COVENTRY GROUP LIMITED — AGM Information 2016

Oct 27, 2016

AGM – CHAIRMAN’S AND CEO’S ADDRESSES

COVENTRY GROUP LTD

28 OCTOBER 2016

Good morning ladies and gentlemen and welcome to the 80th Annual General Meeting of Coventry Group Ltd.

My name is Neil Cathie and I am the Chairman of your Board and this meeting. Welcome to our Thomastown site where we house the largest of our Trade distribution centres.

I would now like to introduce the members of the board Ken Perry, Nick Willis, Peter Caughey (MD & CEO) and Vicky Papachristos. Our company secretary is Chris Lloyd.

My Chairman’s report is contained in the 2016 Annual Report and I don’t intend to repeat that content here. It is more important that you all hear from Peter who will provide an overview of the current state of the business and the progress that has been made with its turn around. There is still much to be done as I state in my report.

To provide some additional narrative around the Annual Report and an update on current initiatives, trading and outlook, I will now hand over to Peter Caughey.

2016 ANNUAL GENERAL MEETING

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28 October 2016 PETER CAUGHEY, CEO & MANAGING DIRECTOR

FY16 Overview

Significant operational improvements have been delivered – but much remains to be done.

Key achievements in FY16

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Operations

• Record contribution from AA Gaskets

• Positive contribution from Trade Distribution in NZ

• Coopers profitable in very tough market

• Successfully opened 11 new stores

• Cost reductions of $7m.

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Restructure

• Phase 1 nearing completion and delivering expected cost benefits

• Phase 2 (F17 Profit Improvement Plan) • Commenced September 2017

• Improve efficiency

• Reduce cost

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Personnel

• New sales management structure implemented

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Financial

  - Underlying EBITDA close to break-even

• General market remains the key challenge

• Engineering & mining sectors are contracting, putting pressure on top-line sales

• Phase 1 restructure initiatives (announced Feb 2015) have reduced costs, improved efficiency and maintained competitiveness.

• Execution has taken longer than expected.

Phase 1: restructuring program

All restructure initiatives are now delivering operational and financial benefits.

Area	Initiatives completed	Benefits
Trade Distribution	• Logistics structure ratioanalised • Improved DIFOT • New store openings • New category management team	• Material cost reductions has maintained competitiveness • More efficient platform from which to leverage revenue growth
AA Gaskets	• Office sale and leaseback	• $2.0m cash received • Record contribution received
Corporate	• Relocated finance team • Leased Perth office	• $1.2m reduced costs
Inventory	• Reductions across the Group	• $3m reduction
Capex	• Warehouse Management System (WMS) • Expand Cooper’s capabilities • 11 new Konnect stores	• Significantly lower cost base • No significant capex required in FY17/18

• DIFOT – Delivered In Full and On Time

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Phase 2: Profit Improvement Plan

In FY17, Coventry has now accelerated initiatives to improve profit.

Ongoing initiatives

1. Category Management team to drive sales and volume

2. Fix/rationalise underperforming branches

3. Response to continued softening conditions

4. Many new initiatives are already underway in the business

5. Attacking corporate overheads

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1. Prudently expand the store footprint 4. Enhance existing IT platform to provide better tools for timely and informed decision making such as Complexica®

2. Ongoing Continuous Improvement Program 6. Continuing review of corporate structure and costs 7. China Hub (benefits in inventory and cost) 8. Continued inventory reduction (needs to accelerate)

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Outlook

Focus remains on building a robust business to deliver sustainable returns for shareholders.

Sector Activity

Work done (quarterly)

• Trading conditions remain very challenging

• Sales down 12% in 1QF17.

• Taking longer than anticipated to reposition the business to building/construction sector

• Significant business remains derived from the engineering/mining sectors

• Despite cost reductions achieved and planned, Coventry is unlikely to deliver a full year profit in F17

• Payment of dividends remains dependent upon sustained profitability for the Group

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40,000
35,000
30,000
+36%
25,000
20,000 -28%
15,000
Construction Work Done ($m) Engineering Work Done ($m)
Source: Australian Bureau of Statistics
Mar-2012 May-2012 Jul-2012 Sep-2012 Nov-2012 Jan-2013 Mar-2013 May-2013 Jul-2013 Sep-2013 Nov-2013 Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Jan-2016 Mar-2016 May-2016
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Disclaimer

Reliance on third party information

The information and views expressed in this Presentation were prepared by Coventry Group Ltd (the Company ) and may contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. No responsibility or liability is accepted by the Company, its officers, employees, agents or contractors for any errors, misstatements in or omissions from this Presentation.

Presentation is a summary only

This Presentation is information in a summary form only and does not purport to be complete. It should be read in conjunction with the Company’s 2014 final financial report. Any information or opinions expressed in this Presentation are subject to change without notice and the Company is not under any obligation to update or keep current the information contained within this Presentation.

Not investment advice

This Presentation is not intended and should not be considered to be the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. The information provided in this Presentation has been prepared without taking into account the recipient’s investment objectives, financial circumstances or particular needs. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary.

No offer of securities

Nothing in this Presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell Company securities in any jurisdiction.

Forward looking statements

This Presentation may include forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, these statements are not guarantees or predictions of future performance, and involve both known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control. As a result, actual results or developments may differ materially from those expressed in the statements contained in this Presentation. Investors are cautioned that statements contained in the Presentation are not guarantees or projections of future performance and actual results or developments may differ materially from those projected in forward-looking statements.

No liability

To the maximum extent permitted by law, neither the Company nor its related bodies corporate, directors, employees or agents, nor any other person, accepts any liability, including without limitation any liability arising from fault or negligence, for any direct, indirect or consequential loss arising from the use of this Presentation or its contents or otherwise arising in connection with it.

For more information, please contact: Peter Caughey CEO and Managing Director, Coventry Group Ltd - (03) 9205 8223