COVENTRY GROUP LIMITED — Annual Report 2008

Aug 21, 2008

COVENTRY GROUP LTD

ABN 37 008 670 102

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Results for Full Year Ended 30 June 2008

Roger Flynn Executive Chairman

Tony Hockley Chief Financial Officer

SUMMARY

F08

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• Business transitions continued at a cost

• Sold non-performing assets

• Minor acquisitions

• Reduced debt substantially

• Ground work for tougher economy

• Selective organic growth

SUMMARY

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F09

• Continued focus on non-performing assets

• -

• Growth through organic volume

- operating efficiently

• Continued emphasis on debt reduction

• Improved working capital management

COVENTRY GROUP BUSINESS PROFILE

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’ ’ June 07 → June 08 Industrial - Fasteners Aust & NZ Aust & NZ - Artia (Furn/H/W) Aust & NZ Aust & NZ - Fluids WA & Qld WA, Qld, SA & Vic Gaskets - To aftermarket Aust & NZ Aust & NZ - Hotmix - Bitumen & Asphalt WA Auto - Aftermarket Parts WA, SA, WA & SA Qld & NT

• Trade focused at “heavy” end of economy through

F08 MIX OF CONTINUING BUSINESSES

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Businesses - Sales : By Geography : By Business Group

: 93% Australia 7% NZ : 60% Industrial 37% Auto

OVERVIEW OF F08

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Industrial - Most areas to plan

• Still significant areas for improvement

• Demand held up well

• Australian system transitions now mostly complete

• Gaskets - Well led

• Benefited from competitive position

OVERVIEW OF F08

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Auto - Relocated WA business

• Changed systems (x2)

• High staff turnover (WA) - Reduced WA service →lower sales

• SA improved

• Q4 consumer confidence drop - Sold Qld

• Sold NT

• Initiatives to progress in F’09

OVERVIEW OF F08

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Financial

• Business & asset sales →

Debt from $82m mid-June ’07 to

$46m end June ’08

• Appraised value of properties held end June ’08

• = $47m

• c.f. Balance Sheet value = $21m

• Most of vehicle fleet sold & leased back

PROJECT COMPASS UPDATE

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• Coventry Auto WA – Live in late August ’07

• Infix live April/May ’08

• Coventry Fasteners Qld live August ’08

• Implementations now progressing smoothly

• Systems now very stable

• Costs brought under tight control

• System enhancements now being implemented in all areas

RESULTS SUMMARY

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• Total sales down 8% to $483m

• Sales from continuing operations down 4% to $449m

• Normalised PBIT down 59% to $10m

• Normalised profit after tax down 43% to $7.6m

• No final dividend – therefore no dividend for the year

• Individually material items net a loss of $1m

FINANCIAL OVERVIEW - CONTINUING OPERATIONS

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	$M	FY08	FY07	%
				Change
	Sales	448.8	468.3	4
	EBIT – normalised	10.1	24.3	59
	Net profit after tax	6.9	(1.2)
	(after minority interest but
	including profit from
	discontinued operations)
	EPS – normalised (cents)	18.3	35.0	48
	EPS (cents)	16.6	(3.8)

FINANCIAL OVERVIEW (Cont’d) - CONTINUING OPERATIONS

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FY08 FY07 EBIT / Sales (%) 3.2 4.8 Return on capital employed (%) 6.6 10.0 (EBIT / equity + net debt) Return on equity (%) 4.4 8.0

CASH FLOW & GEARING

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$M FY08 FY07 Operating cash flow 11.8 10.0 Closing net interest bearing debt 45.8 75.5 Closing equity 172.9 168.1 Net debt / equity (%) 26.5 44.9 Net debt / equity + net debt (%) 20.9 31.0 Interest cover (times) 2.5 4.9

DIVIDENDS

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$M FY08 FY07 EPS – Normalised (cents) 18.3 35.0 - Dividend per share (cents) 17.0 Franking (%) N/A 100.0 Franking account balance 20.9 20.5

CAPITAL EMPLOYED

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$M FY08 FY07 Capital expenditure 8.3 18.6 Stock turns 2.8 2.9 Days sales in trade debtors 61.1 55.8

INDIVIDUALLY MATERIAL ITEMS IMPACTING FY08 RESULTS (PRE TAX)

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$M

Net gain on sale of businesses Net gain on sale of “bitumen” land and buildings Relocation costs of principal WA site Additional stock provisions

1.5 7.0 (3.4) (4.2)

AUTOMOTIVE (excluding discontinued operations)

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$M	FY08	FY07	% Change
Revenue EBIT (normalised) EBIT margin (%) Capital employed Return on capital employed (%)	168.3 (8.6) (5.1) 53.6 (9.5)	203.6 2.8 1.4 55.2 2.6	↓ 17 -

• Significant revenue decline in WA from

-Implementation of new ERP

-Move of distribution centre

INDUSTRIAL

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INDUSTRIAL
$M	FY08	FY07	% Change
Revenue EBIT (normalised) EBIT margin (%) Capital employed Return on capital employed (%)	272.7 21.4 7.8 110.7 19.3	258.6 22.9 8.9 107.8 21.2	↑5 ↓7

• Fasteners had mixed results but particularly strong in Qld/WA

GASKETS

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GASKETS
$M	FY08	FY07	% Change
Revenue EBIT EBIT margin (%) Capital employed Return on capital employed (%)	11.6 2.0 16.9 8.9 21.9	11.1 1.2 10.7 9.0 13.3	↑ 5 ↑64

• Well led

F09 OUTLOOK

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• “Resource States” still strong but no longer “Hot”

• Other States unpredictable

• NZ softer economy but still opportunities

• Auto performance a function of

• Continued internal improvement

• – Consumer confidence

• Challenges of higher inflation & currency volatility

• $35M of debt hedged @ 6% bill rate through F’09