FY20 Full Ye a r Re sults Pre se nta tio n 21 Aug ust 2020 De live - - PowerPoint PPT Presentation

FY20 Full Ye a r Re sults Pre se nta tio n

21 Aug ust 2020 De live ring inno va tive industrial so lutio ns a nd se rvic e s

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T ra ding upda te

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E xe c utive summa ry

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He a lth a nd sa fe ty

T he he a lth, sa fe ty a nd we llb e ing o f o ur pe o ple is o ur numb e r o ne prio rity. During the ye a r we ha d 13 L

• st T

ime Injurie s (L T I’ s). We re ma in c o mmitte d to o ur a spira tio n fo r ze ro L T I’ s a nd ze ro impa c t o n o ur pe o ple .

T r a ding upda te

T ra ding pe rfo rma nc e impro ve d during F Y20 with the Gro up de live ring unde rlying pro fita b ility g ro wth fo r b o th E BIT DA a nd E BIT . Our b e st re sult fo r ma ny ye a rs wa s a c hie ve d a g a inst the b a c kdro p o f the COVID-19 pa nde mic shutdo wns a nd re stric tio ns a c ro ss Austra lia a nd Ne w Ze a la nd with he a dwinds inc luding c urre nc y de va lua tio n, insura nc e c o st inc re a se s a nd lo ss o f inc o me fro m o ur Re dc liffe , WA pro pe rty. Gro up unde rlying E BIT DA o f $6.6m ($2.8m F Y19), a $3.8m impro ve me nt ye a r o n ye a r. Gro up unde rlying E BIT

• f $4.0m ($1.1m F

Y19).

Ba la nc e she e t

T he Gro up ha s a so lid b a la nc e she e t with Ne t Asse ts o f $102.1m a nd Ne t T a ng ib le Asse ts o f $47.6m a s a t 30 June 2020. Ne t de b t o f $3.3m a t 30 June 2020.

COVID-19

Our prio rity ha s b e e n the he a lth, sa fe ty a nd we llb e ing o f o ur pe o ple . T he ma jo r impa c t o n the Gro up in F Y20 wa s the suspe nsio n o f o pe ra tio ns in Ne w Ze a la nd. Sinc e re c o mme nc ing

• pe ra tio ns, sa le s in Ne w Ze a la nd ha ve c o ntinue d to pe rfo rm to e xpe c ta tio ns, a s ha ve o ur

Austra lia n o pe ra tio ns. With the e xc e ptio n o f KAA in Vic to ria a nd KANZ in Auc kla nd, a ll b usine ss units a re c urre ntly fully o pe ra tio na l.

Gr

• wth str

a te g y

Our visio n is to c re a te a le a ding Industria l Supply a nd Se rvic e s Gro up a c hie ving susta ina b le pro fita b le g ro wth thro ug h se nsib le o rg a nic de ve lo pme nt (ma rke t sha re g a ins, ne w b ra nc he s, ne w pro duc ts a nd ne w g e o g ra phie s) a nd se nsib le stra te g ic a c q uisitio ns.

Note : Unde rlying E BIT and E BIT DA e xc lude the impac t of AASB 16 - L e ase s

He a lth, Sa fe ty a nd We llb e ing

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T he he a lth, sa fe ty a nd we llb e ing o f o ur pe o ple is o ur num b e r o ne prio rity

• 13 L
• st T

ime Injurie s (L T I’ s) fo r a to ta l o f 108 lo st d a ys in FY20.

• 8 o f the L

T I’ s we re in ne wly a c q uire d b usine sse s.

• All inc id e nts a nd se rio us ne a r misse s a re re vie we d b y the C o ve ntry L

e a d e rship T e a m (C L T ) to e nsure we le a rn fro m e a c h inc id e nt a nd imp ro ve o ur sa fe ty syste ms. In future , we will a c c e le ra te imp le me nta tio n o f o ur sa fe ty syste ms into ne wly a c q uire d b usine sse s.

• During the C OVID-19 p a nd e mic we a re p rio ritising the he a lth, sa fe ty a nd

we llb e ing o f o ur p e o p le a lo ng with o ur c usto me rs, sup p lie rs a nd c o mmunitie s.

C o m m itm e nt to im pro ving o ur he a lth, sa fe ty a nd we llb e ing syste m s in FY21

• Inve stme nt in a dditio na l he a lth a nd sa fe ty re so urc e s.
• He a lth, sa fe ty a nd we llb e ing a wa re ne ss pro g ra m la unc h in Oc to b e r a s pa rt o f

Na tio na l Sa fe Wo rk Mo nth – Safe ty 1st.

• Inc re a se d fo c us o n we llb e ing a nd me nta l he a lth, pa rtic ula rly during the COVID-

19 pa nde mic .

• Impro ving ma nua l ha ndling syste ms in the Nub c o ne two rk.
• De ve lo ping sa fe wo rking fro m ho me pra c tise s a nd fle xib le wo rking a rra ng e me nts.

We value the health, safety and wellbeing of our people first and foremost. Our aspiration is for zero lost time injuries and zero impact on our people.

Fina nc ia l Hig hlig hts

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Stro ng FY20 sa le s g ro wth o f 22.3% inc luding a c q uisitions

• E

xc luding a c q uisitio ns F Y20 sa le s g ro wth o f 4.7% de spite the lo ss o f 23 tra ding da ys in o ur Ne w Ze a la nd tra de distrib utio n ne two rk.

• Gro up sa le s inc luding a c q uisitio ns a t $247.6m ($202.3m F

Y19).

• Gro up sa le s fo r July 2020 up 7.7% o n the prio r ye a r.

G ro up FY20 unde rlying EBIT DA o f $6.6m

• $16.3m E

BIT DA turna ro und in thre e ye a rs.

• $3.8m E

BIT DA impro ve me nt o ve r F Y19.

• Sta tuto ry ne t pro fit o f $0.8m.

Ba la nc e she e t in a stro ng po sitio n - ne t de b t o f $3.3m a t 30 June 2020

• Ne t a sse ts o f $102.1m. Curre nt Asse ts e xc e e ding Curre nt L

ia b ilitie s b y $42.7m.

• At 30 June 2020 we ha ve re c o rde d a o ne -o ff, no n-c a sh o ne ro us

le a se pro visio n fo r o ur Re dc liffe WA pro pe rty o f 12.2m a nd a o ne -

• ff, write -o ff o f $6.5m fo r le g a c y o ld a nd unsa le a b le inve nto ry.
• Sub sta ntia l Austra lia n ta x lo sse s in the o rde r o f $75.5m. With a re turn

to pro fita b ility, a De fe rre d T a x Asse t – T a x L

• sse s o f $13.1m ha s b e e n

re c o g nise d in re la tio n to the se a c c umula te d lo sse s.

• L
• c ke d in a n inc re a se d $40m se c uritise d tra de re c e iva b le s fa c ility

with o ur princ ipa l fina nc ie r, Sc o ttish Pa c ific , fo r a 36 mo nth te rm.

39.8% 7.5%

T ra d ing p e rfo rma nc e b y se g me nt

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39.8% 7.5%

T r ade Distr ibution F luid Syste ms

• Trade Distribution (TD) sales including acquisitions up 28.1% on

the prior year and excluding acquisitions up 2.6% on the prior

• year. Underlying EBITDA for TD was $6.7m compared to $3.3m

in FY19. Sales growth and EBITDA were negatively impacted by the enforced Government shutdown in New Zealand.

• Konnect & Artia New Zealand (KANZ) continued to perform
• strongly. Sales up 1.0% on the prior year but impacted by the

loss of 23 days sales during the shutdown and continued disruption due to pandemic restrictions.

• Konnect and Artia Australia (KAA) sales up 3.4% on the prior
• year. Further branch consolidation with the closure in June of
• ur unprofitable Darwin branch and merge of Chinchilla into

Toowoomba and Morningside into Pinkenba. Variable cost reductions were delivered in Q4 FY20 and further savings from supply chain optimization will be delivered in Q1 FY21. We have the building blocks in place for success and remain committed to

• ur strategy.
• Nubco network of branches had very strong sales growth. Some

margin and cost pressure is being managed. In May 2020, Nubco’s Sales and Marketing Manager Nick Daw was promoted to General Manager succeeding the previous owner, Paul

• Krawczyk. Pleasingly, this transition has been successful and

well received by customers and staff.

• Fluid Systems (FS) sales have again seen very strong growth

with full year sales including acquisitions up 15.2% on the prior year and excluding acquisitions up 8.5% on the prior year. The underlying EBITDA for FS was $10.3m compared to $8.8m in FY19.

• Sales growth is continuing to be driven by our strong value

proposition in the mining and resources sector and our diversification into new sectors including Defence, Agriculture, Transport and Recycling.

• The integration of Torque is progressing to plan with relocation

to a new custom built facility in Adelaide, SA along with our Cooper Fluid Systems operation now completed.

COVID-19

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He a lth, sa fe ty a nd we llb e ing

• We ha ve prio ritise d the he a lth, sa fe ty a nd we llb e ing o f o ur pe o ple a lo ng with o ur c usto me rs, supplie rs a nd

c o mmunitie s.

• Wo rking fro m ho me a nd fle xib le wo rk a rra ng e me nts ha ve b e e n e nha nc e d.

C o st m a na g e m e nt

• Prude nt c o st ma na g e me nt in pla c e inc luding re stric tio ns o n re c ruitme nt, no sa la ry re vie ws a nd tig ht c o st c o ntro l.
• Va ria b le c o st re duc tio ns o c c urre d q uic kly a t the sta rt o f the COVID-19 pa nde mic . Are a s o f fo c us a re o ve rtime , c a sua l

la b o ur, tra ve l a nd mo to r ve hic le c o sts.

Ma na g ing supply c ha in risk

• We ha ve b e e n la rg e ly suc c e ssful wo rking c lo se ly with o ve rse a s a nd lo c a l supplie rs to minimize supply disruptio n.
• We c o ntinue to mo nito r supply c ha in risk a nd ta ke a c tio n a s re q uire d.

Ma na g ing the fina nc ia l he a lth a nd sta b ility o f the G ro up

• Ca sh pre se rva tio n ha s b e e n a ma jo r prio rity fo r the Gro up. We ha ve sig nific a ntly impro ve d o ur Ne t De b t po sitio n a nd

de b t fa c ility he a dro o m. Inve nto ry ma na g e me nt a nd c a sh c o lle c tio ns ha ve b e e n e xc e lle nt in the la st fo ur mo nths.

O pe ra ting the G ro up a s c lo se a s po ssib le to b usine ss a s usua l

• T

he ma jo r impa c t o n the Gro up in F Y20 wa s the suspe nsio n o f o pe ra tio ns in Ne w Ze a la nd. Sinc e re c o mme nc ing

• pe ra tio ns, sa le s in Ne w Ze a la nd ha ve c o ntinue d to pe rfo rm to e xpe c ta tio ns, a s ha ve o ur Austra lia n o pe ra tio ns.
• With the e xc e ptio n o f o ur KAA o pe ra tio ns in Me lb o urne a nd KANZ o pe ra tio ns in Auc kla nd, a ll b usine ss units re ma in fully
• pe ra tio na l.
• Whilst o ur b usine ss c o ntinue s to o pe ra te , it is to o e a rly to unde rsta nd the impa c t o f the Vic to ria n g o ve rnme nt sta g e 4

lo c kdo wn.

• Co nting e nc y pla ns ha ve b e e n de ve lo pe d fo r va rio us e c o no mic , o pe ra tio na l a nd fina nc ia l sc e na rio s.

39.8% 7.5% T he re sp o nse to the CO VID-19 p a nde mic b y the Co ve ntry L e a de rship T e a m (CL T ) a nd o ur p e o p le ha s b e e n e xe mp la ry

De ta ile d F Y20 F ina nc ia l Re sults

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($m) F Y20 F Y19

Revenue from sale of goods 247.6 202.3 EBITDA 6.6 2.8 EBIT 4.0 1.1 Net profit after tax 0.8

• 1.4

Net debt

• 3.3
• 4.1

Net Tangible Assets 47.6 53.3

• Sa le s up 22.3% (inc luding a c q uisitio ns)
• Sa le s up 4.7% e xc lud ing a c q uisitio ns
• Sa le s o f $247.6m (F

Y19: $202.3m)

• We e stima te the e nfo rc e d Go ve rnme nt

lo c kd o wn in NZ ne g a tive ly imp a c te d sa le s in the o rd e r o f $2.8m to $3.2m

• Ve ry stro ng g ro wth in F

S a nd Nub c o ne two rk

• KAA sa le s g ro wth o f 3.4%
• Unde rlying E

BIT DA o f $6.6m (F Y19: $2.8m)

• E

BIT DA imp ro ve me nt o n p rio r ye a r o f $3.8m

• Und e rlying E

BIT

• f $4.0m (F

Y19: $1.1m)

• Ne t sta tuto ry pro fit a fte r ta x o f $0.8m
• No fina l divide nd de c la re d

Note : Unde rlying E BIT and E BIT DA e xc lude the impac t of AASB 16 - L e ase s

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 2020 o f $3.3m

(ne t de b t po sitio n a s a t 30 June 2019 o f $4.1m)

• Sc o tPa c fa c ility inc re a se d to $40.0m fro m

25.0m a nd e xe c ute d fo r a 36 mo nth te rm

• T

he Gro up ha s a stro ng wo rking c a pita l po sitio n with Ne t Asse ts o f $102.1m a nd Curre nt Asse ts e xc e e ding Curre nt L ia b ilitie s b y $42.7m a s a t 30 June 2020

• T

a x lo sse s o f $75.5m a va ila ble fo r use in Austra lia

• F

ra nking c re dits a va ila b le $11.1m

($m) Jun-19 Jun-20 AASB16 Jun 20 Exc AASB16 Cash & cash equivalents 5.3 7.5 7.5 Trade and other receivables 35.8 33.5 33.5 Inventories 59.9 53.6 53.6 Other financial assets 2.0 2.1 2.1 Other current assets 1.5 3.5

• 0.3

3.2 Total current assets 104.5 100.2 99.9 Trade receivables

• 1.8
• 1.8
• Deferred tax assets

1.2 19.0 0.3 19.3 Property, Plant & Equipment 5.9 6.8 6.8 Right of use assets

• 39.8
• 39.8
• 0.0

Intangible assets 46.6 47.9 47.9 Non-current assets 53.7 115.3 74.0 Total assets 158.2 215.5 173.9 Trade and other payables 38.2 40.8 40.8 Employee benefits 5.7 5.8 5.8 Interest bearing loans and borrowings 9.4 10.9 10.9 Lease liability

• 9.7
• 9.7
• Provisions
• 11.1

11.1 Income tax (refundable).payable 0.5

• Non-current liabilities

53.8 67.2 68.6 Employee benefits 0.2 0.3 0.3 Other payables 3.2 0.2 3.2 3.4 Provisions

• 3.1
• 3.1
• Lease laibility
• 42.6
• 42.6
• Non current liabilities

3.4 46.2 3.7 Total Liabilities 57.2 113.4 72.3 Net Assets 101.0 102.1 101.6

About the Cove ntry Group

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Our va lue s

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 w ith le a d ing m a rke t p o sitio ns a c ro ss m ultiple 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 C L T 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 m a rke ts a nd ha ve d e ve lo pe d a b lue print fo r suc c e ss. T he CL T a lso ha s sub sta ntia l e xpe rie nc e ide ntifying , c o mple 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 rm a nc e

• ve r re c e nt tim e s a nd

re turne d to p ro fita b ility, the Bo a rd a nd C o ve ntry L e a d e rship T e a m (C L T ) ha ve sp e nt tim e d e ve lo ping the visio n a nd stra te g y fo r the b usine ss o ve r the ne xt five ye a rs. G ro w th c a n b e a c hie ve d thro ug h a c o m b ina tio n o f:

• O rg a nic g ro w th -

(m a 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

O ur visio n is to c re a te a le a ding Industria l Sup p ly a nd Se rvic e s G ro 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.

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 F

• rd a nd Ho ld e n

p ro d uc ts d istrib uto r. Ac q uire s Ra p ha e ls Pty L td in 1958. Gro 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 r o f b usine sse s: 1972 – Ind ustria l Sa le s Ho ld ing 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 lud ing d ive rsific a tio n into a numb e r o f F a ste ne rs b usine sse s a nd Co o p e r F luid Syste ms. E sta b lishme nt o f Co ve ntry Auto Pa rts (CAP) in 1998. By 1999 the Gro up ha s 1,900 p e o p le . Gro up re ve nue re a c he s $500m. L

• sse s o c c ur in

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 Ga 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 . Ac q uisitio n o f Nub c o a nd c a p ita l ra ise . Hig hly fo c use d b o a rd a nd ma na g e me nt te a m. 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 - 2019 1929 - 1965 1967 - 1983 1984 - 2000 2000 - 2006 2007 - 2016 2020 +

Co rpo ra te Sna psho t

SHARE PRIC E

20 Aug ust 2020

$0.61

32.7% 9.5%

Substa ntia l Sha re holde rs

SHARES ON ISSUE

89.8M

MARKET C APIT AL ISAT IO N

$54.8M

NET DEBT

30 June 2020

$-3.3M

Ke y Ma rke t Me tric s

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5.7% 5.0%

T he Bo a rd

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• Appointed as a director September

2014 and Chairman January 2015.

• Currently a Non-executive director
• f Experience Co Limited, Plus

Recruitment Pty Ltd, MAS National Ltd and independent board advisor at Middendorp Electric and Bowens Timber & Hardware.

• Previously Chief Financial Officer,

Company Secretary and GM Finance and IT at Australia’s largest and most successful plumbing and bathroom distributor Reece Ltd and Non- executive director of Millennium Services Group Ltd.

• Fellow of CPA Australia (FCPA),

graduate member of the Australian Institute of Company Directors (GAICD) and a Fellow of the Governance Institute of Australia (FGIA).

• Appointed CEO in May 2017 after

holding the role of CFO and company secretary since October 2016.

• 15 years within the Australian

division of Bunzl plc.

• Experience across Finance,

Strategy, Human Resources, Health, Safety and Environment, ICT and Technology, Operations, Project Management and all aspects of acquisitions.

• Appointed May 2020.
• Strong background in the banking

and finance industry and has held executive positions in government, regional and major banks as well as building societies and stockbroking.

• Currently a Non-executive director
• f Alinta Energy, BWP

Management Ltd, Viburnum Funds and is Chairman of St John of God Foundation Inc.

• Previously held public company

roles including Non-executive director of Wesfarmers Ltd, where he was Chairman of the company’s Audit and Risk Committee; Managing Director of Challenge Bank Ltd; Chairman of Alinta Ltd; MMA offshore Ltd; Home Building Society Ltd and Deputy Chairman

• f Bank of Queensland Ltd.
• Appointed in September 2018.
• Former Managing Director of

Wolseley Private Equity, an independent private equity firm which he co-founded in 1999. Non-executive director of ASX listed companies IVE Group Ltd and HRL Holdings Ltd.

• Member of the Australian Institute
• f Company Directors.
• Appointed in September 2017.
• Extensive career in senior

management roles at Reece Ltd.

• Graduate of the Australian

Institute of Company Directors and advisor to a number of private companies.

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 m s (FS)

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

• rq ue Ind ustrie s. De sig ns,

m a 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 m s a nd p ro d uc ts thro ug h 12 b ra nc he s in Austra lia . Custo m e rs a re in the m ining , m a nufa c turing , d e fe nc e , re c yc ling a nd a g ric ulture se c to rs.

TD

T ra de Distribution (T D)

Co m p 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 m s, ind ustria l a nd c o nstruc tio n p ro d uc ts thro ug h a ne two rk o f 47 b ra nc he s in Austra lia a nd 15 b ra nc he s in Ne w Ze a la nd . Custo m e rs a re in the m a nufa c turing , c o nstruc tio n, infra struc ture , a g ric ulture a nd m ining se c to rs.

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

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So lid pro g re ss to wa rds susta ina ble pro fita ble g ro wth

• T

ra de Distrib utio n (T D) sa le s fo r the ye a r inc luding a c q uisitio ns up 28.1% o n the prio r ye a r a nd e xc luding a c q uisitio ns up 2.6% o n the prio r ye a r.

• T

he unde rlying E BIT DA fo r T D wa s $6.7m c o mpa re d to $3.3m in F Y19.

• Sa le s g ro wth a nd E

BIT DA we re b o th ne g a tive ly impa c te d b y the e nfo rc e d Go ve rnme nt shutdo wn in Ne w Ze a la nd.

• T
• a c c e le ra te the pa c e o f pro g re ss in K

AA a nd with the b a c kdro p o f the COVID-19 pa nde mic we ha ve imple me nte d a numb e r o f initia tive s in Q4 F Y21 inc luding :

• T

he me rg ing o f o ur Chinc hilla a nd T

• o wo o mb a b ra nc he s, a nd Mo rning sid e a nd Pinke nb a b ra nc he s a nd in June c lo se d o ur

unp ro fita b le Da rwin b ra nc h.

• Ac tio n in o the r und e rp e rfo rming b ra nc he s wa s a c c e le ra te d .
• Va ria b le c o sts we re re d uc e d a t the sta rt o f the COVID-19 p a nd e mic re stric tio ns a nd the ma jo rity o f the se sa ving s will b e o n-

g o ing .

T he busine ss ha s sig nific a nt o ppo rtunity fo r g ro wth:

• We ha ve a stro ng va lue pro po sitio n b a se d o n o ur la rg e ra ng e o f q ua lity pro duc ts, hig h sto c k a va ila b ility, ha ving

inve nto ry whe re a nd whe n the c usto me r wa nts it, o ur e xpe rtise , e xte nsive b ra nc h ne two rk a nd o ur fle xib le a nd a da pta b le se rvic e mo de l.

• E

xpa nsio n thro ug h sto re g ro wth, b ro a de r pro duc t ra ng e a nd c o mme rc ia l c o nstruc tio n a nd infra struc ture ma rke t g ro wth a nd ma jo r c o ntra c t o ppo rtunitie s. E xpe rie nc e d b usine ss de ve lo pme nt te a m no w in pla c e .

• Nub c o style ma ke o ve rs fo r K

AA a nd K ANZ b ra nc he s.

• Po te ntia l fo r a c q uisitio ns.
• F

urthe r c o st sa ving s thro ug h supply c ha in o ptimisa tio n.

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

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• Ne w Ma c ka y b ra nc h o pe ne d in

F

• Y20. Curre ntly o pe ning two ne w

sto re s in WA a nd SA.

• Re -c o nfig ura tio n o f Pinke nb a

b ra nc h a pplying Nub c o style sto re me rc ha ndising , ma rke ting a nd pro mo tio n c o nc e pts c o mple te d suc c e ssfully. Simila r wo rks to b e unde rta ke n a t o ur K AA Go ld Co a st b ra nc h.

• Mt Ma ng a nui b ra nc h in NZ

re lo c a te d to la rg e r fa c ility.

• Pro g ra m to me rg e sto re s to

impro ve pro fita b ility c o mple te d. Mo rning side into Pinke nb a a nd Chinc hilla into T

• o wo o mb a .
• Unpro fita b le Da rwin sto re c lo se d.

KANZ 15 bra nc he s Nubc o 7 bra nc he s KAA 40 bra nc he s

K AA – K e y Stra te g ic Initia tive s

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Drive pro fita ble sa le s g ro wth

• Impro ving o ur va lue pro po sitio n b y e xpa nding o ur ra ng e o f q ua lity pro duc ts, c o ntinuing to b uild o ur supplie r

re la tio nships, e nsuring o ur sto c k a va ila b ility a nd DIF OT le ve ls in the b ra nc h ne two rk re ma in hig h, inc re a sing the le ve l o f e xpe rtise in the b usine ss thro ug h tra ining a nd de ve lo pme nt a nd a da pting to pro viding a g ile se rvic e in the c ha ng ing b usine ss e nviro nme nt.

• Our b usine ss de ve lo pme nt te a ms a re fo c usse d o n infra struc ture pro je c ts a nd ma jo r c o ntra c t a nd te nde r
• ppo rtunitie s.
• Ope ning ne w sto re s. During the ye a r we o pe ne d a b ra nc h in Ma c ka y a nd ha ve a dva nc e d pla ns fo r two

a dditio na l ne w b ra nc he s in Q1 F Y21.

• Re vie wing a nd re fining pric ing stra te g ie s a nd to o ls.
• F

ixing unde rpe rfo rming b ra nc he s with a c o mb ina tio n o f sa le s, ma rg in a nd c o st initia tive s.

• F

urthe r supply c ha in o ptimisa tio n re sulting in c o st re duc tio ns tho ug h the do wnsizing o f o ur T ho ma sto wn DC a nd c lo sure o f o ur unde r-utilise d 3rd pa rty China Hub fa c ility.

• Gro wing sa le s thro ug h o ur re c e ntly la unc he d o nline o rde ring site s fo r K
• nne c t a nd Artia . Our Custo me r

Re la tio nship Ma na g e me nt (CRM) syste m will a lso g o live in F Y21.

• 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 ma ny o ppo rtunitie s fo r g ro wth.

F luid Syste ms – Busine ss Ove rvie w

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

• Fluid Syste ms (FS) ha ve a g a in se e n ve ry stro ng g ro wth with full ye a r sa le s inc lud ing a c q uisitio ns up 15.2%

a nd e xc lud ing a c q uisitio ns up 8.5% o n the p rio r ye a r.

• Und e rlying EBIT

DA fo r FS wa s $10.3m c o mp a re d to $8.8m in FY19.

• We ha ve suc c e ssfully inte g ra te d the T
• rq ue a nd C o o p e r Fluid Syste ms b usine sse s in Ad e la id e , SA a nd

c o mp le te d the re lo c a tio n in e a rly Aug ust 2020 o f the me rg e d b usine sse s into a ne w c usto m-b uilt fa c ility tha t will c a te r fo r future g ro wth.

• During the ye a r we a lso re lo c a te d o ur Hunte r Va lle y b ra nc h to a la rg e r c usto m-b uilt fa c ility.
• HIS Ho se a c q uisitio n wa s d e fe rre d d ue to the unc e rta inty o f the C O VID-19 p a nd e mic a nd Vic to ria n

G o ve rnme nt lo c kd o wn. 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 nsion a nd a c quisition

• 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 , tra nsp o rt,

re c yc ling 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.

F luid Syste ms – Bra nc h Ne two rk

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• Re lo c a tio n a nd inte g ra tio n o f

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 ha s b e e n c o mple te d.

• Hunte r Va lle y b ra nc h wa s

re lo c a te d to a la rg e r c usto m b uilt fa c ility in F Y20.

• Sa le s a nd te c hnic a l c a pa b ility

b e ing e sta b lishe d in T a sma nia in F Y21.

T

• rque 1 bra nc h

Coope rs F luid Syste ms 12 bra nc he s F luid Syste ms 12 bra nc he s

Ac q uisitio ns

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Se nsible stra te g ic a c quisitio ns

• T

he Gro up ta ke s 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

• c us on ne w g e og r

a phie s a nd industr ie s Pr

• fita ble & c a sh flow

positive E a r ning s a c c r e tive L ike minde d c ultur e & c omple me nta r y skillse ts

Ca n he lp to a c c e le ra te o ur e ntry into ne w ind ustrie s a nd g e o g ra p hie s. Stro ng und e r- lying b usine ss fund a me nta ls with g ro wth o p tio ns. Min $10M re ve nue . Ind ustria l sup p ly fo c use d ta rg e ts. Whe n a p p ro p ria te re ta in ve nd o r a nd ke y ma na g e me nt

Outlo o k

T he G ro up is c a utiously o ptim istic fo r the FY21 fina nc ia l ye a r - subje c t to C O VID- 19 pa nde m ic im pa c ts

• Ac tivity in o ur ma jo r e nd ma rke ts (c o mme rc ia l c o nstruc tio n, infra struc ture a nd mining ) ha s re ma ine d so lid

to d a te . Ho we ve r, the re is a hig h le ve l o f unc e rta inty surro und ing the sc a le a nd d ura tio n o f the C O VID-19 p a nd e mic a nd the p o te ntia l imp a c t in the se ma rke ts.

• G ive n ma rke t unc e rta intie s re sulting fro m the p a nd e mic ’ s imp a c ts, we a re no t p ro vid ing full ye a r

g uid a nc e . We re ma in c o nfid e nt tha t we ha ve the rig ht stra te g ic p la n, the rig ht p e o p le a nd o p e ra te in ma rke ts tha t will e na b le us to na vig a te the situa tio n a nd ta ke a d va nta g e o f o p p o rtunitie s a s the y a rise .

• 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 will 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

he te a m is 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.

• 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.

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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 Co mpa 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 2020 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. E a 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. F

• r mo re info rma tio n, p le a se c o nta c t:

Ro be rt Bulluss

CE O a nd Ma na g ing Dire c tor

Co ve ntry Gro up L td (03) 9205 8219

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Authorised for release by the Board of Directors of Coventry Group Limited.

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