ABN 37 008 670 102

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Results for announcement to the market Full Year Ended 30 June 2023

			$'000
Revenue	Up	11.2% to	358,543
Underlying EBITDA1	Up	9.7% to	17,005
Profit before tax	Down	49.3% to	3,723
Profit after tax attributable to members	Down	48.9% to	2,472

1. Underlying EBITDA is earnings before interest, tax, depreciation, amortisation and has been adjusted to exclude the impact of AASB 16 Leases and significant items. Underlying EBITDA is a non-IFRS measure and reflects how management measures performance of the Group.

Dividends (distributions)

Dividends (distributions)
	Amount per security	Franked amount per security
Final dividend	3.5 cents	3.5 cents
Record date for determining entitlements to the	30 September 2023
Date the dividends are payable	13 October 2023
Dividend reinvestment plan (DRP)
The Company’s Dividend Reinvestment Plan enables	eligible shareholders to reinvest their dividend in additional
Net Tangible Assets Per Security
As at 30 June 2023		0.40
As at 30 June 2022		0.40

The financial statements have been audited and an unmodified opinion has been issued.

Coventry Group Limited advises that its Annual General Meeting will be held on Friday 20 October 2023. The time and other details relating to the meeting will be advised in the Notice of Meeting to be sent to all Shareholders and released to the ASX after dispatch.

In accordance with ASX Listing Rules, valid nominations for the position of Director are required to be lodged at the registered office of the Company by 5.00pm (AEST) 1 September 2023.

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ANNUAL REPORT 2023

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VALUES

AT COVENTRY GROUP, OUR VALUES ARE

SAFETY FIRST

We place the health, safety and wellbeing of our people first

DO THE RIGHT THING - FAIRNESS, INTEGRITY & RESPECT

We treat everyone equally, we operate with competence and we treat everyone with respect

WORK AS A TEAM

We work with stregth and resilience together.

BE THE BEST AT EVERYTHING WE DO

We strive to be better every day, finding new ways to grow our company and each other

OUR PEOPLE we trust and emplower our people

OUR CUSTOMERS we are dedicated to our customer’s needs

OUR SUPPLIERS we work in partnership with our suppliers

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Chairman's Report	4
Chief Executive Officer's Report	6
Consolidated statement of profit or loss	12
Consolidated statement of comprehensive income	13
Consolidated statement of financial position	14
Consolidated statement of changes in equity	16
Consolidated statement of cash flows	18
Notes to the consolidated financial statements:	19
1. Significant accounting policies	19
2. Segment information	26
3. Business Combinations	31
4. Auditor's remuneration	32
5. Employment costs	32
6. Finance income and finance expenses	32
7. Taxes	33
8. Earnings per share	34
9. Cash and cash equivalents	36
10. Trade and other receivables	36
11. Inventories	36
12. Parent entity disclosures	37
13. Property, plant and equipment	38
14. Right-of-use assets	39
15. Intangible assets	40
16. Impairment of non-financial assets	40
17. Trade and other payables	42
18. Interest-bearing loans and borrowings	42
19. Provisions	43
20. Share-based payments	43
21. Capital and reserves	44
22. Financial risk management	45
23. Leases	50
24. Controlled entities	51
25. Reconciliation of cash flows from operating activities	52
26. Related parties	52
27. Significant items	53
28. Events occurring after the reporting period	53
Directors' Report	55
Directors' Declaration	73
Lead Auditor's Independence Declaration under S307C of the_Corporations Act 2001_	74
Independent Auditor's Report	75
Shareholder Information	79
Corporate Directory	82

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CHAIRMAN’S REPORT

FY23 RESULTS

Coventry achieved its sixth consecutive year of sales and Underlying EBITDA1 growth in 2023 with pleasing contributions from our Trade Distribution and Fluid Systems segments. Group sales revenue was up 11.2% to $358.5m, while Underlying EBITDA1 improved 9.7% to $17.0m.

The businesses within each segment continue to successfully provide specialised industrial products, services and customised solutions to our wide network of customers.

Our vision is to be Australia and New Zealand’s leading industrial supply and services group where we do the right thing by our people, customers and partners to create a sustainble future.

Our focus on specialisation differentiates us from our competitors and is underpinned by our value proposition of quality products, stock availability, expertise, agility and geographic coverage. In both segments we have a well-defined pipeline of organic growth opportunities encompassing expanding and upgrading our network, improving our customer value proposition, service and product extensions and digitalisation.

Generally, the Group has a very small share of the markets in which it operates so there are many opportunities for growth organically and via acquisition and this is a factor driving our strategy and planning. In order to deliver on identified growth opportunities, we need the right people and to that end we continue to refine and improve our people management systems to build skills and expertise for future business growth.

The Group continues to have a strong working capital position with Current Assets exceeding Current Liabilities by $25.3m. We were very pleased with the cash conversion outcome of 112.5% for FY23. As an indicator of financial health, this outcome is a huge improvement on prior periods. The Group has substantial Australian tax losses of $66.8m against which a Deferred Tax Asset of $14.1m has been recognised in its Statement of Financial Position.

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DIVIDENDS

The Board has declared a final dividend of 3.5 cents per share, fully franked. The Company’s Dividend Reinvestment Plan remains active, enabling eligible shareholders to reinvest their dividend in additional shares in the Company.

EXECUTIVE REMUNERATION

The Company Executive and Director Incentive Plan provides for the granting or issuing of Performance Rights to eligible Executives in accordance with its terms and subject to the terms and performance hurdles set by the Board. The CEO and Managing Director’s total remuneration includes a Plan award and, as required by the ASX Listing Rules, the Company will seek shareholder approval to grant him Performance Rights for his participation in the Plan for 2024. Full particulars will be published in the Notice of Annual General Meeting for the meeting to be held on 20 October 2023.

PEOPLE

I would like to thank my Board colleagues for their continuing contribution, support and guidance in 2023. On behalf of the Board, I would like to thank all our colleagues for their commitment to the business and its core values. Six years of consecutive growth does not happen without a lot of hard work from a lot of people and improved financial results are but one measure of the success of their efforts. To our shareholders, my continuing thanks for your ongoing and patient support.

OUTLOOK

Our primary end markets remain resilient, supply chain issues have eased and we only have a small exposure to segments of the economy which are slowing however given continuing macroeconomic volatility we will not be providing full year guidance but will continue to provide quarterly trading updates to the market.

Neil G. Cathie

Chairman of the Board of Directors

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CHIEF EXECUTIVE OFFICER’S REPORT

FY23 was another positive year for the Group. The Group delivered solid full year FY23 Sales and Underlying EBITDA[1] growth. My thanks go to every person in the Group for their effort, expertise and professionalism.

We are pleased to report the Coventry Group’s strategy based on specialisation and service excellence is continuing to be resilient and has delivered a sixth consecutive year of Sales and Underlying EBITDA[1] growth. The strong results were achieved against a backdrop of increasing wage and cost inflation, labour and skills shortages and rising interest rates. These challenges are expected to remain in FY24.

Demand remains robust in our primary end markets and we have very modest exposure to segments of the economy that are slowing, namely household discretionary expenditure and residential construction. The Group operates in multi-billion-dollar fragmented markets and has very modest market shares.

During the year we:

Implemented a new Progress Review program for the development of our people.
Introduced a new Graduate Program.
Developed a comprehensive induction program for use by Managers in the Konnect and Artia Australia (KAA) business unit. This will be rolled out through the Group in FY24.
Implemented sales training programs into KAA and Nubco.
Developed a Diversity and Inclusion framework.

ENVIRONMENT, SOCIAL AND GOVERNANCE

From an environmental perspective we:

We are confident that we have the right strategy, the right people, and operate in the right markets to continue our journey of sustainable profitable growth. Our consistent delivery of sales growth and improved profit results are proof that our strong value proposition and commitment to our core values deliver results.

Note 1: Underlying EBIT and Underlying EBITDA exclude the impact of AASB 16 Leases and significant items.

HEALTH, SAFETY AND WELLBEING

The Group prioritises the Health, Safety and Well-being of our people along with our customers, suppliers and communities. We aspire to zero LTI’s and zero harm to our people. During FY23 we had 10 Lost Time Injuries (LTI’s) across all of our business units. All incidents and serious near misses are reviewed by our safety team and the Coventry Leadership Team (CLT) to ensure we share lessons and improve safety systems.

During FY23 we focused on our Safety First program, ran Safe Work month programs in October, continued to enhance our safety management platform Donesafe and increased hazard identification and resolution. We also trained Mental Health First Aiders and launched our Mental Health First Aid program.

PEOPLE

During FY23 we refined our values to Safety First, Doing the Right Thing (Fairness, Integrity, Respect), Working as a Team and Being the Best at Everything we do. We remain focussed on doing the right thing in all our interactions with our people, customers, suppliers and communities.

Completed gathering our Scope 1 and Scope 2 data from FY22 and now have our Greenhouse Gas Emissions baseline.
Implemented a number of reduction strategies across the business. These were highlighted by:
A reduction of 17% of plastic from Konnect packaging and a change of our traditional yellow boxes to the easily recyclable plain brown boxes in line with the Australian Packaging Guidelines.
Our ‘Flick the Switch’ energy reduction and ‘Eco-drive’ fuel reduction campaigns.
Our annual World Environment Day eco-audits resulting in a number of recycling, water saving and lighting improvements across the business.

From a social perspective, we supported our people and communities including:

Donations to charities through our Matched Giving and Workplace Giving Programs.
Proudly sponsoring numerous sporting and community programs throughout Australia and New Zealand.

From a governance perspective we:

Continued to conduct internal risk reviews to ensure the continuity of our business.
Submitted our third Modern Slavery Statement, and completed audits on our top 15 local suppliers, which equated to over 90% of our total local spend.
Extensively reviewed our Whistleblower Policy ensuring new legislation was covered from both an Australian and New Zealand perspective.

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As part of our regular review, we updated all our Corporate Governance policies including Securities Trading, Continuous Disclosure, Fraud, Privacy, Security and Risk Management.

BUSINESS PERFORMANCE

Trading performance improved during FY23 with the Group delivering both Sales and Underlying EBITDA[1] growth.

The Group achieved sales growth for FY23 of 11.2% to $358.5m ($322.3m FY22) and a 9.7% increase in Underlying EBITDA[1] to $17.0m ($15.5m FY22). Group Underlying EBIT[1] for FY23 was $13.4m ($12.4m FY22) and Net Profit

after Tax for the year was $2.5m ($4.8m FY22). The reduction in Net Profit after Tax was due principally to costs in relation to the ERP upgrade of $5.5m.

The Group has a solid balance sheet with Net Assets of $113.0m and Net Tangible Assets of $36.8m at 30 June 2023. At 30 June 2023 the Group had net debt of $33.5m ($33.1m FY22). Cash Conversion for the year was 112.5%.

Note 2: Cash conversion = Gross operating cash flow less cash lease payments, addback significant items, divided by Underlying EBITDA[1]

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Chief Executive Officer’s Report (continued)

BUSINESS PERFORMANCE

. FY23 GROUP FY23 GROUP FY22 GROUP SALES GROWTH SALES SALES 11.2% $358.5m $322.3m

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TRADING
PERFORMANCE
IMPROVED
DURING FY23
WITH THE GROUP
DELIVERING
BOTH SALES AND
UNDERLYING
EBITDA [1]
GROWTH.
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net debt net tangible assets net assets $33.5m $36.8m $113.0m

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Chief Executive Officer’s Report (continued)

TRADE DISTRIBUTION

Our Trade Distribution (TD) segment has expanded to a network of 65 branches across Australia and New Zealand supported by 3 Distribution Centres. It comprises Konnect and Artia Australia (KAA), Konnect and Artia New Zealand (KANZ) and Nubco in Tasmania. TD supplies a range of fastening systems, cabinet hardware systems, industrial and construction products to customers in the Industrial, Manufacturing, Infrastructure, Building and Construction, Roofing and Cladding, Mining and Mining Services, Resources/Oil and Gas and Agriculture and Aquaculture sectors.

TD sales for the year of $210.1m up 8.8% on FY22. TD Underlying EBITDA[1] of $17.0m up 5.4% on FY22.

Konnect and Artia Australia (KAA)

KAA is one of Australia’s leading fastener specialists and supplier of cabinet hardware.

KAA delivered sales growth and Underlying EBITDA1 growth on the prior year up 10.3% and 13.4% respectively. To achieve the result KAA improved their value proposition, service levels and reputation in the marketplace. The store network was upgraded with store makeovers completed in Hobart, Lismore and Toowoomba and branch relocations to larger facilities in better locations completed in Geelong, Artarmon and Wollongong. In FY24 we will continue store makeovers (Laverton, Kwinana, Shepparton, Wingfield, Wacol, Bibra Lake, Lonsdale and Townsville) and relocations (Wagga Wagga, Orange, Mildura and Dandenong). We have plans to expand the store network by three to four in FY24.

Konnect and Artia New Zealand (KANZ)

KANZ is New Zealand’s leading fastener specialist and supplier of cabinet hardware and temporary fencing.

KANZ delivered sales growth and Underlying EBITDA1 growth on the prior year up 19.0% and 35.2% respectively. During the year we consolidated two of our Auckland branches into a larger location with an expanded showroom. Auckland is now serviced by branches in Albany, East Tamaki and Silverdale. The opening of a new branch in Palmerston North early in FY24 has taken our branch footprint to 18. We also relocated our Albany branch to a larger facility and refurbished our Dunedin branch.

Nubco

Nubco is a specialist supplier of steel, reinforcing, fasteners, construction products, power tools, hand tools, PPE and consumables in Tasmania.

Nubco sales slowed in FY23 after two very strong years of growth. Deflation on steel products and a decline in discretionary spend impacted the result. The Tasmanian building and construction, infrastructure and agriculture markets are performing well so we are confident we can continue to grow in this market.

FLUID SYSTEMS

Fluid Systems (FS) is an innovative specialist service provider to the mining, agriculture, defence, construction, manufacturing and allied industries. FS specialises in hydraulic, lubrication, fluid transfer, refuelling, fire suppression, automation systems and products. FS has the capability to design, manufacture, install, maintain and supply full turn-key solutions and components and operates 15 branches across Australia.

FS had an excellent year growing both Sales and Underlying EBITDA[1] despite a continuing backdrop of labour and skills shortages and input costs escalation.

FS is positioned for further growth in the coming years as we expect their core markets of mining and resources, defence and agriculture to perform well. We can increase market share through our value proposition, expansion of our product and service offering, expanding our hydraulics capabilities and further diversification into sectors outside of the mining and resources sector. FS has demonstrated through various cycles, that it has the capability to scale according to prevailing market conditions.

FS sales for the year of $148.1m up 14.1% on FY22. FS Underlying EBITDA[1] of $15.3m up 19.0% on FY22.

CENTRAL SERVICES

Our financing facility with the National Australia Bank for $55.0m was re-signed to July 2026. The move to the National Australia Bank in Australia for transaction banking and the move of our New Zealand banking to Bank of New Zealand has been completed.

Corporate costs are currently running at 4.6% of sales (4.6% FY22). We expect productivity projects will allow us to continue to reduce corporate cost % to sales in FY24.

TECHNOLOGY

The ERP upgrade to Microsoft Dynamics 365 Finance and Operations continues to progress to plan and is on schedule and in line with budget.

Our experienced project team and implementation support partners are working closely together and have completed the requirements definition and design phases of the project. The build phase is well advanced. We will pilot the first branch in February 2024 after completing 5 rounds of User Acceptance Testing. We are on target to complete the project by December 2024.

The system will integrate seamlessly with our existing Microsoft systems including Office, SharePoint, Teams, Power BI and CRM. We expect significant improvements in customer service and productivity post implementation of the system.

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Chief Executive Officer’s Report (continued)

ACQUISITIONS

Our FY22 acquisitions, Goudie Holdings Limited and NZ Plank Hire Limited (“GHL”) and Fraser Coast Bolts and Industrial Supplies (“FCB”) have both performed to expectations since joining the Group at the start of April 2022..

SIGNIFICANT ITEMS

The FY23 result was impacted by costs in relation to the ERP Upgrade of $5.5m.

NET ASSETS/WORKING CAPITAL

The Group has a solid balance sheet with Net Tangible Assets of $36.8m and Net Assets of $113.0m compared to $113.6m in FY22. Initiatives to reduce working capital and maximise cash conversion remain a key focus area for the Group.

The Group has tax losses of $66.8m available for use in Australia and franking credits of $8.5m available at balance date.

NET DEBT POSITION

Net debt of $33.5m at 30 June 2023 (net debt of $33.1m at 30 June 2022).

Net debt was impacted by:

ERP project costs ($5.5m)
FY22 Dividend ($3.0m)
Capital expenditure ($3.7m)

In FY24 we will continue to take action to prudently manage inventory levels, collections and operating costs.

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Chief Executive Officer’s Report (continued)

OUTLOOK

Demand remains robust from our primary end markets (mining and resources, infrastructure, commercial construction and industrial). The Group has very modest exposure to segments of the economy that are slowing, namely household discretionary expenditure and residential construction.

The Group operates in multi-billion-dollar fragmented markets and has very modest market shares.

There are clear plans in place to continue to increase market share via new branch openings, branch refurbishments, product range expansion and an enhanced focus on sales and marketing.

The Board and management are committed to leveraging the scale benefits of the platform established over recent years in all parts of our business. In particular, our goal is to achieve best in-class trade distribution margins over time and to that end we have already identified a range of improvement opportunities which the business is implementing.

Given continuing market uncertainty we will not be providing FY24 guidance but will continue to provide quarterly trading updates to the market.

We remain confident that we will continue to deliver sustainable profitable growth to our shareholders.

Robert J Bulluss

Chief Executive Officer and Managing Director

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Coventry Group Ltd and its controlled entities

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the year ended 30 June 2023	NOTE	2023	2022
		$’000	$’000
Revenue from sale of goods	2	358,543	322,324
Cost of sales		(215,454)	(195,689)
Gross profit		143,089	126,635

Other income		4,156	4,097
Employment costs	5	(81,592)	(74,255)
Depreciation and amortisation expense	13, 14, 15	(16,385)	(14,142)
Occupancy costs		(2,388)	(1,946)
Communication costs		(3,973)	(3,733)
Freight		(8,292)	(8,006)
Vehicle operating costs		(3,277)	(2,215)
ERP implementation costs	27	(5,492)	(34)
Other expenses		(16,631)	(14,177)
Profit before net financial expense and tax		9,215	12,224

Financial income	6	1,015	318
Financial expense	6	(6,507)	(5,200)
Net financial expense	6	(5,492)	(4,882)
Profit before income tax		3,723	7,342

Income tax expense	7	(1,251)	(2,501)
Profit for the year		2,472	4,841

Earnings per share:
Basic earnings per share:	8	2.7 cents	5.3 cents
Diluted earnings per share:	8	2.7 cents	5.2 cents

The consolidated statement of profit or loss is to be read in conjunction with the accompanying notes to the consolidated financial statements.

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Coventry Group Ltd and its controlled entities

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2023

	2023	2022
	$’000	$’000
Profit for the year	2,472	4,841

Other comprehensive income items that may
be reclassified to profit or loss:
Foreign currency translation differences	(213)	(638)
Effective portion of changes in fair value of cash flow hedges	(284)	267
Other comprehensive loss for the year, net of income tax	(497)	(371)

Total comprehensive income for the year	1,975	4,470

The consolidated statement of comprehensive income is to be read in conjunction with the accompanying notes to the consolidated financial statements.

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Coventry Group Ltd and its controlled entities CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the year ended 30 June 2023

For the year ended 30 June 2023
	NOTE	2023	2022
		$’000	$’000
Assets
Cash and cash equivalents	9	3,859	15,319
Trade and other receivables	10	53,302	48,020
Inventories	11	72,402	73,767
Other financial assets	10	2,705	2,668
Prepayments	10	4,894	4,587
Total current assets		137,162	144,361
Other receivables	10	1,313	1,604
Deferred tax assets	7	21,339	21,845
Property,plant and equipment	13	13,990	13,190
Right-of-use assets	14	54,132	42,168
Intangible assets	15	54,861	55,630
Total non-current assets		145,635	134,437

Total assets		282,797	278,798
Liabilities
Trade and otherpayables	17	52,217	48,875
Employee benefits		8,158	7,513
Interest-bearingloans and borrowings	18	37,394	48,411
Lease liability		13,024	10,830
Provisions	19	603	741
Income taxpayable		453	286
Total current liabilities		111,849	116,656
Employee benefits		535	374
Otherpayables	17	574	734
Provisions	19	2,383	2,206
Lease liability		54,505	45,237
Total non-current liabilities		57,997	48,551

Total liabilities		169,846	165,207

Net assets		112,951	113,591
Equity
Issued capital	21	152,725	151,618
Reserves		(5,030)	(4,038)
Profit reserve		8,611	9,366
Accumulated losses		(43,355)	(43,355)
Total equity		112,951	113,591

The consolidated statement of financial position is to be read in conjunction with the accompanying notes to the consolidated financial statements.

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Coventry Group Ltd and its controlled entities

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2023

	Hedge	Translation	Other	Total	Profit	Share	Accumulated	Total
	reserve	reserve	reserve	reserves	reserve	capital	losses	equity
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Balance at 1 July 2022	299	(2,618)	(1,719)	(4,038)	9,366	151,618	(43,355)	113,591
Total comprehensive
income/(loss) for the year
Profit for the year	-	-	-	-	2,472	-	-	2,472
Other comprehensive
income/(loss):
Foreign currency translation differences	-	(213)	-	(213)	-	-	-	(213)
Effective portion of
changes in fair value	(284)	-	-	(284)	-	-	-	(284)
of cash flow hedges
Total other comprehensive loss	(284)	(213)	-	(497)	-	-	-	(497)
Total comprehensive income/(loss) for the year	(284)	(213)	-	(497)	2,472	-	-	1,975
Transactions with owners,
recorded directly in equity
Share issue	-	-	-	-	-	1,114	-	1,114
Share issue costs	-	-	-	-	-	(7)	-	(7)
Equity-settled share- based payments	-	-	(495)	(495)	-	-	-	(495)
Dividends	-	-	-	-	(3,227)	-	-	(3,227)
Balance at 30 June 2023	15	(2,831)	(2,214)	(5,030)	8,611	152,725	(43,355)	112,951

Amounts are stated net of tax

The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes to the consolidated financial statements.

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Coventry Group Ltd and its controlled entities - Consolidated statement of changes in equity (continued)

	Hedge	Translation	Other	Total	Profit	Share	Accumulated	Total
	reserve	reserve	reserve	reserves	reserve	capital	losses	equity
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Balance at 1 July 2021	32	(1,980)	(1,948)	(3,896)	7,246	149,773	(43,355)	109,768
Total comprehensive
income/(loss) for the year
Profit for the year	-	-	-	-	4,841	-	-	4,841
Other comprehensive
income/(loss):
Foreign currency translation differences	-	(638)	-	(638)	-	-	-	(638)
Effective portion of
changes in fair value	267	-	-	267	-	-	-	267
of cash flow hedges
Total other comprehensive income/(loss)	267	(638)	-	(371)	-	-	-	(371)
Total comprehensive income/(loss) for the year	267	(638)	-	(371)	4,841	-	-	4,470
Transactions with owners,
recorded directly in equity
Share issue	-	-	-	-	-	1,851	-	1,851
Share issue costs	-	-	-	-	-	(6)	-	(6)
Equity-settled share- based payments	-	-	229	229	-	-	-	229
Dividends	-	-	-	-	(2,721)	-	-	(2,721)
Balance at 30 June 2022	299	(2,618)	(1,719)	(4,038)	9,366	151,618	(43,355)	113,591

Amounts are stated net of tax

The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes to the consolidated financial statements.

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Coventry Group Ltd and its controlled entities CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2023

	NOTE	2023	2022
		$’000	$’000
Cash flows from operating activities
Cash receipts from customers		395,898	355,524
Cash paid to suppliers and employees		(370,038)	(339,690)
Cash from operations		25,860	15,834
Interest paid		(6,315)	(5,010)
Income taxes paid		(457)	(186)
Net cash from operating activities	25	19,088	10,638

Cash flows from investing activities
Proceeds from sale of property, plant and equipment		211	147
Payment for acquisitions of business, net of cash acquired		-	(10,365)
Interest received		525	269
Acquisition of property, plant and equipment	13	(3,732)	(4,278)
Acquisition of intangible assets	15	(7)	(123)
Net cash (used in) investing activities		(3,003)	(14,350)

Cash flows from financing activities
Proceeds from borrowings		940,570	492,556
Repayment of borrowings		(951,485)	(468,645)
Repayment of lease liabilities		(13,131)	(11,107)
Share issue costs		(7)	(6)
Dividends paid	21	(3,044)	(1,556)
Net cash from financing activities		(27,097)	11,242

Net increase/(decrease) in cash and cash equivalents		(11,012)	7,530
Cash and cash equivalents at 1 July		15,319	8,221
Effect of movements in exchange rates on cash and cash equivalents		(448)	(432)
Cash and cash equivalents at 30 June	9	3,859	15,319

The consolidated statement of cash flows is to be read in conjunction with the accompanying notes to the consolidated financial statements.

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Coventry Group Ltd and its controlled entities

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 30 June 2023

1. SIGNIFICANT ACCOUNTING POLICIES

Coventry Group Ltd (the “Company”) is a for profit company domiciled in Australia. The address of the Company’s registered office is 235 Settlement Road Thomastown VIC 3074 Australia. The consolidated financial statements (“financial report” or “consolidated financial report”) of the Company for the financial year ended 30 June 2023 comprises the Company and its controlled entities (together referred to as the “Group”).

The Company is party to a deed of cross-guarantee with its subsidiary entities. Under the deed of crossguarantee, each body has guaranteed that the debts to each creditor of each other body which is a party to the deed will be paid in full in accordance with the deed.

The financial report was authorised for issue by the Directors on 25 August 2023.

(a) Statement of compliance

This financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial report of the Group complies with the International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB).

(b) Basis of preparation

The financial report is presented in Australian dollars, which is the Company’s functional currency. The financial report is prepared on the historical cost basis except for certain financial assets and liabilities (including share-based payments and derivative financial instruments) which are stated at their fair value.

concern, which includes consideration of ongoing compliance with financial debt covenants, the continuity of business operations, realisation of assets and settlement of liabilities in the ordinary course of business and at the amounts stated in the financial report. The Directors have a reasonable expectation that the Group will have adequate resources to continue to meet its obligations as they fall due.

(c) New and amended standards adopted by the Group

The following new and amended standards are not expected to have a significant impact on the Group’s consolidated financial statements.

Classification of Liabilities as Current or Non-current (Amendments to IAS 1).
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts.
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2).
Definition of Accounting Estimates (Amendments to IAS 8).

There are no significant new standards or interpretations not yet adopted.

Standards issued but not yet effective

The Group has not early adopted the following new or amended standards issued but not yet effective. The standards are not expected to have a significant impact on the Group’s consolidated financial statement.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1).

The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated 24 March 2016 and in accordance with that Instrument, amounts in the financial report have been rounded off to the nearest thousand dollars, unless otherwise stated.

The Group has consistently applied the accounting policies (as set out in Note 1(d) – 1(u)) to all years presented in this consolidated financial report.

Going Concern

In preparing the financial report, the Directors have made an assessment of the ability of the Group to continue as a going

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Significant accounting policies (continued)
(d) Basis of consolidation

Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

The Group measures goodwill at the acquisition date as:

the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in the consolidated statement of profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Controlled entities

Controlled entities are entities controlled by the Company. Control exists when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Investments in controlled entities are carried at their cost of acquisition in the Company’s financial statements, net of impairment write downs. Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognised in the consolidated statement of profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

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The revenues and expenses of foreign operations are translated to Australian dollars at rates approximating the foreign exchange rates at the dates of the transactions.

Significant accounting policies (continued)

(e) Foreign currency

Foreign currency differences are recognised in other comprehensive income and presented in the translation reserve in equity. However, if the operation is a nonwholly owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests.

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences arising on translation are recognised in the consolidated statement of profit or loss.

(f) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and short-term deposits with a maturity of three months or less at inception date.

(g) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on weighted average cost. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads. An impairment allowance is made for obsolete, damaged and slow-moving inventories.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Australian dollars at exchange rates at the reporting date.

(h) Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost less loss allowance.

(i) Property, plant and equipment

All classes of property, plant and equipment are stated at cost less depreciation and any accumulated impairment loss.

Depreciation

Items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives from the date that they are installed and are ready for use.

The estimated useful lives for each class of asset are:

Class of Depreciation Rate Fixed Asset Plant and 5% - 40% Equipment

(j) Intangibles

Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For the measurement of goodwill at initial recognition, see Note 1(d). Goodwill is not amortised, but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Computer software

Computer software comprises licence costs and direct costs incurred in preparing for the operation of that software, including associated process re-engineering costs. Computer software is measured at cost less accumulated amortisation and impairment losses. Computer software costs that have been categorised as a Software-as-a-Service (SaaS) arrangement are recognised as an expense in the consolidated statement of profit or loss.

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1. Significant accounting policies (continued)

Other intangible assets

Brand names and customer relationships acquired in a business combination are recognised at fair value at the acquisition date. Brand names have an indefinite useful life and are measured at cost less accumulated impairment losses. Customer relationships have a finite useful life and are measured at cost less accumulated amortisation and any accumulated impairment losses.

Amortisation

Except for goodwill and brand names, intangible assets are amortised on a straight-line basis in the consolidated statement of profit or loss over their estimated useful lives, from the date that they are available for use. In current and comparative periods, customer relationships was estimated to have a useful life of 10 years. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(k) Financial Instruments

Investments and other financial assets

The Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in the consolidated statement of profit or loss.

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Impairment of financial assets

The Group assesses on a forward-looking basis the expected credit losses associated with its instruments carried at amortised cost and fair value through other comprehensive income (“OCI”). The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same type of contract. The Group has concluded that the expected loss rates of trade receivables are a reasonable approximation to the loss rates for the contract assets.

(l) I mpairment of assets (financial and non-financial)

Non-financial

Goodwill and intangible assets that have an indefinite useful life are not amortised but are tested annually for impairment in accordance with AASB 136. Other assets are tested for impairment whenever events or circumstances arise that indicate that the carrying amount of the asset may be impaired. An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs of disposal and value in use.

Financial

Financial assets are tested for impairment at each financial year end.

(m) Employee benefits

A provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance date. These benefits include wages and salaries, annual leave and long service leave. Sick leave is non-vesting and has not been provided for.

(n) Provisions

A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Make good

Provision for make good in respect of leased properties is recognised where appropriate based on the estimated cost to be incurred to restore premises to the required condition under the relevant lease agreements.

(o) Trade and other payables

Trade and other payables are stated at amortised cost.

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1. Significant accounting policies (continued)

(p) Revenue and other income

Revenue is recognised when control of a good or service transfers to a customer. Determining the timing of the transfer of control – at a point in time or over time - requires judgement.

Sale of goods – revenue recognised at a point in time

Revenue from the sale of goods that are not subject to contract manufacturing arrangements is measured at the fair value of the consideration received or receivable, net of returns, rebates and goods and services tax payable to the taxation authority.

Revenue is recognised when a customer obtains control of the promised goods and the Group has satisfied its performance obligation in relation to the promised goods. In determining when control of promised goods passes to the customer, the Group considers a variety of factors including a present right to payment, physical possession, legal title, the transfer of significant risk and rewards of ownership of the goods and customer acceptance of the asset. The timing of the transfer of control to the customers for the sale of goods occurs either:

When the goods are despatched or delivered in line with the Incoterms as detailed in the relevant contract of sale or purchase order for the goods. The Group sells a significant proportion of its products on FreeIn-Store/ Delivered at Place Incoterms. This means the Groups control of the goods passes when the product is delivered to the agreed destination;
When they are made available to the customer and ownership transfers prior to despatch as detailed in the relevant contract of sale or purchase order for the goods; or
On notification (following stocktake) that the product has been used when the goods are consignment products located at customers’ premises.

Where cash consideration has been received but the revenue recognition criteria has not been met, such amounts have been recorded on the consolidated statement of financial position as a contract liability.

Sale of goods – contract manufacturing and supply revenue recognised over time

The Group has determined that for bundled contract manufacturing comprising design, build, install and service elements, the customer controls the goods once the goods are finished and installed on premises in accordance with the relevant contract. This is because under the contract, goods are manufactured to a customer’s specification, and if a firm order that is placed by the customer in accordance with the agreement is terminated, the Group is entitled to a reimbursement of the costs incurred in manufacturing the goods, including a reasonable margin. Therefore, revenue for the agreements and the associated costs are recognised over time. That is, before the goods are delivered to the customer’ premises. Invoices issued according to contractual terms and amounts not yet invoiced are presented as contract assets.

(q) Leases

Leases in which the Group is a lessee

The Group recognises all lease liabilities and corresponding right-of-use assets, with the exception of short-term (12 months or fewer) and low value leases, on the balance sheet.

Lease liabilities are initially measured at the net present value of future lease payments and extension options expected to be exercised. Variable lease payments not dependent on an index or rate are excluded from the calculation of lease liabilities. Payments are discounted at the incremental borrowing rate of the lessee. Non-lease components are excluded from the projection of future lease payments and recorded separately within operating costs on a straight-line basis.

The right-of-use asset, resulting from a lease arrangement, at initial recognition reflects the lease liability, initial direct costs and any lease payments made before the commencement date of the lease less any lease incentives plus, where applicable, provision for dismantling and restoration.

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(s) Income tax

1. Significant accounting policies (continued)

The Group recognises depreciation of right-ofuse assets and interest on lease liabilities in the consolidated statement of profit or loss over the lease term. Repayments of lease liabilities are separated into a principal portion (presented within financing activities) and interest portion (which the Group presents in operating activities) in the cash flow statement.

Leases in which the Group is a lessor

The Group sub-leases some of its properties. The Group has applied the guidance set out in AASB 16 to classify these as either a finance lease or operating lease.

Operating leases

Rental income is recognised in the statement of profit or loss as other income.

Finance leases

The Group recognises an investment in sub-lease in the statement of financial position. Rental income is recognised in the consolidated statement of profit or loss as interest income. Finance sub-leases are classified with reference to the right-of-use asset arising from the head lease.

(r) Finance income and finance costs

Finance income comprises interest income on funds invested and on finance leases where the Group is a lessor. Interest income is recognised as it accrues in the consolidated statement of profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings and leases.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in the consolidated statement of profit or loss using the effective interest method.

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the statement of profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences only to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for the Group.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.

Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

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Significant accounting policies (continued)

Tax consolidation

The Company and its wholly owned Australian resident entities have formed a tax consolidated group with effect from 1 November 2002 and are therefore taxed as a single entity from that date. The head entity within the tax consolidated group is Coventry Group Ltd.

Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax consolidated group are recognised in the separate financial statements of the members of the tax consolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying amounts of assets and liabilities in the separate financial statements of each entity and the tax values applying under tax consolidation.

Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the controlled entities is assumed by the head entity in the tax consolidated group and recognised by the Company as an equity contribution or distribution.

The Company recognises deferred tax assets arising from unused tax losses of the tax consolidated group to the extent that it is probable that future taxable profits of the tax consolidated group will be available against which the asset can be utilised.

Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability is recognised by the head entity only.

(t) Goods and services tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables in the statement of financial position are stated with the amount of GST included. Cash flows are included in the statement of cash flows on a gross basis.

(u) Accounting estimates and judgements

In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expense. The estimates and associated assumptions are based on historical experience and on other factors it believes to be reasonable under the circumstances, the results of which form the basis of the reported amounts that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are:

estimation of current tax payable, current tax expense and recovery of deferred tax assets based on forecasted taxable profit – note 1(s) and note 7
estimated useful life of intangible assets – note 1(j)
revenue recognition: whether revenue from made-to-order products is recognised over time or at a point in time – note 1(p) and note 2(b)
estimated impairment of nonfinancial assets and measurement of the recoverable amount of cash generating units – note 16
valuation of inventories – note 1(g)
valuation of trade receivables – note 1 (k) and note 22
estimation of lease term under AASB16 – note 1 (q)
estimation of fair value of assets acquired and liabilities assumed in business combinations, and fair value of consideration transferred (including contingent consideration) – note 3
estimation of share-based payment arrangements – note 20.

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2. SEGMENT INFORMATION

(a) Description of segments

The Group has reportable segments as described below. For each of the strategic reportable segments, the CEO reviews internal management accounts on a monthly basis. The following summary describes the operations of each of the Group’s reportable segments:

Trade Includes the importation, distribution and marketing of industrial fasteners, industrial hardware supplies and Distribution associated products, temporary fencing and cabinet making hardware. Includes the design, manufacture, distribution, installation and maintenance of lubrication and hydraulic fluid Fluid Systems systems and hoses.

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2. Segment Information (continued)

(b) Segment information

Information regarding the results of each reportable segment is included below.

			Other business
Information about reportable segments#	Trade Distribution	Fluid Systems	units and consolidation	Total reportable segments
			adjustments
30 June 2023	$’000	$’000	$’000	$’000

Segment revenue	210,106	148,096	-	358,202
Inter-segment revenue	-	-	-	-
Revenue from external customers	210,106	148,099	-	358,202

Timing of revenue recognition at
point in time	206,881	143,119	-	350,000
over time	3,225	4,977	-	8,202
Total	210,106	148,096	-	358,202

Underlying EBITDA(2)	17,019	15,348	(15,362)	17,005

Depreciation and amortisation	1,626	944	1,058	3,628

Underlying EBIT(2)	15,393	14,404	(16,420)	13,377

(1) Underlying EBITDA and Underlying EBIT are non-IFRS measures and reflect how management measures performance of the Group.

(2) Underlying EBITDA is earnings before interest, tax, depreciation, amortisation and has been adjusted as a result of AASB16 to exclude leases and significant items. Underlying EBIT is earnings before interest and tax and has been adjusted to exclude leases and significant items.

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Segment Information (continued)

			Other business
Information about reportable segments#	Trade Distribution	Fluid Systems	units and consolidation	Total reportable segments
			adjustments
30 June 2022	$’000	$’000	$’000	$’000

Segment revenue	193,044	129,763	-	322,807
Inter-segment revenue	-	-	-	-
Revenue from external customers	193,044	129,763	-	322,807

Timing of revenue recognition at
point in time	192,232	126,740	-	318,972
over time	812	3,023	-	3,835
Total	193,044	129,763	-	322,807

Underlying EBITDA(2)	16,148	12,901	(13,544)	15,505

Depreciation and amortisation	977	891	1,282	3,150

Underlying EBIT(2)	15,171	12,010	(14,826)	12,355

(1) Underlying EBITDA and Underlying EBIT are non-IFRS measures and reflect how management measures performance of the Group.

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2. Segment Information (continued)

(c) Other segment information

i. Segment Revenue

A reconciliation of segment revenue to total revenue from the sale of goods in the consolidated statement of profit or loss is provided as follows:

	2023	2022
	$’000	$’000
Total segment revenue	358,202	322,807

Foreign exchange translation variance	341	(483)
Total revenue	358,543	322,324

ii. Segment Operating Profit

The performance of the Group’s reportable segments is based on Underlying EBIT1. Reconciliation of Underlying EBIT1 to operating profit in the consolidated statement of profit or loss is provided as follows:

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NOTE 2023 2022
$’000 $’000
Total segment Underlying EBIT1 13,377 12,355
Foreign exchange translation variance 15 (15)
Significant items (6,394) (2,149)
Net financing expense, excluding interest on lease liabilities (AASB16) (1,473) (1,006)
Income tax benefit/(expense) 7 (1,791) (3,116)
Reversal of amortisation associated with change in - 206
accounting policy relating to software-as-a-service
Impact of AASB16
Depreciation of right-of-use assets (12,739) (11,202)
Net Interest on lease liabilities and sub-lease investment (4,015) (3,877)
Reversal of net rent and lease payments and receivables 14,952 13,031
Income tax benefit 7 540 614
Total operating profit 2,472 4,841
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(d) Geographic information

Revenue based on the geographic location of customers were Australia $306,457,000 (2022: $279,331,000) and New Zealand $52,086,000 (2022: $42,993,000).

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3. BUSINESS COMBINATIONS

Prior period business combination provisional amounts finalised

At 30 June 2022 the amounts disclosed as the fair value of the identifiable assets and liabilities acquired in the business combination of Goudie Holdings Limited and NZ Plank Hire Limited (“GHL”) on 31 March 2022 and Fraser Coast Bolts and Industrial Supplies (“FCB”) on 1 April 2022 were presented as provisional amounts. The amounts have been finalised and resulted in no change to goodwill or the fair value of assets and liabilities acquired.

The final acquisition accounting for GHL and FCB is summarised below:

Purchase consideration	GHL	FCB Total
	$’000	$’000 $’000
Cash paid	7,802	2,513 10,315
Cash retention payable	-	280 280
Total	7,802	2,793 10,595

Fair value of net assets acquired
Inventories	1,538	222 1,760
Other current assets	4	- 4
Property, plant and equipment (note 13)	2,004	45 2,049
Deferred tax assets	28	31 59
Right-of-use assets (note 14)	649	378 1,027
Brand names (note 15)	560	- 560
Other payables	(71)	- (71)
Employee benefits	(70)	(30) (100)
Deferred tax liabilities	(157)	- (157)
Lease liabilities	(649)	(378) (1,027)
Total identifiable net assets acquired	3,836	268 4,104
Goodwill on consolidation (note 15)	3,966	2,525 6,491
Total	7,802	2,793 10,595

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4. AUDITOR’S REMUNERATION	2023 2022 $ $
Audit services
Engagement of audit and review of financial reports	347,084 327,720
Non-audit services
Amounts paid and payable to KPMG:
Transaction services	- 586,676*
Taxation services	16,792 11,954
Sustainability services	- 11,054
Hosting of AGM	604 -
Total non-audit services	17,396 609,684

* Services relating to transactions that did not complete.
5. EMPLOYMENT COSTS	2023 2022 $’000 $’000
Wages and salaries	62,144 57,572
Liability for annual leave and long service leave	6,473 5,614
Contributions to superannuation funds	6,424 5,638
Payroll taxes	3,745 3,458
Other associated personnel expenses	2,806 1,973
Total	81,592 74,255
6. FINANCE INCOME AND FINANCE EXPENSES	2023 2022 $’000 $’000
Interest income from other entities	294 269
Net foreign exchange gain	721 49
Financial income	1,015 318

Interest expense	(2,489) (1,115)
Interest expense on lease liabilities	(4,018) (4,085)
Financial expenses	(6,507) (5,200)
Net financial expense	(5,492) (4,882)

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7. TAXES	2023 2022 $’000 $’000
Current tax expense
Current year	865 2,764
Tax recognised in the profit or loss	865 2,764

Deferred tax expense
Origination and reversal of temporary differences	386 (263)
Total deferred tax (benefit)/expense	386 (263)

Total income tax expense	1,251 2,501

Reconciliation of effective tax rate
Profit from operations for the period	2,472 4,841
Total income tax expense	1,251 2,501
Profit before income tax	3,723 7,342

Income tax using the Company’s domestic tax rate of 30%	1,117 2,203
Non-deductible expenditure	180 332
Effect of lower tax rate applicable to foreign controlled entity	(46) (34)
Total income tax expense	1,251 2,501

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7. Taxes (continued)

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

	Assets	Liabilities	Net
	2023	2022 2023	2022 2023	2022
	$’000	$’000 $’000	$’000 $’000	$’000
Trade and other receivables	189	83 -	(49) 189	34
Inventories	1,255	1,336 -	- 1,255	1,336
Property, plant and equipment	2,124	2,360 -	- 2,124	2,360
Right-of-use assets	-	- (16,082)	(12,525) (16,082)	(12,525)
Intangible assets	-	- (4,605)	(4,785) (4,605)	(4,785)
Employee benefits	2,596	2,354 -	- 2,596	2,354
Trade and other payables	748	1,054 (7)	(73) 741	981
Provisions	88	125 -	- 88	125
Lease liability	20,900	17,445 `-	- 20,900	17,445
Other items	33	174 -	- 33	174
Tax losses carried forward	14,100	14,346 -	- 14,100	14,346
Tax assets/(liabilities)	42,033	39,277 (20,694)	(17,432) 21,339	21,845
Set off of deferred tax liability	(20,694)	(17,432) 20,694	17,432 -	-
Net deferred tax asset	21,339	21,845 -	- 21,339	21,845

Within the Group Australian operations there are unutilised carried forward tax losses of $66,821,502 (2022: $76,605,343). The Group has determined it is probable that future taxable profits would be available for use against tax losses.

The Australian Group has $16,797,993 in unused tax losses for which no deferred tax asset has been recognised in the statement of financial position.

8. EARNINGS PER SHARE


8. EARNINGS PER SHARE	2023	2022
Weighted average of shares in year used in basic earnings per share (number)	92,111,671	91,013,828
Weighted average of dilutive rights outstanding (number)	856,448	1,628,068
Weighted average of shares in year used in calculating dilutive earnings per share (number)	92,968,119	92,641,896

Earnings used in basic and diluted earnings per share calculation ($)	2,471,577	4,841,336
Earnings per share (cents)	2.7 cents	5.3 cents
Diluted earnings per share (cents)	2.7 cents	5.2 cents

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	2023	2022
9. CASH AND CASH EQUIVALENTS	$’000	$’000
Cash and cash equivalents	3,859	15,319

10. TRADE AND OTHER RECEIVABLES	2023 2022 $’000 $’000
Current
Trade receivables	53,626 48,036
Loss allowance(note 22(a))	(598) (229)
	53,028 47,807
Net investment in sub-lease	274 213
Total	53,302 48,020

Other financial assets	2,705 2,668
Prepayments	4,894 4,587
	7,599 7,255
Non-current
Net investment in sub-lease	1,313 1,604

Total trade and other receivables	62,214 56,879

During the year the Group recognised interest income of $176,000 on sub-lease receivables.

Information about the Group’s exposure to credit risk, foreign currency risk and interest rate risk is disclosed in note 22.

	2023	2022
11. INVENTORIES	$’000	$’000
Work in progress	5,540	5,463
Finished goods	71,081	72,796
Provision for obsolescence	(4,219)	(4,492)
Net Inventory balance	72,402	73,767

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12. PARENT ENTITY DISCLOSURES

As at, and throughout the financial year ending 30 June 2023 the parent company of the Group was Coventry Group Ltd.

Results of the parent entity	2023 2022 $’000 $’000
Profit for the year	5,989 6,134
Other comprehensive income/(loss)	(143) 180
Total comprehensive income for the year after tax	5,846 6,314

Financial position of parent entity at year end
Current assets	94,064 99,152
Total assets	246,924 242,554

Current liabilities	93,567 96,253
Total liabilities	129,525 125,642

Net assets	117,399 116,912

Total equity of the parent entity comprising:
Issued capital	152,725 151,618
Reserves	1,373 2,034
Profit reserve	5,716 5,675
Accumulated losses	(42,415) (42,415)
Total equity	117,399 116,912

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13. PROPERTY, PLANT AND EQUIPMENT

13. PROPERTY, PLANT AND EQUIPMENT
	$’000
Cost at 1 July 2022	53,340
Accumulated Depreciation at 1 July 2022	(40,150)
Carrying amounts at 1 July 2022	13,190
Additions	3,732
Depreciation charge for the year	(2,775)
Disposals	(211)
Effect of movements in foreign exchange	54
Carrying amounts at 30 June 2023	13,990

Cost at 1 July 2021	50,021
Accumulated Depreciation at 1 July 2021	(40,841)
Carrying amounts at 1 July 2021	9,180
Additions	4,278
Additions through business combinations (note 3)	2,049
Depreciation charge for the year	(2,054)
Disposals	(172)
Effect of movements in foreign exchange	(91)
Carrying amounts at 30 June 2022	13,190

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	Property	Vehicles	Total
14. RIGHT-OF-USE ASSETS
	$’000	$’000	$’000
Carrying amounts at 1 July 2022	37,227	4,941	42,168
Additions	9,007	7,594	16,601
Terminations	(391)	-	(391)
Lease reassessments	7,376	1,006	8,382
Depreciation for the period	(8,894)	(3,857)	(12,751)
Effect of movements in foreign exchange	104	19	123
Carrying amount at 30 June 2023	44,429	9,703	54,132

Carrying amounts at 1 July 2021	38,159	3,290	41,449
Additions	2,267	2,865	5,132
Acquisitions through business combinations (note 3)	1,027	-	1,027
Terminations	-	-	-
Lease reassessments	4,072	1,885	5,957
Depreciation for the period	(8,140)	(3,062)	(11,202)
Effect of movements in foreign exchange	(158)	(37)	(195)
Carrying amount at 30 June 2022	37,227	4,941	42,168

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			Customer	Computer
15. INTANGIBLE ASSETS	Goodwill	Brand name	relationships	software	Total
	$’000	$’000	$’000	$’000	$’000
Carrying amounts at 1 July 2022	36,949	11,919	4,069	2,693	55,630
Additions	-	-	-	7	7
Amortisation for the year	-	-	(610)	(249)	(859)
Effect of movements in foreign exchange	73	10	-	-	83
Carrying amounts at 30 June 2023	37,022	11,929	3,459	2,451	54,861

Carrying amounts at 1 July 2021	30,310	11,376	4,679	2,846	49,211
Additions	-	-	-	123	123
Additions through business combinations (note 3)	6,740	560	-	-	7,300
Amortisation for the year	-	-	(610)	(276)	(886)
Effect of movements in foreign exchange	(101)	(17)	-	-	(118)
Carrying amounts at 30 June 2022	36,949	11,919	4,069	2,693	55,630

16. IMPAIRMENT OF NON-FINANCIAL ASSETS

For the purpose of impairment testing, goodwill and indefinite life intangible assets are allocated to the Group’s reportable segments. The aggregate carrying amounts of goodwill and indefinite life intangible assets allocated to each CGU are as follows.

	2023 2022 Goodwill Brand Name Total Goodwill Brand Name Total $’000 $’000 $’000 $’000 $’000 $’000
Fluid Systems	15,682 - 15,682 15,682 - 15,682
Trade Distribution	21,340 11,929 33,269 21,267 11,919 33,186
Total	37,022 11,929 48,951 36,949 11,919 48,868

The key assumptions used in the value in use calculations include projected sales growth, projected gross margins, terminal growth rate, improvements in working capital and the discount rate. These assumptions are based on historical experience and projected performance. Budget and forecast calculations cover a period of five years. A long-term growth rate is determined and applied to project future cash flows after the fifth year.

For the year ended 30 June 2023, the Group’s value in use model showed the recoverable amount exceeded the carrying amount of both the Trade Distribution and Fluid Systems CGUs.

The values assigned to the key assumptions were:

Fluid Systems

Sales growth at 5.76% for FY24, 7.00% for FY25, 7.00% for FY26, 7.00% for FY27 and 8.00% for FY28.
Terminal growth 2.5%
Post-tax WACC of 11.19%

Trade Distribution

Sales growth at 10.61% for FY24, 10.36% for FY25, 9.55% for FY26, 9.61% for FY27 and 8.00% for FY28.
Terminal growth 2.5%
Post-tax WACC of 11.19%

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17. TRADE AND OTHER PAYABLES

The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 22.

	2023	2022
	$’000	$’000
Trade payables	43,276	36,920
Other trade payables and accrued expenses	9,515	12,689
Total trade and other payables	52,791	49,609

Current	52,217	48,875
Non-current	574	734
Total trade and other payables	52,791	49,609

18. I NTEREST-BEARING LOANS AND BORROWINGS

	2023 2022 $’000 $’000
Current
Borrowing facility	37,394 48,411
Total interest-bearing loans and borrowings	37,394 48,411

Non-cash investing and financing activities

There were no non-cash investing and financing activities.

Borrowing Base facility

The Group has a $55.0 million Borrowing Base facility against eligible inventory and debtors with a current expiry of July 2026 (2022: $55.0 million). The overall facility is secured by General Security Deeds with Australian and New Zealand entities as well as Rights of Entry to eligible inventory locations. The facility is subject to a floating interest on funds drawn. The facility limit is scalable for future growth.

Guarantee facility

In addition to the borrowing facilities above, the Group has a $5.0 million Standby Letter of Credit to provide security for Transactional Banking, Bank Guarantees, FX and other transactional facilities up to the limit specified in each individual guarantee.

ANZ Facilities

The Group maintains a small residual intraday facility with ANZ which will be closed upon full transition of transactional banking to the NAB.

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19. PROVISIONS


19. PROVISIONS	Make good	Warranties	Total
	$’000	$’000	$’000
Balance at 1 July 2022	2,531	416	2,947
Provisions increased/(decreased)	258	(59)	199
Provisions used	(87)	(73)	(160)
Balance at 30 June 2023	2,702	284	2,986

20. SHARE-BASED PAYMENTS

Executive and Director Incentive Plan

An Executive and Director Incentive Plan was re-approved by shareholders in 2021. The Plan governs the future granting of performance rights and issue of shares based on annual Company performance. Vesting of performance rights may vary subject to the extent performance hurdles have been met and the exercise of Board discretion. On vesting, the performance rights entitle the recipient to receive fully paid shares in the Company.

The following share-based payments existed at 30 June 2023:

	30 June 2023	30 June 2023	30 June 2022	30 June 2022
	Number of	Weighted	Number of	Weighted
	performance	average	performance	average
	rights	fair value	rights	fair value
Outstanding at the beginning of the year	1,628,068	$1.2681	1,732,978	$0.9962
Granted	718,742	$1.2400	572,424	$1.7900
Forfeited	(718,742)	$1.2400	-	-
Exercised	(771,620)	$1.2058	(677,334)	$1.0134
Lapsed	-	-	-	-
Outstanding at the end of the year	856,448	$1.3243	1,628,068	$1.2681

Total expenses arising from share-based payment transactions recognised in employment costs during the year were $434,960 (2022: $1,002,052).

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21. CAPITAL AND RESERVES

	Ordinary shares	Ordinary shares
	2023	2022
Share capital	‘000	‘000
On issue at 1 July	91,430	90,012
Conversion of performance rights	772	677
Dividend reinvestment plan	154	741
On issue at 30 June	92,356	91,430

Ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

Nature and purpose of reserves

Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations where their functional currency is different to the functional currency of the reporting entity, as well as from the translation of liabilities that hedge the Company’s net investment in a foreign subsidiary.

Share based payments reserve

The share-based payment reserve comprises the fair value of shares and options that are yet to vest under share-based payment arrangements.

Hedge reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition in the consolidated statement of profit or loss as the hedged cash flows affect profit or loss.

Profit reserve

The profit reserve comprises retained profits since the reserve was first established in the 2021 financial year.

Dividends

The Board has declared a final dividend of 3.5 cents per share, fully franked, in relation to the year ended 30 June 2023. The Company’s Dividend Reinvestment Plan enables eligible shareholders to reinvest their dividend in additional shares in the Company.

A final dividend of $3.2 million (3.5 cents per share, fully franked) in relation to the financial year ended 30 June 2022 was declared and paid by the Group in the financial year ended 30 June 2023 (2022: 2.7 million). Final dividend paid includes dividend reinvested of $183,300.

	Company
	2023	2022
	‘000	‘000
Dividend
franking account
30 per cent franking
credits available
to shareholders of the Company	8,520	9,903
for subsequent
financial years

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22. FINANCIAL RISK MANAGEMENT

The Group has exposure to the following risks from their use of financial instruments:

Credit risk

within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities

(a) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s cash and cash equivalents and receivables from customers.

Liquidity risk
Market risk

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.

Fair value disclosures

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised

Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Exposure to credit risk

The carrying amount of the Group’s financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

		Carrying amount
	Note	2023	2022
		‘000	‘000
Cash and cash equivalents	9	3,859	15,319
Trade receivables	10	54,615	49,624
Total		58,473	64,943

Trade and other receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The Group has no significant concentration of customer base.

Management has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered.

Goods are sold subject to retention of title clauses, so that in the event of non-payment the Group may have a secured claim. The Group’s terms and conditions of trade have been amended to incorporate the Personal Property Security legislation. The Group does not normally require collateral in respect of trade and other receivables.

The Group’s maximum exposure to credit risk for trade receivables at the reporting date by geographic region was Australia $48,594,000 (2022: $44,403,000) and New Zealand $6,020,000 (2022: $5,220,000).

Cash at bank and short-term or long-term deposits are held with Australian and New Zealand banks with acceptable credit ratings.

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Financial Risk Management (continued)

Impairment of Trade Receivables

The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics, days past due and historic credit loss data.

The loss allowance as at 30 June 2023 was determined as follows for trade receivables:

	Current	More than 30 days past due	More than 60 days past due	More than 120 days past due	Total
30 June 2023
Australia
Expected loss rate (%)	0.0%	0.1%	1.3%	52.3%
Gross carrying amount ($’000) / balance outstanding as reporting date	44,301	1,430	822	980	47,533
Loss allowance ($’000)	-	1	11	513	525
New Zealand
Expected loss rate (%)	0.0%	0.1%	2.2%	87.5%
Gross carrying amount ($’000) / balance outstanding at reporting date	5,755	136	122	80	6,093
Loss allowance ($’000)	-	-	3	70	73

30 June 2022
Australia
Expected loss rate (%)	0.0%	0.1%	1.2%	47.6%
Gross carrying amount ($’000) / balance outstanding as reporting date	40,406	1,424	586	342	42,758
Loss allowance ($’000)	-	1	7	163	171
New Zealand
Expected loss rate (%)	0.0%	0.1%	1.9%	76.1%
Gross carrying amount ($’000) / balance outstanding at reporting date	5,069	74	60	75	5,278
Loss allowance ($’000)	-	-	1	57	58

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22. Financial Risk Management (continued)

(b) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group maintains a $55 million Borrowing Base facility on which interest is payable at prevailing market rates.

Maturities of financial liabilities

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

2023

Non derivative financial liabilities	Carrying amount Contractual cash flow 6 mths or less 6-12 mths 1-2 years More than 2 years
	$’000 $’000 $’000 $’000 $’000 $’000
Trade and other payables	52,791 (52,791) (51,798) (419) (437) (137)
Borrowing facility	37,394 (37,394) (37,394) - - -
Lease liability	67,530 (84,074) (8,685) (7,997) (14,520) (52,872)
Total	157,715 (174,259) (97,877) (8,416) (14,957) (53,009)

The outflows associated with forward contracts used for hedging are US$11.0 million (A$16.6 million), 2022: US$5.7 million (A$7.9 million) and will have been made within 11 months or less

2022

Non derivative financial liabilities	Carrying amount Contractual cash flow 6 mths or less 6-12 mths 1-2 years More than 2 years
	$’000 $’000 $’000 $’000 $’000 $’000
Trade and other payables	49,609 (49,609) (48,604) (271) (423) (311)
Borrowing facility	48,411 (48,411) (48,411) - - -
Lease liability	56,067 (71,702) (7,640) (6,668) (11,986) (45,408)
Total	154,087 (169,722) (104,655) (6,939) (12,409) (45,719)

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22. Financial Risk Management (continued)

Changes in liabilities arising from financing activities

			Total liabilities
			from financing
	Borrowings	Lease liabilities	activities
	$’000	$’000	$’000
30 June 20231
Opening balance at the beginning of the financial year	48,411	56,067	104,478
Proceeds	940,570	-	940,570
Repayments	(951,485)	(13,131)	(964,616)
New leases, reassessments and disposals	-	24,466	24,466
Effects of movement in foreign exchange	(102)	127	25
Closing balance	37,394	67,529	104,923

30 June 20221
Opening balance at the beginning of the financial year	24,500	53,994	78,494
Proceeds	492,556	-	492,556
Repayments	(468,645)	(11,107)	(479,752)
New leases, reassessments and disposals	-	12,153	12,153
Assumed in business combinations (note 3)	-	1,027	1,027
Closing balance	48,411	56,067	104,478

1 Repayments are presented net of interest expense

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Financial Risk Management (continued)

(c) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency risk

The Group is exposed to foreign currency risk on purchases that are denominated in a currency other than the Australian dollar. The currencies giving rise to this risk are primarily US dollars and Euros. The Group adopts a policy of obtaining, foreign currency forward contracts to hedge its exposure to USD foreign currency risks.

Capital management

The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Group defines capital as cash, banking facilities and equity.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

Interest rate risk

The Group’s interest rate risk arises primarily from interestbearing liabilities with variable interest rates where interest rate movements can impact the Group’s cash flow exposures.

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

	Carrying amount
	2023	2022
	$’000	$’000
Variable rate financial assets	3,859	15,319
Borrowing facility	(37,394)	(48,411)
Total	(33,535)	(33,092)

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any material fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

23. LEASES

Leases as lessee

	2023	2022
Non-cancellable short-term or low value leases are payable as follows:	$’000	$’000
Less than one year	7	73
Between one and five years	-	-
More than five years	-	-
Total	7	73

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Leases (continued)

The Group leases various premises, plant and equipment and motor vehicles under short-term or low value leases. The leases run for 12 months or less or are of low value. Lease payments are reviewed periodically to reflect market rentals. None of the leases include contingent rentals.

During the financial year ended 30 June 2023 the Group recognised $409,000 (2022: $313,000) as an expense in the consolidated statement of profit or loss in respect of short-term or low value leases.

Leases as lessor

At the end of the reporting period, the future minimum lease payments under non-cancellable leases are receivable as follows:

2023	2022
$’000	$’000
Less than one year 1,278	934
Between one and five years 2,336	1,838
More than five years -	200
Total 3,614	2,972

During the financial year ended 30 June 2023, the Group recognised $1,066,000 (2022: 1,058,000) as income in the consolidated statement of profit or loss.

	Country of Incorporation	Ownership interest
24. CONTROLLED ENTITIES		2023	2022
	%	%	%
COV Holdings (Aust) Pty Ltd	Australia	100	100
Coventry Group (NZ) Limited	New Zealand	100	100
COV Holdings (NZ) Pty Ltd (i)	New Zealand	100	100
Nubco Proprietary Limited	Australia	100	100

The ultimate parent entity is Coventry Group Ltd.

(i) The company is a 100% controlled entity of COV Holdings (Aust) Pty Ltd and operates in New Zealand.

Deed of Cross Guarantee

The Company is party to a deed of cross-guarantee with its subsidiary entities. All entities listed in the table above are parties to the deed under which each company guarantees the debts of the others. Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, Nubco Proprietary Limited is relieved from the Corporations Act requirements to prepare a financial report and Directors’ report.

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25. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES Note 2023 Cash flows from operating activities $’000 Profit for the period 2,472	2022 $’000
	4,841
Adjustments for:
Equity-settled share-based payments 435	916
Depreciation and amortisation 16,385	14,142
Other non-cash or non-operating exceptional items (67)	512
Interest income from other entities (294)	(269)
Interest expense 6 6,507	5,200
Net gain on disposal of property, plant and equipment -	31
Income tax expense 7 1,251	2,501
Operating profit before changes in working capital and provisions 26,689 Change in trade and other receivables (5,962)	27,874 (3,972)
Change in inventories 1,364	(8,450)
Change in trade and other payables 3,182	(150)
Change in provisions and employee benefits 587	532
Operating profit after changes in working capital and provisions 25,860	15,834
Interest paid (6,315)	(5,010)
Income taxes paid (457)	(186)
Net cash from operating activities 19,088	10,638

26. RELATED PARTIES

26. RELATED PARTIES
Transactions with key management personnel	2023	2022
Key management personnel compensation comprised the following:	$’000	$’000
Short-term employee benefits	1,433,579	1,363,330
Post-employment benefits	92,749	82,867
Other long-term benefits	163,674	162,083
Share-based payments	197,632	455,129
Total	1,887,634	2,063,409

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26. Related Parties (continued)

Apart from the details disclosed in this note, no Director has entered into a material contract with the Group since the end of the previous financial year and there were no material contracts involving Directors’ interests existing at year-end.

Key management personnel transactions

From time to time, key management personnel may purchase goods from companies within the Group on the same terms as apply to other employees of the Group. The value of these transactions is insignificant.

Transactions with other related parties

The Group has a related party relationship with its controlled entities (see Note 24). Transactions between the parent entity and its controlled entities are eliminated on consolidation and are not disclosed.

27. SIGNIFICANT ITEMS

The following significant costs were incurred in the year ended 30 June 2023.

Borrowing costs were incurred in the current financial year relating to refinancing activities during the year.

	2023	2022
Significant items	$’000	$’000
ERP implementation costs	5,492	-
Restructuring costs	68	-
Software-as-a-Service costs	-	437
Acquisition costs on transactions not completed	-	917
Acquisition costs on completed transactions	601	50
Other	238	745
Total	6,399	2,149

28. EVENTS OCCURRING AFTER THE REPORTING PERIOD

The Board has declared a final dividend of 3.5 cents per share, fully franked, in relation to the year ended 30 June 2023.

On 16 August 2023 the Company announced an on-market buy-back of a maximum of 9,235,587 ordinary fully paid shares (up to 10% of issued capital) in the Company from the period 4 September 2023 to 4 September 2024.

Other than the matters outlined elsewhere in the Group’s financial statements, no other matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of the Group in subsequent accounting periods.

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Coventry Group Ltd and its controlled entities DIRECTORS’ REPORT

For the year ended 30 June 2023

The Directors present their report together with the consolidated financial report of the Group comprising Coventry Group Ltd (the “Company”) and its controlled entities for the year ended 30 June 2023.

CONTENTS OF DIRECTORS’ REPORT

1.	Directors	56
2.	Principal activities	60
3.	Consolidated results	60
4.	Dividends	60
5.	Review of operations and results	61
6.	Earnings per share	62
7.	Significant change in the company’s affairs	62
8.	Events subsequent to reporting date	62
9.	Likely developments	62
10.	Remuneration Report - audited
	10.1 Key Management Personnel (KMPs)	62
	10.2 Principles used to determine the nature and amount of compensation	63
	10.3 Details of compensation	68
	10.4 Service contracts	69
	10.5 Director share movement	69
11.	Environmental regulation	70
12.	Insurance of officers	70
13.	Corporate governance	70
14.	Non-audit services	71
15.	Lead auditor’s independence declaration	71
16.	Company secretary	71
17.	Rounding off	72
Directors’ Declaration		73
Lead Auditor’s Declaration under S307C of the_Corporations Act 2001_		74
Independent Auditor’s Report		75
Shareholder Information		79
Corporate Directory		82

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1. DIRECTORS

Information on Directors

The Directors of the Company at any time during or since the end of the financial year and up to the date of this report are:

NEIL GEORGE CATHIE FCPA, GAICD, FCIS

ANDREW WILLIAM NISBET GAICD

JAMES SCOTT CHARLES TODD B.Comm, LLB, FFin, MAICD

INDEPENDENT NON-EXECUTIVE CHAIRMAN

Chairman of Remuneration Committee Member of Audit and Risk Committee

INDEPENDENT NON-EXECUTIVE DIRECTOR

Member of Audit and Risk Committee Member of Remuneration Committee

INDEPENDENT NON-EXECUTIVE DIRECTOR

Chairman of Audit and Risk Committee Member of Remuneration Committee

Mr Cathie was appointed as a Director of the Company in September 2014 and as Chairman in January 2015. He has extensive experience in very relevant areas including having a 27 year career at Australia’s largest and most successful plumbing and bathroom distributor, ASX listed Reece Limited, during which time he served as its Chief Financial Officer, Company Secretary and General Manager, Finance and IT.

Mr Cathie is a Non-Executive Director of Experience Co. Limited (since 2019) and was a Non-Executive Director of Millennium Services Group Limited from 16 October 2018 to 7 March 2019. He is also an independent advisor and Chair at Middendorp Electric and NonExecutive Director at Bowens Timber & Hardware.

Other than those listed above, he held no other listed company directorships during the past three financial years.

Mr Nisbet was appointed as a Director of the Company in October 2017.

During his extensive career at ASX listed Reece Limited he held a variety of senior leadership roles, from Marketing to Merchandising, IT, Supply Chain Transformation, Innovation and the management of a number of Strategic Business Units, including the Reece expansion into New Zealand.

Mr Nisbet is a graduate of the Australian Institute of Company Directors. he continues to consult to businesses on strategy and works with SME’s in setting up their advisory boards.

He held no other listed company directorships during the past three financial years.

Mr Todd was appointed as a Director of the Company on 3 September 2018.

Mr Todd is an experienced company director, corporate adviser and investor. He commenced his career in investment banking, and has taken active roles with, and invested in, a range of public and private companies. He was until recently Managing Director of Wolseley Private Equity, an independent private equity firm which he co-founded in 1999.

He is also a Non-Executive Director of three other ASX listed companies; IVE Group Limited (since June 2015), and Bapcor Limited (since September 2020), and was a Non-Executive Director of HRL Holdings Limited between March 2018 and August 2022.

Other than those listed above, he held no other listed company directorships during the past three financial years.

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ROBERT JAMES BULLUSS FCPA, GAICD, B Bus (Acc)

MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

Mr Bulluss was appointed Chief Executive Officer on 3 May 2017 and Managing Director and Chief Executive Officer on 29 August 2017. He was previously Chief Financial Officer (CFO) of the Company from October 2016 to April 2017. Prior to joining the Company he was CFO for over 15 years for the Australasian division of Bunzl plc.

He held no other listed company directorships during the past three financial years

TONY HOWARTH AO ALEX WHITE FAICD (Life), SF FIN (Life) B.Bus (EconFin)

NON-EXECUTIVE DIRECTOR

Member of Audit and Risk Committee Member of Remuneration Committee

Mr White was appointed as a Director of the Company on 1 March 2022.

Mr Howarth was appointed as a Director of the Company on 4 May 2020.

Mr White is a Director of Richmond Hill Capital (“RH Capital”) and is jointly responsible for managing its RH High Conviction Fund.

Mr Howarth has a strong background in the banking and finance industry having held executive positions in government, regional and major banks as well as building societies and stockbroking companies. He has broad based industry experience from his time as President of the Australian Chamber of Commerce and Industry and Australian International Chamber of Commerce, as well as Chair of Catholic Health Australia. He has had a long involvement with the University of Western Australia and is an Adjunct Professor at the UWA Business School.

Mr White has over fifteen years of corporate and investment management experience and prior to co-founding RH Capital, he was jointly responsible for the portfolio management of the VF High Conviction Fund at Viburnum Funds for six years.

Mr White joined Viburnum following over three years with Cooper Investors, a privately owned specialist investment manager, where he focused on investment research for CI Australian Equities Fund and CI Brunswick Fund. He previously gained industry experience working for Fletcher Building as a Strategy Analyst and as a Credit Analyst for ratings agency Standard and Poor’s.

He is also the Chairman of Alinta Energy, BWP Management Ltd and St John of God Foundation Inc, as well as a Non-Executive Director at Viburnum Funds.

Mr Howarth was a Non-Executive Director of Wesfarmers Ltd from 2007 to 2019 and Chairman of MMA Offshore Ltd from 2006 to 2017. Previously he had been Chairman of Home Building Society and Deputy Chairman of Bank of Queensland Ltd. He has held no other listed company directorships during the past three financial years.

Mr White was previously a Director of the following ASX listed companies:

MOQ Digital Limited (from June 2019 to November 2022)
HRL Holdings (from March 2021 to August 2022)

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DIRECTORS’ INTERESTS

As at the date of this report particulars of the relevant interest of each Director in the securities of the Company are as follows:

	Number of
	Ordinary Shares
NG Cathie	983,000
RJ Bulluss	901,918
AW Nisbet	139,144
JSC Todd	122,470
A White#	31,241
T Howarth#	-

Mr Howarth and Mr White have declared their indirect interests in the shares of the Company as being shareholders of Viburnum Funds Pty Ltd, Richmond Hill Capital Pty Ltd and Rat Pack Adventures Pty Ltd respectively, who are major shareholders of the Company.

During the 2022/23 financial year and as at the date of this report no Director has declared any interest in a contract or proposed contract with the Company, the nature of which would be required to be reported in accordance with subsection 300(11)(d) of the Corporations Act 2001 .

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DIRECTORS’ MEETINGS

The following table sets out the number of meetings of the Company’s Board of Directors and each Board Committee, held during the year ended 30 June 2023, and the number of meetings attended by each Director.

	NG Cathie	RJ Bulluss	AW Nisbet	JSC Todd	T Howarth	A White
Board of Directors
Held	11	11	11	11	11	11
Eligible to attend	11	11	11	11	11	11
Attended	11	11	11	10	10	10

Audit & Risk Committee
Held	3	3	3	3	3	3
Eligible to attend	3	0	3	3	3	2
Attended	3	3	3	3	3	3

Remuneration Committee
Held	2	2	2	2	2	2
Eligible to attend	2	0	2	2	2	2
Attended	2	0	2	2	2	2

Note: Directors may pass resolutions in writing without a formal meeting being convened. Such resolutions are deemed by the Company’s Constitution to be meetings. The above table does not include such meetings.

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2. PRINCIPAL ACTIVITIES

The principal activities of the Group during the financial year were:

Trade Distribution

The importation, distribution and marketing of industrial fasteners, stainless steel fasteners, construction fasteners, specialised fastener products and systems, industrial hardware and associated industrial tools and consumables
Importation, distribution and marketing of hardware, components and finished products to the commercial cabinet making, joinery and shop fitting industries
Temporary fencing sales and hire and scaffolding plank hire.

3. CONSOLIDATED RESULTS

Results of the Group were as follows:

	2023	2022
	$‘000	$‘000
Revenue from sale of goods	358,543	322,324
Profit before tax	3,723	7,342
Income tax expense	(1,251)	(2,501)
Profit after tax for the year	2,472	4,841

Fluid Systems

design and installation of lubrication systems
distribution of hose, connectors, fittings and hydraulic hose assemblies
design and supply of service truck components

4. DIVIDENDS

The Board has declared a final dividend of 3.5 cents per share, fully franked, in relation to the year ended 30 June 2023.

installation of fire suppression systems
design and distribution of fluid handling systems, pneumatic component sales and sale of hydraulic associated products and consumables
rock hammer service and repair.

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5. REVIEW OF OPERATIONS AND RESULTS

People

It comprises Konnect and Artia Australia (KAA), Konnect and Artia New Zealand (KANZ) and Nubco in Tasmania. TD supplies a range of fastening systems, cabinet hardware systems, industrial and construction products to customers in the Industrial, Manufacturing, Infrastructure, Building and Construction, Roofing and Cladding, Mining and Mining Services, Resources/Oil and Gas and Agriculture and Aquaculture sectors.

TD sales for the year of $210.1m up 8.8% on FY22. TD Underlying EBITDA[1] of $17.0m up 5.4% on FY22.

Konnect and Artia Australia (KAA)

During FY23 we refined our values to Safety First, Doing the Right Thing (Fairness, Integrity, Respect), Working as a Team and Being the Best at Everything we do. We remain focused on doing the right thing in all our interactions with our people, customers, suppliers and communities.

Financial performance

The Group achieved sales growth for FY23 of 11.2% to $358.5m ($322.3m FY22) and a 9.7% increase in Underlying EBITDA[1] to $17.0m ($15.5m FY22). Group Underlying EBIT1 for FY23 was $13.4m ($12.4m FY22) and Net Profit after Tax for the year was $2.5m ($4.8m FY22). The reduction in Net Profit after Tax was due principally to costs in relation to the ERP upgrade of $5.5m.

	FY23 FY22 $M $M	% change
Revenue from sale of goods	358.5 322.3	+11.2
Underlying EBIT(2)	13.4 12.4	+8.1
Underlying EBITDA(2)	17.0 15.5	+9.7
Net Profit after tax	2.5 4.8	-48.9
Net debt	33.5 33.1
Net tangible assets	36.8 36.1	+1.9

(1) Underlying EBITDA and Underlying EBIT are non-IFRS measures and reflect how management measure performance of the Group. Non-IFRS measures have not been subjected to audit.

(2) Underlying EBITDA is earnings before interest, tax, depreciation, amortisation and has been adjusted to exclude leases and significant items. Underlying EBIT is earnings before interest and tax and has been adjusted to exclude leases and significant items.

Review of businesses

Trade Distribution (TD)

Our Trade Distribution (TD) segment has expanded to a network of 65 branches across Australia and New Zealand supported by 3 Distribution Centres.

KAA is one of Australia’s leading fastener specialists and supplier of cabinet hardware.

Konnect and Artia New Zealand (KANZ)

KANZ is New Zealand’s leading fastener specialist and supplier of cabinet hardware and temporary fencing.

The opening of a new branch in Palmerston North early in FY24 has taken our branch footprint to 18. We also relocated our Albany branch to a larger facility and refurbished our Dunedin branch.

Nubco

Nubco is a specialist supplier of steel, reinforcing, fasteners, construction products, power tools, hand tools, PPE and consumables in Tasmania.

Fluid Systems

FS had an excellent year growing both Sales and Underlying EBITDA[1] despite a continuing backdrop of labour and skills shortages and input costs escalation.

FS sales for the year of $148.1m up 14.1% on FY22. FS Underlying EBITDA[1] of $15.3m up 19.0% on FY22.

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6. EARNINGS PER SHARE

Basic earnings per share and diluted earnings per share for the year ended 30 June 2023 was 2.7 cents and 2.7 cents respectively. This compares to a basic earnings per share and diluted earnings per share for the previous year of 5.3 cents and 5.2 cents respectively.

7. SIGNIFICANT CHANGE IN THE COMPANY’S AFFAIRS

In the opinion of the Directors, there have been no other significant changes in the Group’s state of affairs during the financial year.

8. EVENTS SUBSEQUENT TO REPORTING DATE

The Board has declared a final dividend of 3.5 cents per share, fully franked, in relation to the year ended 30 June 2023.

Other than the matters outlined elsewhere in the Groups financial statements, no other matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of the Group in subsequent accounting periods.

9. LIKELY DEVELOPMENTS

The Group will continue to implement its five-year strategy and continue to operate in the markets in which it currently participates.

10. REMUNERATION REPORT - AUDITED

Remuneration is referred to as compensation throughout this Remuneration Report.

10.1 Key Management Personnel (KMPs)

KMPs are the persons who have authority and responsibility for planning, directing and controlling the activities of the Company and the Group. The following were KMPs of the Group at any time during the reporting period and unless otherwise indicated were KMPs for the entire period:

Directors	Other Key Management Personnel
NG Cathie	RJ Jackson
RJ Bulluss (CEO and Managing Director)
AW Nisbet
JSC Todd
T Howarth
A White

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10.2 Principles used to determine the nature and amount of compensation

Non-Executive Directors

Non-Executive Directors receive cash fees for their Board and Committee work. They are eligible to participate in the Executive and Director Incentive Plan which was re-approved by shareholders at the Annual General Meeting of the Company in October 2020.

Non-Executive Directors’ cash fees are determined within an aggregate Directors’ fees pool limit, which is periodically recommended for approval by shareholders. The total pool currently stands at $550,000 (2022: $550,000) per annum, and was last approved by shareholders in November 2004 with effect from 1 July 2004. The Board determines the allocation of the maximum amount approved by shareholders amongst the respective Directors, having regard to their duties and responsibilities. Directors’ fees are not directly linked to Company performance. Non-Executive Directors do not receive termination benefits. There is no provision for retirement allowances to be paid to Non-Executive Directors.

As at 30 June 2023 the Non-Executive Directors’ fees were allocated as follows (includes statutory superannuation contributions):

	2023 2022 $ $
Chairman (inclusive of Board and Committee work)	130,000 130,000
Chair of Audit and Risk Committee (inclusive of Board and Committee work)	85,000 85,000
Non-Executive Directors (inclusive of Board and Committee work)	80,000 80,000

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10.2 Principles used to determine the nature and amount of compensation (continued)

Executive Pay

Remuneration policies

Remuneration of Directors and senior executives is the responsibility of the Remuneration Committee. The Committee has resolved to set remuneration packages which are appropriate in the context of the company’s size, complexity and performance but which will attract the calibre of executive required to drive necessary change in order to enhance performance. The Committee seeks external advice in relation to these matters where necessary.

Remuneration for the CEO and senior executives currently comprises three elements:

Fixed, cash-based remuneration which includes salary, superannuation and benefits
Eligibility to participate in the Company’s short-term incentive plan (STI Plan)
Eligibility to participate in the Company’s long-term share based Executive and Director Incentive Plan (LTI Plan)

The CEO and senior executives have employment contracts with notice periods executable by either party. There are no arrangements in place to provide the CEO or any senior executive with a retirement benefit other than those which accrue by law. Superannuation contributions are paid at the superannuation guarantee rate.

Cash incentives under the STI Plan of up to 65% of fixed annual compensation are payable to the CEO and senior executives based on financial and non-financial measures framed around the Company’s trading performance and each individual’s performance.

The LTI Plan was re-approved by shareholders at the 2020 annual general meeting. This share-based plan provides for the granting or issuing of performance rights in accordance with its terms and subject to the terms and performance hurdles set by the Board.

Business Performance

In considering the Group’s performance and benefits for shareholder wealth, the Remuneration Committee have regard to the following financial performance metrics in respect of the current financial year and the previous four financial years.

	2023	2022	2021	2020	2019
	$’000	$’000	$’000	$’000	$’000
Sales revenue	358,543	322,324	288,522	247,567	202,346
Underlying EBITDA(i)	17,005	15,505	13,357	6,637	2,811
Underlying EBIT	13,377	12,355	10.561	4,026	1,145
NPAT	2,472	4,841	7,246	(455)	(1,426)
Dividends paid	3,227	2,721	-	-	-
Share price at year end ($)	1.15	1.33	1.45	0.57	0.91

(i) Underlying EBITDA is the key financial performance target considered in setting the Short-Term Incentive (STI).

Where applicable, comparative information has been restated for the effects of the application of new accounting standards.

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10.2 Principles used to determine the nature and amount of compensation (continued)

Performance Rights (PR’s)

PR’s Key Inputs

	FY20	FY21	FY22	FY23
	Performance	Performance	Performance	Performance
	Period	Period	Period	Period
Measurement date 10-day VWAP(iii)	$0.8482	$0.6021	$1.4210	$1.2165
No. of PR’s granted	1,164,237	1,424,504(iv)	572,424(iv)	718,742(iv)
Grant date	25.10.2019	29.10.2020	22.10.2021	21.10.2022
Share price at Grant Date	$1.30	$0.95	$1.79	$1.24
Vesting date (1)(i)	01.09.2020	01.09.2021	01.09.2022	01.9.2023
Vesting date (2)(i)	N/A	01.09.2022	01.09.2023(ii)	01.9.2024
Vesting date (3)(i)	N/A	01.09.2023(ii)	01.09.2024(ii)	01.9.2025
% of PR’s vested - Vesting date (1)	33.3%	33.3%	33.3%	0.0%
% of PR’s vested – Vesting date (2)	0.0%	33.3%	N/A	0.0%
% of PR’s vested – Vesting date (3)	0.0%	N/A	N/A	0.0%
No. of eligible PR’s vested - Vesting date (1)	317,919	474,835	190,809	-
No. of eligible PR’s vested – Vesting date (2)	-	474,836	N/A	-
No. of eligible PR’s vested – Vesting date (3)	-	N/A	N/A	-
No. of PR’s lapsed & forfeited	846,318	-	-	718,742
No. of eligible PR’s exercised up to 30 June 2023	317,919	949,671	190,809	-
No. of PR’s remaining to be vested and/or exercised subject to service conditions	-	474,833	381,615	-

Share-based payments recognised as an expense in the financial statements of the Company.

	FY20	FY21	FY22	FY23
No. of performance rights issued	1,164,237	1,424,504	572,424	718,742
No. of eligible performance Rights vested(iv)	317,919	949,671	190,809	-
Share price at Grant Date	$1.30	$0.95	$1.79	$1.24
Share-based payments expense (v)	$413,295	$826,989	$1,002,052	$434,960

(i) Subject to service conditions.

(ii) Vesting determination not yet made.

(iii) Used to calculate grant of Performance Rights.

(iv) Performance rights granted in relation to FY22 and FY23 will vest in accordance with performance and employment conditions and in three separate annual vesting events. Consequently, the share-based payments expense for FY21 and FY22 is recognised based on graded vesting and the probability that 100% of participants will receive 100% of their grant over a three-year period

(v) Share-based payment expense ‘true up’ in FY21 ($618,921) presented as a one-off non-cash significant item in that period .

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10.2 Principles used to determine the nature and amount of compensation (continued)

Performance Rights Commentary

In FY23, one third of the performance rights that were vested to the CEO and Managing Director (R Bulluss) in relation to the FY20 performance period, one third in relation to the FY21 performance period and one third in relation to the FY22 performance period, were exercised. One third of the performance rights that were vested to six other Company senior executives in relation to the FY20 performance period, one third in relation to the FY21 performance period and one third in relation to the FY22 performance period were also exercised in FY23.

In relation to FY23, the CEO and Managing Director (R Bulluss) was granted 205,508 performance rights under the terms of the LTI Plan following the successful passing of a resolution at the 2022 Annual General Meeting of the Company. These performance rights had a performance period that ended on 30 June 2023 with performance and employment conditions set by the Board. The Board has determined that the FY23 performance rights will be forfeited.

In relation to FY23, an offer to participate in the LTI Plan was made to a number of other Company senior executives. The total performance rights granted was 513,234. These Performance Rights had a performance period that ended on 30 June 2023 with performance and employment conditions set by the Board. The Board has determined that the FY23 performance rights will be forfeited.

It is intended that the CEO and Managing Director will participate in the LTI Plan in relation to FY24. The maximum face value of the CEO’s FY23 grant is based on an LTI opportunity of 50% of his fixed annual remuneration. The number of performance rights to be granted is determined by dividing the maximum face value by the 10-day volume weighted average price (VWAP) of the Company’s shares preceding the start of the performance period, being the 10 trading days up to and including 30 June 2023.

The performance rights will vest at the Board’s discretion, taking into consideration Underlying EBITDA year on year growth. An appropriate resolution will be put to the 2023 Annual General Meeting of the Company.

It is intended that a number of senior executives will participate in the LTI Plan in relation to FY24. The maximum face value of each senior executive’s FY24 grant is based on an LTI opportunity of 25% to 40% of his or her fixed annual remuneration. The number of performance rights to be granted is determined by dividing the maximum face value by the 10-day volume weighted average price (VWAP) of the Company’s shares preceding the start of the performance period, being the 10 trading days up to and including 30 June 2023. The performance rights will vest in the same manner as outlined for the CEO and Managing Director.

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10.3 Details of compensation

The following table provides the details, nature and amount of elements of compensation for the key management personnel of the Company and the Group for the year ended 30 June 2023.

	Short-term Post-employment Proportion of remuneration performance related Cash salary, leave entitlement and fees STI cash bonus Non-monetary benefits Short term total Super- annuation (i) Long-service & annual leave provision accrual Share-based payment Total $ $ $ $ $ $ $ $
Directors NG Cathie - Chairman	2023 117,647 117,647 12,353 - 130,000 -
	2022 118,182 - - 118,182 11,818 - - 130,000 -
RJ Bulluss	2023 474,196 124,560 598,756 25,292 85,562 125,525 835,135 29.95%
	2022 440,934 134,300 - 575,234 23,568 89,302 289,418 977,523 43.35%
AW Nisbet	2023 72,398 - - 72,398 7,602 - - 80,000 -
	2022 72,727 - - 72,727 7,273 - - 80,000 -
JSC Todd	2023 76,923 - - 76,923 8,077 - - 85,000 -
	2022 77,273 - - 77,273 7,727 - - 85,000 -
T Howarth	2023 72,398 - - 72,398 7,602 - - 80,000 -
	2022 72,727 - - 72,727 7,273 - - 80,000 -
A White	2023 62,196 - - 62,196 6,531 - - 68,727 -
	2022 17,260 - - 17,260 1,640 - - 18,900 -
Total Directors' remuneration	2023 875,758 124,560 - 1,000,318 67,457 85,562 125,525 1,278,862 -
	2022 799,103 134,300 - 933,403 59,299 89,302 289,418 1,371,423 -
Other Key Management Personnel
RJ Jackson	2023 338,643 94,618 433,261 25,292 78,112 72,107 608,772 27.39%
	2022 322,470 107,457 - 429,927 23,568 72,781 165,711 691,986 39.48%
Total other key management personnel remuneration	2023 338,643 94,618 433,261 25,292 78,112 72,107 608,772 -
	2022 322,470 107,457 - 429,927 23,568 72,781 165,711 691,986 -
Total Directors' and other key management personnel remuneration	2023 1,214,401 219,178 1,433,579 92,749 163,674 197,632 1,887,634 -
	2022 1,121,574 241,757 - 1,363,330 82,867 162,083 455,129 2,063,409 -

Premiums in respect of the Directors’ and Officers’ insurance policy are not included above, as the policy does not specify the premium paid in respect of individual Directors and officers.

(i) Includes statutory superannuation contributions and additional voluntary contributions.

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10.4 Service contracts
Compensation and other terms
of employment for the CEO and
Managing Director and other key
management personnel are formalised
in employment contracts. Major
provisions of the contracts relating
to compensation are set out below:
Robert Bulluss, CEO and
Managing Director
• The contract has no fixed term.
• Fixed annual compensation
to be reviewed annually by the
Remuneration Committee.
• Long service leave is payable
by the Company in accordance
with relevant state legislation.
• The contract provides for
participation in short-term and
long-term incentive plans.
• Other than for an act that may
have a serious detrimental effect
on the Company, such as wilful
disobedience, fraud or misconduct,
termination of employment requires
six months’ notice by the Company.
Rodney Jackson, Chief
Financial Officer
• The contract has no fixed term.
• Fixed annual compensation
to be reviewed annually by the
Remuneration Committee.
• Long service leave is payable
by the Company in accordance
with relevant state legislation.

• The contract provides for
participation in short-term and
long-term incentive plans.
• Other than for an act that may
have a serious detrimental
effect on the Company, such
as wilful disobedience, fraud
or misconduct, termination of
employment requires eighteen
weeks’ notice by the Company.
10.5 Director share movement
The movement during the reporting
period in the number of ordinary
shares in the Company held, directly,
indirectly or beneficially, by each
key management person, including
their related parties, is as follows:

	Held at 30 June 2022	Purchases (includes DRP allotments)	Conversion of Performance Rights	Sales / Cancelled	Held at Resignation / Retirement	Held at 30 June 2023
Directors
NG Cathie	850,000	133,000	-	-	-	983,000
AW Nisbet	135,269	3,875	-	-	-	139,144
RJ Bulluss	658,056	16,833	227,029	-	-	901,918
JSC Todd	118,977	3,493	-	-	-	122,470
T Howarth#	-	-	-	-	-	-
A White#	31,241	-	-	-	-	31,241

Key Management
Personnel
RJ Jackson	247,729	7,274	124,554	-	-	379,557

# Mr Howarth and Mr White have declared their indirect interests in the shares of the Company as being shareholders of Viburnum Funds Pty Ltd, Richmond Hill Capital Pty Ltd and Rat Pack Adventures Pty Ltd respectively, who are major shareholders of the Company.

End of Remuneration Report.

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11. ENVIRONMENTAL REGULATION

The Group is not subject to any specific environmental regulation.

The Group mainly operates from warehousing and distribution facilities throughout Australia and New Zealand which have general obligations under environmental legislation of the respective statutory authorities in relation to pollution prevention.

The Company has reviewed its obligations under the National Greenhouse & Energy Reporting Act 2007 (the Act). As the Group is under the minimum greenhouse and energy thresholds stipulated in the Act, there are no registration and reporting requirements that have to be complied with as at the date of this report.

12. INSURANCE OF OFFICERS

During the financial year the Company has paid premiums in respect of contracts insuring the Directors and officers of the Company against certain liabilities incurred in those capacities. The contracts prohibit further disclosure of the nature of the liabilities and the amounts of the premiums.

13. CORPORATE GOVERNANCE

The Statement of Corporate Governance Practices is disclosed on the Company’s website.

For the financial year ended 30 June 2023 and as at the date of this report, the Group has not been prosecuted nor incurred any infringement penalty for environmental incidents.

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14. NON-AUDIT SERVICES

During the year KPMG, the Company’s auditor, has performed certain other services in addition to their statutory duties. The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001, for the following reasons:

all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Company’s Audit and Risk Committee to ensure they do not impact the integrity and objectivity of the auditor; and

15. LEAD AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor’s independence declaration made in accordance with Section 307C of the Corporations Act 2001 forms part of this Directors’ report.

16. COMPANY SECRETARY

Mr Mark Licciardo is the founder of Mertons Corporate Services, now part of Acclime Australia and is the Company Secretary.

the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non-audit services provided during the year are set out in Note 4 to the full financial report.

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17. ROUNDING OFF

The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that Instrument, amounts in the financial report and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Signed in accordance with a resolution of the Directors.

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N.G. CATHIE Chairman Melbourne 25 August 2023

R.J. BULLUSS CEO and Managing Director Melbourne 25 August 2023

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Coventry Group Ltd and its controlled entities DIRECTORS’ DECLARATION

1. IN THE OPINION OF THE DIRECTORS OF COVENTRY GROUP LTD (“THE GROUP”):

a) the financial statements and notes, and the Remuneration Report in the Directors’ Report, set out on pages 56 to 71, are in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2023 and of their performance, for the financial year ended on that date; and
ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(a) of the full financial report;
c) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2023 pursuant to Section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of the Directors.

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N.G. CATHIE Chairman Melbourne 25 August 2023

R.J. BULLUSS CEO and Managing Director

Melbourne 25 August 2023

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KPMG

LEAD AUDITOR’S INDEPENDENCE DECLARATION

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KPMG INDEPENDENT AUDITOR’S REPORT

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KPMG Independent Auditor’s Report

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KPMG Independent Auditor’s Report

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KPMG Independent Auditor’s Report

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Coventry Group Ltd

SHAREHOLDER INFORMATION

As at 24 August 2023

		Ordinary	Shares
		Number	% of Total
1	J P MORGAN NOMINEES AUSTRALIA PTY LIMITED	26,169,307	28.34
2	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	15,122,002	16.37
3	NATIONAL NOMINEES LIMITED	12,411,187	13.44
4	PALM BEACH NOMINEES PTY LIMITED	9,874,432	10.69
5	CITICORP NOMINEES PTY LIMITED	2,223,666	2.41
6	DORSETT INVESTMENTS PTY LTD	1,382,586	1.50
7	DIXSON TRUST PTY LIMITED	1,201,400	1.30
8	BNP PARIBAS NOMINEES PTY LTD	932,316	1.01
9	MR ROBERT BULLUSS	901,918	0.98
10	BNP PARIBAS NOMS (NZ) LTD	823,291	0.89
11	ROMNEY LODGE PTY LTD	632,535	0.68
12	DIXSON TRUST PTY LIMITED	605,015	0.66
13	MRS ANNE KYLE	582,793	0.63
14	MR GEOFFREY KYLE	480,000	0.52
15	ARUMA BEACH PTY LTD	400,000	0.43
15	TPSC SMIRK PTY LTD	400,000	0.43
17	MR RODNEY JAMES JACKSON	379,557	0.41
18	ABTOURK (SYD NO 415) PTY LTD	305,733	0.33
19	MR LIONEL MCFADYEN + MRS JENNIFER MCFADYEN + MS SKYE MCFADYEN	282,254	0.31
20	MR BRUCE NEIL CARTER	235,227	0.25
	Total	75,345,219	81.58

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DISTRIBUTION OF SHAREHOLDING	Number of holders	%	Number of shares	%
Size of holding
1 – 1,000	413		233,577	0.25
1,001 - 5,000	627		1,596,349	1.73
5,001 - 10,000	209		1,564,799	1.69
10,001 - 100,000	283		8,973,352	9.72
100,001 Over	51		79,987,800	86.61
Total	1,585		92,355,877	100.00
		Minimum Parcel Size	Holders	Units
Unmarketable parcels field information		486	133	28,526

SUBSTANTIAL SHAREHOLDERS

The Company’s register of substantial shareholders showed the following particulars as at 24 August 2023.

Name of Substantial Shareholder	Extent of Interest (Number of Shares)	Date of last notification
Viburnum Funds Pty Ltd	25,696,019	20 May 2021
Richmond Hill Capital Pty Ltd	17,011,011	23 Jun 2023
Sandon Capital Pty Ltd	9,874,432	10 Aug 2023
Castle Point Funds Management	6,210,518	16 Oct 2021
DUMAC Inc.	4,498,152	23 Dec 2019

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UNQUOTED EQUITY SECURITIES

Nil.

SECURITIES SUBJECT TO VOLUNTARY ESCROW

There are no securities on issue subject to voluntary escrow.

VOTING RIGHTS

Each member present at a general meeting of the Company in person or by proxy, attorney or official representative is entitled:

on a show of hands - to one vote
on a poll - to one vote for each share held

There are no other classes of equity securities.

ON-MARKET BUY-BACK

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Coventry Group Ltd

CORPORATE DIRECTORY

Coventry Group ABN 37 008 670 102

Registered and Principal Administrative Office 235 Settlement Road, Thomastown, Victoria 3074

Postal Address

P O Box 526 Thomastown, Victoria 3074

Website

www.cgl.com.au

Secretary

Mark Licciardo

Bankers

National Australia Bank Limited Australian and New Zealand Banking Group Limited Bank of New Zealand

Auditors

KPMG Tower Two Collins Square 727 Collins Street Melbourne, Victoria 3008

Share Registry Computershare Limited Yarra Falls 452 Johnston Street, Abbotsford Melbourne Victoria 3067

or GPO Box 2975 Melbourne, Victoria 3000 Telephone from within Australia: 1300 763 414 Telephone from outside Australia: (+61) 3 9415 5000 Facsimile: +(61) 3 9473 2500 Email: [email protected] Website: www.investorcentre.com

Securities Exchange Listing

The Company’s shares are listed on the ASX Limited and trade under the code CYG. The home exchange is Melbourne.

Shareholder Enquiries/Change of Address

Shareholders wishing to enquire about their shareholdings, dividend payments, or change their address should contact the Company’s share registry.

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AI assistant

COVENTRY GROUP LIMITED — Annual Report 2023

64742_rns_2023-08-24_0a5390da-089c-4c30-8574-68c1412ad33f.pdf

Results for announcement to the market Full Year Ended 30 June 2023

Dividends (distributions)

ANNUAL REPORT 2023

VALUES

AT COVENTRY GROUP, OUR VALUES ARE

SAFETY FIRST

WORK AS A TEAM

BE THE BEST AT EVERYTHING WE DO

CONTENTS

CHAIRMAN’S REPORT

FY23 RESULTS

DIVIDENDS

EXECUTIVE REMUNERATION

PEOPLE

OUTLOOK

Neil G. Cathie

CHIEF EXECUTIVE OFFICER’S REPORT

ENVIRONMENT, SOCIAL AND GOVERNANCE

HEALTH, SAFETY AND WELLBEING

PEOPLE

BUSINESS PERFORMANCE

BUSINESS PERFORMANCE

TRADE DISTRIBUTION

Konnect and Artia Australia (KAA)

Konnect and Artia New Zealand (KANZ)

Nubco

FLUID SYSTEMS

CENTRAL SERVICES

TECHNOLOGY

ACQUISITIONS

SIGNIFICANT ITEMS

NET ASSETS/WORKING CAPITAL

NET DEBT POSITION

OUTLOOK

Robert J Bulluss

Coventry Group Ltd and its controlled entities

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Coventry Group Ltd and its controlled entities

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Coventry Group Ltd and its controlled entities CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the year ended 30 June 2023

Coventry Group Ltd and its controlled entities

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Coventry Group Ltd and its controlled entities CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2023

Coventry Group Ltd and its controlled entities

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

(b) Basis of preparation

(c) New and amended standards adopted by the Group

Standards issued but not yet effective

Going Concern

Business combinations

Controlled entities

Loss of control

(e) Foreign currency

Foreign currency transactions

(f) Cash and cash equivalents

(g) Inventories

Foreign operations

(h) Trade and other receivables

(i) Property, plant and equipment

Depreciation

(j) Intangibles

Goodwill

Computer software

1. Significant accounting policies (continued)

Other intangible assets

Amortisation

(k) Financial Instruments

Investments and other financial assets

Impairment of financial assets

(l) I mpairment of assets (financial and non-financial)

Non-financial

Financial

(m) Employee benefits

COVENTRY GROUP LIMITED Annual Report 2023