p inio ns e xp re sse d in this Pre se nta tio n a re sub je c t to c ha ng e witho ut no tic e a nd the Co mp a ny is no t und e r a ny o b lig a tio n to up d a te o r ke e p c urre nt the info rma tio n c o nta ine d within this p re se nta tio n.

Not inve stme nt a dvic e

T his p re se nta tio n is no t inte nd e d a nd sho uld no t b e c o nsid e re d to b e the g iving

• f inve stme nt a d vic e b y the Co mp a ny o r a ny o f its sha re ho ld e rs, d ire c to rs,
• ffic e rs, a g e nts, e mp lo ye e s o r a d vise rs. T

he info rma tio n p ro vid e d in this p re se nta tio n ha s b e e n p re p a re d witho ut ta king into a c c o unt the re c ip ie nt’ s inve stme nt o b je c tive s, fina nc ia l c irc umsta nc e s o r p a rtic ula r ne e d s. Ea c h p a rty to who m this p re se nta tio n is ma d e a va ila b le must ma ke its o wn ind e p e nd e nt a sse ssme nt o f the Co mp a ny a fte r ma king suc h inve stig a tio ns a nd ta king suc h a d vic e a s ma y b e d e e me d ne c e ssa ry.

No offe r of se c uritie s

No thing in this p re se nta tio n sho uld b e c o nstrue d a s e ithe r a n o ffe r to se ll o r a so lic ita tio n o f a n o ffe r to b uy o r se ll Co mp a ny se c uritie s in a ny jurisd ic tio n.

F

• rwa rd looking sta te me nts

T his p re se nta tio n ma y inc lud e fo rwa rd -lo o king sta te me nts. Altho ug h the Co mp a ny b e lie ve s the e xp e c ta tio ns e xp re sse d in suc h fo rwa rd -lo o king sta te me nts a re b a se d o n re a so na b le a ssump tio ns, the se sta te me nts a re no t g ua ra nte e s o r p re d ic tio ns o f future p e rfo rma nc e , a nd invo lve b o th kno wn a nd unkno wn risks, unc e rta intie s a nd o the r fa c to rs, ma ny o f whic h a re b e yo nd the Co mp a ny’ s c o ntro l. As a re sult, a c tua l re sults o r d e ve lo p me nts ma y d iffe r ma te ria lly fro m tho se e xp re sse d in the sta te me nts c o nta ine d in this p re se nta tio n. Inve sto rs a re c a utio ne d tha t sta te me nts c o nta ine d in the p re se nta tio n a re no t g ua ra nte e s o r p ro je c tio ns o f future p e rfo rma nc e a nd a c tua l re sults o r d e ve lo p me nts ma y d iffe r ma te ria lly fro m tho se p ro je c te d in fo rwa rd -lo o king sta te me nts.

No lia bility

T

• the ma ximum e xte nt p e rmitte d b y la w, ne ithe r the Co mp a ny no r its re la te d

b o d ie s c o rp o ra te , d ire c to rs, e mp lo ye e s o r a g e nts, no r a ny o the r p e rso n, a c c e p ts a ny lia b ility, inc lud ing witho ut limita tio n a ny lia b ility a rising fro m fa ult o r ne g lig e nc e , fo r a ny d ire c t, ind ire c t o r c o nse q ue ntia l lo ss a rising fro m the use o f this p re se nta tio n o r its c o nte nts o r o the rwise a rising in c o nne c tio n with it. Fo r mo re info rma tio n, p le a se c o nta c t:

Robe rt Bulluss

CEO a nd Ma na g ing Dire c tor

Co ve ntry G ro up L td (03) 9205 8219

ASX: CYG

ASX: CYG