COVENTRY GROUP LIMITED — AGM Information 2002

Nov 3, 2002

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Coventry Group Ltd		Facsimile Transmission
ABN 37 008 670 102		253 Walter Road Morley, Western Australia
		PD Box 63, Morley WA 6943
To COMPANY ANNOUNCEMENTS OFFICE	Fax Number 1300 300 021	Telephone (08) 9276 0222 Facsimile (08) 9276 1666 www.cgl.com.au Wab
AUSTRALIAN STOCK EXCHANGE LTD Company
From JOHN COLLI	Telephone Number (08) 9276 0323
Branch	Fax Number (08) 9276 1666 tauwingoodia kuning hypoolitiikumingo goddiitauwing goddiitauwingoddiitau inggooddiitau inggoodiitii ang oditii .
Date 4 NOVEMBER 2002	Pages (including this page) 10

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RELEASE OF THE CHAIRMAN'S ADDRESS AND CHIEF EXECUTIVE OFFICER'S REPORT TO BE DELIVERED AT THE 2002 ANNUAL GENERAL MEETING OF SHAREHOLDERS OF COVENTRY GROUP LTD.

AUSTRALIAN STOCK EXCHANGE
A SAN BRANCA
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COVENTRY GROUP LTD

ABN 37 008 670 102

ANNUAL GENERAL MEETING

4 NOVEMBER 2002

CHAIRMAN'S ADDRESS

Ladies and Gentlemen,

2001/2002 Results

The annual report has been distributed to shareholders and you will have before you details of the Company's performance over the 12 months to 30 June. Although sales revenue increased by 10%, net profit after tax fell to \$4.5m from \$7.4m in the previous year. This was a disappointing outcome and was largely due to the performance of Coventry Auto Parts or CAP, our joint venture with Ford. I will comment further on that shortly.

Our Managing Director, Barry Watson, will make a more detailed presentation, but at this stage I draw to your attention the strong performance of our long-term major activities - the auto parts distribution business in Western Australia and South Australia, and our national industrial fasteners business - their results have been excellent.

Coventry Auto Parts (CAP)

The CAP joint venture has been a major disappointment. Although the executives and staff responsible for CAP are putting in a first-class effort, and we are budgeting for the business to achieve break even in the next financial year, it will take some time for CAP to reach a reasonable level of profitability.

The underlying reason for this poor performance is the decision by Ford not to proceed with their original plans for their dealer network on the east coast. These plans had underpinned the business case for establishing CAP. By the time Ford took their decision, the build-up of CAP's distribution centres and branch network was well in hand. We formed the view that the Victorian operation would not be viable without the Ford franchise and decided that this operation should be closed down immediately. As you know, the cost was considerable. We are continuing with the operations in New South Wales, where we have Ford parts distribution rights, and in Queensland that we judged to have better prospects of achieving viability. We are still working on that.

A recent development has been the agreement by Ford and its partners to give up their equity in CAP, and a royalty agreement in Western Australia, in return for the issue of Coventry shares. This was announced on October 11^th.

100% ownership will give us benefits in the better management of CAP in conjunction with our well established auto parts distribution businesses, and also will allow the Group to take advantage of consolidation of operating losses for tax purposes. This will improve the Group's net profits and cash flow.

Ford & Holden

We have a very valuable relationship with Ford and have distributed Ford parts in Western Australia and South Australia for many years. It is in Coventry's long-term interests to maintain and develop this relationship despite our disappointment with developments surrounding CAP.

I might add that we also have a strong association with Holden and in fact this year marks the 50^th anniversary of our distribution of Holden parts in Western Australia. Our South Australian division, Motor Traders, also distributes Holden parts, and has done so since 1931.

Dividends

Apart from the special dividend of 39.47 cents per share that was paid on the 22nd of February from the proceeds of the liquidation of the assets of Investment Company of the West, the Board has approved total dividends for the year of 20 cents. We regret that this amount is less than the Company has been paying in recent years; nevertheless it is greater than the earnings per share for the year of 13 cents.

We expect to restore the dividend to its past levels as soon as we are satisfied that profits are on a sustainable upward track and we are satisfied that the Company's cash position will not be adversely affected.

Dividend Reinvestment Plan

I am pleased to tell you that the Board has decided to reinstate the dividend reinvestment plan with effect from the interim dividend next year. The plan rules have been updated to reflect changes in the Corporations Law since the plan was first introduced in 1991, and shareholders will be supplied with full information and election forms well before the dividend is payable. The directors have not yet decided what discount will be applied to shares issued under the plan and this information also will be advised when details of the dividend reinvestment plan are mailed to you.

Current Performance & Outlook

The results for the first three months of the current financial year have been encouraging and, if these trends can be maintained, we will be able to produce a very much better result than we have shown in recent years. I hope also that we will be able to increase the dividend payment closer to past levels. However, it would be dangerous to predict an outcome for twelve months based on only three months performance. At this stage, all I can say is that your directors, management and staff will be doing all they can to restore the Company's fortunes and better results already are apparent.

Retirement of Managing Director and Chief Executive Officer

I am sure you will be aware from our earlier announcements that our Chief Executive Officer, Barry Watson, has indicated his intention to retire by the end of December. We have commissioned a leading executive search firm to locate a suitable replacement and this process is well under way. We expect to be able to make an announcement in this respect before the end of the year.

Barry has devoted a major part of his working life to the service of the Coventry Group and has been a director since 1977. He became a managing director jointly with Brian Goddard in 1989, and has been flying solo as chief executive officer since 1997. Barry has led the Group through a period of significant change, including the expansion of its range of activities, particularly in industrial fasteners distribution, that has been of great significance for our future. I am sure you would wish to join me in thanking Barry for his contribution to the Group and extending to him our warmest good wishes for the future.

The Future

I mentioned in the Annual Report that the Board had commenced a strategic review of the Group assisted by external consultants. This will involve a comprehensive review of our activities and future directions. The Board has decided to suspend further work on this rather complex exercise until our new chief executive officer is in place. It is important that he be part of this review process because it will be his responsibility to implement decisions arising from the review.

During the year the Board also commissioned an external review of its own activities and procedures, and all directors and senior executives participated in this process. Our objective was to ensure that the Board focuses on the right issues and is properly implementing good corporate governance practices. $\lambda$

There has been considerable public discussion about corporate governance following some notorious corporate collapses and excesses, both in Australia and the United States. While I am confident that there are no serious issues with the Coventry Group, we have reviewed a number of matters such as terms of office for directors, auditor independence and board committees' membership and terms of reference. I believe that our approach is well in line with the standards which it is expected will be imposed on corporates generally.

In closing I express my thanks to my fellow directors for their support during the past year and also to the senior executives, management and staff who have done so much in building the Group's reputation for quality service which will be the lifeblood of our future profitability.

It is now my pleasure to call on Barry Watson to make a presentation on the Group's performance.

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COVENTRY GROUP LTD

ABN 37 008 670 102

ANNUAL GENERAL MEETING

4 NOVEMBER 2002

CHIEF EXECUTIVE OFFICER'S REPORT

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As shareholders you would have studied our 2002 annual report and observed that apart from the nice pictures, the presentation is far more detailed then in previous years and that the activities associated with our various business segments has been comprehensively reported and explained.

For the analysts and the accounting technicians, details set out within the segmental reporting has given a very broad and detailed analysis of performance - profit contribution together with assets employed to achieve the various profit returns.

We have received from the investment fraternity, in general, high commendation for the content of this year's annual report.

Today the Chairman has requested I present a brief overview of each business segment within our Group and to do this I will refer to some of the comments I have detailed within the annual report.

Firstly, I will review the historical performance covering the 2001-2002 financial year and then discuss in general terms how I believe the Company will continue to grow and develop into the future.

Starting with the automotive parts distribution divisions - this segment still remains one the engines of our Group and continues to generate a very positive and strong cash flow contribution.

Automotive Group

It is well reported that for the Australian market covering automotive parts distribution $-$ the overall growth in 2001-2002 achieved a factor of 1%.

When we equate this average against our two major auto business units in Coventrys and Motor Traders, that registered a combined revenue growth of 6% to reach a total of \$192 million - I believe you will accept that we enjoyed a very positive result.

Against this positive revenue increase and resulting from ongoing management activity to improve the internal efficiencies and to embrace new technologies - it is extremely rewarding that profit before tax increased by 62% to \$10.1 million.

Now the obvious question is why should we enjoy such a strong result.

Well it is really very basic $-1$ believe $-$ for it all comes back to that magic word $$ service.

Service to me covers 3 basic ingredients:

• Staff ability and knowledge -- we train our people well and support our young people in career development and promote from within as first option.
• Stock availability we maintain a comprehensive range and levels of stock so as to achieve a 95% plus supply rate in every order received. Remember we carry over 120,000 different products and process in excess of 14,000 orders per day.
• · Client service -- via competitive pricing, prompt delivery, together with technical support, we maintain an extremely high customer satisfaction rating.

So in short, it is my $3'S's = stock$ , service, staff.

I have expressed within my report, also in previous announcements, that for the present financial year 2002-2003 we continue to enjoy positive acceptance by the market with revenue and profit continuing to be a major contributor to our Group performance.

After the first 4 months, this automotive business segment is ahead of both our revenue and profit budget expectations.

The other major segment of our Group is that of industrial products.

This sector of our business is really the ongoing growth element of our Group with strong opportunity going forward to expand our product range and also to develop further via additional distribution centers - increased customer service levels.

To state that for the review year revenue increased 19% to \$157 million it does suggest that we must be doing something right within the market place, for like all business activity these days - competition is strong with the market being very mature.

Again as with automotive $-1$ attribute this growth to wise acquisitions in the past $$ the strength of our executive team together with the respective state managers. Also the strong elements of service, stock, staff has a huge impact on the performance outcome.

Profit for industrial products registered at \$12 million and this represents a massive 51% increase over the previous year.

For the current year we are maintaining budget expectations both in revenue and profit for industrial products and for the first 4 months covering 2002-2003 we are encouraged that a firm foundation is being developed.

The remaining two segments of our business are those of Bitumen and Gasket manufacturing.

Bitumen

Bitumen is a great contributor to our Group and does present a very positive cash flow. It is a very fickle industry, for as I constantly noted within the annual report, we have the best intention and strong opportunity but if it rains we sit in the shed and suffer with no production.

The review year shows Bitumen contributing a profit of \$2.3 million - down 14% on the previous year - this was on a revenue of \$14.9 million.

The exciting announcement for this business was recently made when we advised on a new joint venture manufacturing facility with CSR Emoleum.

In short - this means we will close our current plant at Cannington and with CSR Emoleum, jointly operate a new state of the art plant allowing for major cost reduction in manufacture - the introduction of the latest pavement technology and also to encompass the highest possible control over pollution and other environmental issues.

This is a purely manufacturing joint venture - both companies will maintain their existing road surfacing activities.

Gaskets

This small business was a star performer for 2001-2002.

Early in 2002 AA Gaskets lost the supply contract covering a large volume of sales to the Repco Group. We thought the business would stagnate for a year or two as management worked to gain new markets and a stronger client base.

Let me say that at 30 June 2002 AA Gaskets recorded \$2 million in profit - this being 4% over the previous year on a revenue base that increased by 5%.

This represents a wonderful outcome against the potential profit reduction.

We not only have an excellent product and manufacturing technology at AA Gaskets - we also have an excellent management team that at this time is working on an encouraging potential to export our products offshore.

Now that is the good news and the excitement for our Group.

The story of life is that there always is a BUT.

The weak link for our Group was again the activities of Coventry Auto Parts (JV with Ford) registering a trading loss for the year of \$9.9 million.

Included in this amount is approximately \$3 million covering the closure of this business within Victoria.

I gave a very comprehensive overview at last year's AGM covering the total reasoning and the expected associated costs with the Victorian closure.

Of the above mentioned loss - Coventry Group was required to account for 88% being our percentage ownership.

The Queensland and New South Wales business units have over the past 12 months 'Coventrised' to replicate the systems and network of Coventrys and whilst we expect to register a trading loss for the 2002-2003 year - we budget for the loss to be substantially slashed to between \$3 - \$4 million.

To explain: the closure of CAP Victoria registered in the first half of the 2001-2002 year a charge of \$2 million - this loss will not be present when our Group reports trading the first six months ending 31 December 2002.

For the 2001-2002 review year, Coventry Group paid income tax at the rate of 65% (30% is standard). This was due to our Coventry Auto Parts ownership of less than 100% which for taxation purposes prevented us from offsetting the losses in Coventry Auto Parts against the profits earned in other parts of the Group.

We now own 100% of Coventry Auto Parts and, going forward, any losses incurred by Coventry Auto Parts will be offset against profits earned by our other activities and we will be taxed only on the net amounts. In addition under new government legislation we expect to be able to offset past losses against Group profits and in future years.

Closina

To the end of the first quarter 2002-2003 we are encouraged that our Group has recorded revenue ahead of our budget forecast and profit is commensurate with that growth.

Revenue to end of the first quarter is 10% ahead of the previous year with profit before tax being a 56% increase against the same period of the previous year. The percentage increase is after allowing for the last years first quarter closure cost for Coventry Auto Parts - Victoria.

This is a first quarter result and sets in place a very positive foundation going However, the markets we operate in are influenced by economic forward. circumstances and therefore can quickly turn. For you the shareholders, it will be our half year result that will establish a strong prediction and guide for the full year outcome.

Prior to handing the meeting back to the Chairman - let me advise you, the shareholders, that the major strength of our Company - the element that makes us head and shoulders above others - are our executives - managers and the 1900 employees that make up the Coventry Group.

They are our biggest asset - and today I record my appreciation to their ongoing contribution.

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