ABN 37 008 670 102
Results for announcement to the market
Full Year Ended 30 June 2019
Revenues from continuing operations
Profit before interest, taxes, depreciation and
amortisation from continuing operations
Loss before tax from continuing operations
Loss after tax from continuing operations
attributable to members
Dividends (distributions)
Final dividend
Date the dividends are payable
Record date for determining entitlements to the
dividends
Amount of dividend per security
Final dividend current year
previous year
Interim dividend current year
previous year
Special dividend previous year
Total dividend current year
previous year
Dividend reinvestment plan (DRP)
The Company’s DRP remained suspended.
Net Tangible Assets Per Security
As at 30 June 2019
As at 30 June 2018
Up
Up
Up
Up
20.4% to
202,346
N/A
N/A
N/A
1,515
(741)
(1,426)
Amount per security
Franked amount per security
Nil
N/A
N/A
Amount per
security
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Franked amount per
security at 30% tax
Nil
Nil
Nil
Nil
Nil
Nil
Nil
0.59
1.30
For an explanation of the figures reported above see the attached commentary.
The attached financial statements and Directors’ declaration have been subject to an independent audit review.
ANNUAL REPORT
2019
1
Coventry Group Ltd and its controlled entities
Contents
Chairman's Report
Chief Executive Officer's Report
Consolidated statement of profit or loss
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements:
1. Significant accounting policies
2. Operating segments
3. Business Combination
4. Discontinued operation
5. Auditor's remuneration
6. Employment costs
7. Finance income and finance expenses
8. Taxes
9. Earnings per share
10. Cash and cash equivalents
11. Trade and other receivables
12.
Inventories
13. Parent entity disclosures
14. Property, plant and equipment
15.
Intangible assets
16.
Impairment of non-financial assets
17. Trade and other payables
18.
Interest-bearing loans and borrowings
19. Share-based payments
20. Capital and reserves
21. Financial risk management
22. Operating leases
23. Controlled entities
24. Reconciliation of cash flows from operating activities
25. Related parties
26. Change in accounting policies
27. Events occurring after the reporting period
Directors' Report
Directors' Declaration
Auditor's Independence Declaration
Auditor's Report
Shareholder Information
Corporate Directory
2
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33
34
36
37
47
48
49
54
55
Chairman’s Report
Two years into a turnaround under the stewardship of our CEO and Managing Director, Robert Bulluss, I am pleased to report a return
to underlying profitability for the Group. This is the first time I have been able to do so during my tenure as Chairman. Getting us to this
point in the turnaround Robert has not acted alone with the Group being well served by a professional and well credentialed Executive
Leadership Team whose members are now, deservedly, beginning to experience the satisfaction of working in a business with
momentum and with improving financial results. The improved financial performance in 2019 would not have been achieved without
two transformational acquisitions which fast-tracked that improvement. On 26 September 2018 we announced a fully underwritten
$15m equity raising to fund the acquisition of Torque Industries. On 5 February 2019 we announced a fully underwritten $27.6m equity
raising in order to fund the acquisition of Nubco Proprietary Limited. We at Coventry have been greatly encouraged and motivated by
the support demonstrated by a range of existing and new shareholders in both equity raisings. We are extremely grateful for the support
we have received. The CEO will expand on the successful integration of Torque and Nubco into the broader Group in his report.
An underlying EBIT of $1.1m in 2019 represents a turnaround in the order of $13.6m from our base year of 2017 and all our plans are
geared to considerable improvement in 2020. The 2017 base year marked the pivotal appointment of our CEO in May 2017 but also
marked very grim annual financial results with sales from continuing operations sinking to $151.0m and a statutory loss after tax of
$37.7m. What a difference two years and a substantial strategy re-set under new leadership makes. A $13.6m EBIT turnaround in 2
years and a great business saved!!
Fluid Systems has performed strongly in 2019 and the addition of Torque Industries introduced revenue diversification outside the
resources sector and identified a number of growth opportunities. Fluid Systems continues to be well led with a stable and experienced
team which can now add a successful acquisition integration to its list of achievements.
Trade Distribution, comprises our Australian and New Zealand network of Konnect, Artia and newly acquired Nubco branches, which
are serviced by a number of distribution centres.
Our New Zealand network is very well led and has performed strongly in 2019 producing year on year sales and contribution growth.
Our new Australian Nubco network has produced sales and profitability in line with expectations since acquisition.
Our Australian network of Konnect and Artia branches has improved year on year but it did not achieve the breakeven or better result
we were looking for. It has been well documented previously how badly broken this business was but the $4.0m improvement in
contribution achieved since 2017 reinforces that our strategy now is correct even if our timing was a little ambitious. All our plans are
geared to a return to profitability in 2020. We have great expectations for this part of the business as in our opinion it provides the single
biggest internal growth opportunity. This network has been reinvigorated by our new General Manager, Peter Shaw who brings to the
Group wisdom and experience gained at Worksense Workwear & Safety, Wesfarmers Industrial & Safety and Total Fasteners. In
addition, we have been fortunate in the calibre of people recruited into, and in some cases re-joining, the business. This is all part of
the momentum I mentioned earlier in this report and, speaking from personal experience, it is motivating, stimulating and rewarding to
be part of a well led dynamic business. It remains our number one priority to restore profitability to this part of the business and in time
restore it as a material contributor to the profitability of the Group.
As evidenced with Torque and Nubco in 2019, acquisitions form part of our growth strategy for the Group. Opportunities continue to
arise and they are assessed, initially by our CEO and CFO against strict criteria. Into the foreseeable future acquisitions will be funded
by debt and cash flow.
The Executive and Director Incentive Plan approved at the 2017 Annual General Meeting of the Company 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. Mr Bulluss’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 2020. Full particulars will be published in the
Notice of Annual General Meeting for the meeting to be held on 25 October 2019.
The Redcliffe, Perth property, with its single term of 20 years not expiring until 2027, is not fully sub-let. This matter continues to be
actively managed by our experienced Property Manager, supported by local real estate resources.
The Group continues to have a strong working capital position with Current Assets exceeding Current Liabilities by $50.8m. Net debt
at financial year end was $4.1m. The Group has substantial Australian tax losses in the order of $71.9m for which no deferred tax
asset is recognised in its Statement of Financial Position.
On behalf of the Board my sincere thanks go to the CEO, the Executive Leadership Team and all our colleagues throughout the
business for their commitment to our values and the impact their efforts are having on the turnaround efforts in progress at Coventry.
3
Outlook
All our plans are geared to sustainable profitable growth for the Group with expectations for EBITDA in 2020 of greater than $10m.
That outcome will require continuation of the current momentum, effective execution of our plans and the markets in which we operate
to remain buoyant.
The board has determined that no final dividend will be paid. Looking ahead the Board will assess the Company’s ability to pay
dividends against earnings and the financial position of the business. If EBITDA guidance is met for 2020 the board expects the
Company will be in a position to pay a dividend in relation to that period.
Neil G. Cathie
Chairman of the Board of Directors
4
Chief Executive Officer’s Report
The Group’s performance improved in FY19 and is largely progressing to plan towards sustainable profitable growth. We are pleased
to report that the Group has returned to a profitable position in FY19 for EBITDA and EBIT. This is proof that our strategic plan, people,
strong value proposition and dedication to our core values are delivering results. Combined with two excellent acquisitions, the Group
has produced an EBIT turnaround of $13.6m in two years.
The health, safety and wellbeing of our people is our number one priority. During the year, we had 8 Lost Time Injuries (LTI’s) and
whilst the people returned to work in a short time frame, we are disappointed in this result. Our reporting systems are providing us with
valuable insights into the root causes of these incidents and action is being taken to prevent future occurrences. Our aspiration is for
zero LTI’s.
Along with our customers and suppliers we focus on our people. Delivering on our core values of Respect, Fairness, Teamwork,
Professionalism and Integrity, is improving our culture and turning Coventry into a satisfying and rewarding environment in which to
work. I am proud that the Group has an unwavering commitment to human rights, equality, diversity, anti-discrimination and flexibility
in the workplace. Diversity in our business without doubt delivers better overall commercial and financial outcomes. Our employee
Net Promotor Score improved again during the year to +16.1 (-31.2 FY17). Our voluntary employee turnover has reduced significantly
to sustainable levels. These KPI’s provide evidence of an improved culture and progress towards becoming an employer of choice.
The higher employee retention rates are a critical success factor for delivering sustainable profitable growth. We are building training
and development capability and this year Fluid Systems (FS) launched Cooper Built learning. Together with Outsource Institute
Technology (OIT) we are a delivering a Certificate IV in engineering – Fluid Power to a number of our people. Many other initiatives
are being implemented to improve our culture and work environment.
During the year we added additional capability into our experienced Executive Leadership Team (ELT) with the appointments of Peter
Shaw (General Manager – Konnect and Artia Australia), Ken Lam (Chief Information Officer) and Paul Krawczyk (General Manager –
Nubco). The ELT work closely together to develop and deliver the Group’s strategic plan for sustainable profitable growth.
Our focus on the customer by providing service excellence through quality products, stock availability, expertise, agility and our
geographic coverage is delivering sales growth. Margin improvement programs, supplier engagement and cost reductions from the
Distribution Centre (DC) optimisation project have also contributed to improved financial performance.
We engage closely with our suppliers to ensure we grow profitably together with aligned strategies. Our supplier relationships continue
to improve and in many cases we have been able to negotiate improved trading terms.
During the year the Information Technology function was relocated to Melbourne from Perth under Ken Lam’s guidance. The new team
is delivering on business optimisation projects and is playing a key role in the delivery of our Digital Customer Engagement (DCE)
project. DCE will provide on-line and mobility solutions for customers as well as a Customer Relationship Management (CRM) system
and a user-friendly Point of Sale (POS) module. Legacy hardware and software concerns are also being resolved.
Our central services teams (HR and Safety, Finance, Accounts Payable and Accounts Receivable) have built capability to support the
business divisions as the Group returns to sustainable profitable growth.
Trade Distribution (TD) comprises Konnect and Artia Australia (KAA), Konnect and Artia New Zealand (KANZ) and Nubco.
We are making steady progress with the turnaround of the KAA business. Our aim is to achieve sustainable profitable growth through
sales development on the back of our quality service and value proposition, building strong sales capability, improving the branch
network, margin improvements, reducing the size and cost of our Distribution Centres and introducing marketing and other strategies
employed in the Nubco business. Significant investment has been made in people, inventory, delivery capability and the branches over
the last two years. We are far from satisfied with the slow rate of recovery in KAA sales but remain committed to our strategy. Green
shoots are appearing and we are optimistic about our prospects for returning KAA to break even or better in FY20. KAA is our largest
opportunity for profit growth over the next few years.
KANZ had an excellent year for the second year in a row with strong sales growth delivering a positive increase in their contribution to
the Group.
Nubco performed in line with expectations in the four months post acquisition. We have delivered buying benefits into KAA following
the acquisition and these will be fully realised in FY20.
Fluid Systems (FS), which comprises our Cooper Fluid Systems (CFS) and Torque Industries (Torque) businesses, performed very
strongly and is well positioned for further growth in coming years as we expect their core markets of mining and resources, defence
and agriculture to perform well.
We were delighted to acquire both the Torque and Nubco businesses during the year. Both businesses met our strict acquisition criteria
and have immediately had a positive impact on our profit and cash flow results. It was pleasing to have market and shareholder support
for two capital raises during the period which secured $42.6m to fund these acquisitions.
With strong results from FS, Nubco and KANZ, and with KAA’s performance improving, our focus continues to be on additional
opportunities for growth. Our markets are performing well, and we are confident that both divisions have organic growth and acquisition
opportunities.
We remain fully focussed on our Customers, People and our Suppliers, and applying our values of Respect, Fairness, Teamwork,
Professionalism and Integrity.
5
Business Performance
Trading performance improved significantly during the year with a return to underlying profitability for both EBITDA and EBIT. Sales
growth was achieved year on year and in every quarter for the year. Daily sales run rates continue to improve.
Group sales growth for FY19 including acquisitions of 20.4% and excluding acquisitions of 7.0% when compared with the prior
corresponding period (PCP). Group sales including acquisitions at $202.3m ($168.1m FY18). Group underlying EBITDA of +$2.8m (-
$4.7m FY18 excluding discontinuing operations). Group underlying EBIT of +$1.1m (-$6.1m FY18 excluding discontinuing operations).
Reported net loss for the year -$1.4m (-$8.3m FY18 excluding profit on sale of the AA Gaskets business). During the period we
announced the acquisitions of Torque and Nubco which are trading in line with expectations delivering +$3.6m contribution in FY19.
Equity raises totalling $42.6m for the acquisitions were successfully completed.
The Group has a solid balance sheet with Net Tangible Assets of $53.3m and Net Assets of $101.0m as at 30 June 2019. At 30 June
2019 the Group had net debt of $4.1m.
Performance by Division
Fluid Systems
Fluid Systems (FS), led by Bruce Carter and his management team have had another outstanding year with exceptional sales growth.
Sales growth of 27.3% (15.7% excluding Torque) was achieved following 20.9% growth in FY18. Sales growth is being driven by an
increase in service, maintenance, upgrade and new equipment activity in the mining and resources sector. Underlying EBITDA in FY19
of $8.8m including Torque compared to $5.5m in FY18.
We expect continuing sales and contribution growth in FS in FY20. Sales growth will be achieved as a result of the strong mining and
resources sector, increasing market share through our value proposition, expanding our product and service offering, potential
greenfield expansion and acquisitions. The Adani coal mine approval is a positive for the division. We are conscious of the exposure
FS has to the mining and resources cycle and were pleased to commence a diversification program with the acquisition of Torque. We
will use expertise in Torque to continue to diversify the customer base outside of the mining and resources sector.
FS is an excellent profitable business well positioned to integrate further acquisitions.
Plans for the integration of Torque with our CFS branch in Adelaide and relocation to a custom designed facility in 2020 are well
advanced. This will enable us to take advantage of the significant growth opportunities forecast in South Australia particularly in the
Defence and Agriculture markets. Plans are being implemented to relocate our Hunter Valley branch to a new custom-built facility to
cater for growth.
Trade Distribution (TD)
TD sales for the year including acquisitions up 16.1% on the prior year and excluding acquisitions up 1.5% on the prior year. The
underlying EBITDA for TD was $3.3m compared to -$2.5m loss in FY18.
Konnect and Artia New Zealand (KANZ)
Mike Wansink and his management team at KANZ have continued to perform strongly with sales up 13.3% on last year with highlights
including continuing growth in the construction industry and the opening of two new branches. The Auckland CBD branch has also
been relocated to a much larger facility. KANZ is the leading fastening systems business in the construction and roofing and cladding
markets in New Zealand and has good growth prospects.
The new branches opened in Rotorua and Silverdale and the expanded Auckland CBD branches are expected to perform well in FY20.
Future growth will come from a combination of organic sales growth, the potential for further branches in new locations and the potential
acquisition of profitable businesses in New Zealand.
Konnect and Artia Australia (KAA)
As previously stated, we are far from satisfied with the slow rate of recovery in KAA sales but remain committed to our strategy. KAA
sales are in line with PCP excluding one-off project sales to Chevron in WA ($1.282m) and the impact of unprofitable store closures
($1.467m). Whilst there has been a solid improvement in contribution, we remain well short of achieving a breakeven result. Our
progress has been slowed in the main due to the difficulty attracting quality experienced people into the business. Our ability to recruit
over the last six months has improved and we have strengthened the team with senior appointments that will ensure the turnaround
will gain momentum in FY20 and beyond.
In the last six months we have made quality key appointments including Peter Shaw (ex Wesfarmers) as General Manager, Chris Smith
(ex Blackwoods) as Qld Regional Manager, Mark Ramsdale (ex Bunzl Safety) as NSW Regional Manager, Christian McCormack (ex
Stanley Black and Decker) as Artia Manager and Tim Holland (ex Blackwoods) as Southern Regional Manager. We are continuing to
strengthen our sales team with new Business Development Manager appointments in NSW, Queensland, Victoria and WA.
6
The key to success is having the right people. In addition to getting the right people our other key strategies are:
•
Improving our value proposition, specifically:
o Sale of quality products from our local suppliers and own brand imported range. Relationships with our key suppliers
are continuing to strengthen and we are improving trading terms
o Ensuring our stock availability and DIFOT levels in the branch network remain high and each branch stocks what it
sells based on the markets the branch operates in
Increasing our capability in the branch network by ensuring we have an appropriate level of qualified resources and
service delivery agility
Increasing the level of expertise in the business through recruitment and training
Improving service agility with the introduction of branch delivery vehicles
o
o
o
• Opening new stores. During the year we opened a branch in Kalgoorlie and a “pop up store” in Mount Gambier. We have
advanced plans for two additional new branches.
• Margin improvement programs including:
o Taking advantage of buying synergies as a result of the Nubco acquisition
o
Improving trading terms with overseas suppliers
o
Introducing rebate plans with local suppliers
o Sales of our higher margin categories and products
o Reducing freight costs and increasing freight recovery
•
•
The Distribution Centre cost savings highlighted in this report last year of $3.0m have been delivered in FY19 and we expect
to deliver a further $1.5m in savings over FY20 and FY21. As this project progresses the supply chain across KAA is becoming
more efficient improving our ability to deliver high stock availability and agile service to our customers.
The Nubco acquisition presents us with opportunities to improve KAA including:
o Buying benefits
o Product range extension
o Marketing, store merchandising and promotional expertise
• A Digital Customer Engagement project is aimed at increasing on-line sales, improving our understanding of our customers,
increasing electronic digital marketing activity and introducing a quality CRM system.
As a result of the Nubco acquisition we have closed the Konnect branches in Launceston and Burnie with the majority of their business
transferred to Nubco branches.
We are expecting stronger sales growth in FY20 with the strengthening of the management and business development teams that has
occurred in the second half of FY19.
Nubco
Nubco had a positive start with the Group recording sales and earnings in line with expectations for the four months post acquisition.
Nubco are well poised to take advantage of the strong Tasmanian economy and significant infrastructure and construction spend
planned in the state. As previously noted, the Nubco acquisition is also assisting us to improve KAA’s value proposition and fast
tracking its return to profitability.
Corporate Costs
Corporate costs increased during the year due to the strengthening of the Finance, Human Resources and IT teams so that they can
support a rapidly growing business. Moving forward we will deliver productivity gains using technology so that as sales grow, only
modest additional corporate costs are required. Corporate costs are currently running at 4.8% of sales (5.1% FY18). We expect this
to reduce to 4.2% of sales in FY20.
The property at Redcliffe remains a concern with the need to replace the sub tenant in the warehouse from the start of next calendar
year. We have a comprehensive marketing program in to place to maximise our ability to deliver a new sub tenant. All other tenants
are locked in for the medium term.
Working Capital
Net assets of $101.0m compared to $60.6m in FY18 in the main due to the acquisitions. Reducing working capital to maximise cash
generation remains a key focus area for the Group. The new Accounts Receivable team in Melbourne has had a positive impact on
debtor days outstanding. Inventory reductions have been modest, with our main priority being high stock availability to ensure we can
deliver on our value proposition to achieve sales growth. Detailed inventory reduction plans for FY20 have been developed.
The Group has minimal capital expenditure requirements.
7
Outlook
The outlook for our end markets (commercial construction / infrastructure and mining) is positive. The Group has negligible exposure
to the residential construction market.
A significant improvement in profitability is forecast for FY20 with the inclusion of recent acquisitions for a full 12 months, continued
sales growth, procurement savings and continued optimisation of the distribution footprint. We are forecasting FY20 EBITDA of $10m+
assuming the continuation of current trends and no adverse broader market developments. The medium term target of 7.5% Group
EBITDA margin remains.
We are actively assessing acquisition opportunities that are presented to us. We are seeking to sensibly increase debt facilities to fund
acquisitions along with cash generated by the Group. The Group has significant tax losses available to offset future profits ensuring a
high profit to cash conversion rate for the foreseeable future.
Overall, we remain positive about the outlook for the Group.
I would like to acknowledge the support we have received from the Board and thank the Executive Leadership team and every person
in the Group for their contribution during the year. In two years we have transformed a large loss making company in financial distress
into one that is profitable with excellent future prospects. We remain confident that we will fully deliver on our five year strategy and in
doing so restore shareholder value.
Robert J Bulluss
Chief Executive Officer and Managing Director
8
Coventry Group Ltd and its controlled entities
Consolidated statement of profit or loss
For the year ended 30 June 2019
Continuing operations
Revenue from sale of goods
Cost of sales
Gross profit
Other income
Employment costs
Depreciation and amortisation expense
Occupancy costs
Communication costs
Freight
Vehicle operating costs
Restructuring and other significant costs
Other expenses
Loss before financial income and tax
Financial income, including net foreign exchange gain
Financial expense, including net foreign exchange loss
Net financial expense
Loss before income tax
Income tax expense
Loss for the year from Continuing Operations
Discontinued operation
Profit from Discontinued operation, net of tax
(Loss)/profit for the year from Continuing and Discontinued operation
(Loss)/profit attributable to:
Owners of the Company
Non-controlling interests
Earnings/(loss) per share:
Basic loss from Continuing operations per share:
Diluted loss from Continuing operations per share:
Basic (loss)/earnings from Continuing and Discontinued operation per share:
Diluted (loss)/earnings Continuing and Discontinued operation per share:
Note
6
7
7
7
8
4
9
9
9
9
2019
$’000
202,346
(123,624)
78,722
3,732
(48,676)
(1,666)
(10,553)
(2,503)
(5,395)
(1,775)
(1,354)
(10,741)
(209)
92
(624)
(532)
(741)
(685)
(1,426)
-
(1,426)
(1,426)
-
2018
$’000
168,050
(105,846)
62,204
5,676
(42,702)
(1,337)
(10,056)
(2,705)
(5,686)
(1,446)
(443)
(10,033)
(6,528)
9
(756)
(747)
(7,275)
(1,026)
(8,301)
14,278
5,977
5,651
326
(2.3 cents)
(2.3 cents)
(2.3 cents)
(2.3 cents)
(22.1 cents)
(22.1 cents)
15.1 cents
15.1 cents
The consolidated statement of profit or loss is to be read in conjunction with the accompanying notes to the consolidated financial
statements.
9
Coventry Group Ltd and its controlled entities
Consolidated statement of comprehensive income
For the year ended 30 June 2019
Note
(Loss)/profit for the year from Continuing and Discontinued operations
Other comprehensive income/(loss) items that may be
reclassified to profit or loss:
Foreign currency translation differences
Effective portion of changes in fair value of cash flow hedges
Other comprehensive income/(loss) for the year, net of income tax
Total comprehensive (loss)/income for the year
Total comprehensive (loss)/income attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive (loss)/income for the year
2019
$’000
(1,426)
191
(96)
95
(1,331)
(1,331)
-
(1,331)
2018
$’000
5,977
(842)
236
(606)
5,371
5,071
300
5,371
The consolidated statement of comprehensive income is to be read in conjunction with the accompanying notes to the consolidated
financial statements.
10
Coventry Group Ltd and its controlled entities
Consolidated statement of financial position
As at 30 June 2019
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets at amortised cost
Other current assets
Derivative financial instrument
Total current assets
Deferred tax assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Employee benefits
Interest-bearing loans and borrowings
Income tax payable
Provisions
Total current liabilities
Employee benefits
Other payables
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Note
10
11
12
11
11
8
14
15
17
18
17
2019
$’000
5,314
35,833
59,886
2,023
1,487
136
104,679
1,185
5,864
46,562
53,611
158,290
38,204
5,734
9,411
526
-
53,875
157
3,228
3,385
57,260
101,030
149,517
(4,874)
(43,613)
101,030
2018
$’000
4,966
30,504
46,444
-
-
-
81,914
6,120
4,581
6,071
16,772
98,686
30,522
3,701
-
416
90
34,729
146
3,197
3,343
38,072
60,614
107,770
(4,969)
(42,187)
60,614
The consolidated statement of financial position is to be read in conjunction with the accompanying notes to the consolidated financial
statements.
11
Coventry Group Ltd and its controlled entities
Consolidated statement of changes in equity
For the year ended 30 June 2019
Share-based
payments
reserve
Hedge
reserve
Translation
reserve
Other
reserve
Total
reserves
$’000
$’000
$’000
$’000
$’000
Share
capital
$’000
Retained
earnings
$’000
192
(1,587)
(3,574)
(4,969)
107,770
(42,187)
Balance at 1 July 2018
Total comprehensive
(loss)/income for the year
(Loss) for the year
Other comprehensive
(loss)/income:
Foreign currency translation
differences
Effective portion of changes in
fair value of cash flow hedges
Total other comprehensive
(loss)/income
Total comprehensive
(loss)/income for the year
Transactions with owners,
recorded directly in equity
Share issue
Share issue costs
Balance at 30 June 2019
Amounts are stated net of tax
-
-
-
-
-
-
-
-
-
-
-
(96)
(96)
(96)
-
-
96
Total for
owners of the
Company
Non-
controlling
interests
Total
equity
$’000
60,614
$’000
$’000
-
60,614
(1,426)
(1,426)
-
(1,426)
-
191
(96)
95
95
-
-
-
-
-
-
-
-
191
(96)
95
(1,426)
(1,331)
-
191
-
191
191
-
-
-
-
-
-
-
-
-
-
-
44,641
(2,894)
-
-
44,641
(2,894)
(1,396)
(3,574)
(4,874)
149,517
(43,613)
101,030
-
-
-
-
-
-
-
191
(96)
95
(1,331)
44,641
(2,894)
101,030
Balance at 1 July 2017
Total comprehensive
income for the year
Profit for the year
Other comprehensive
(loss)/income:
Foreign currency translation
differences
Effective portion of changes in
fair value of cash flow hedges
Total other comprehensive
income/(loss)
Total comprehensive
income/(loss) for the year
Transactions with owners,
recorded directly in equity
Acquisition of non-controlling
interest
Conversion of performance
rights
Share buy-back
Dividend to equity holders
Share based payment
transactions
Balance at 30 June 2018
Amounts are stated net of tax
Share-based
payments
reserve
$’000
-
Hedge
reserve
$’000
(44)
Translation
reserve
$’000
(771)
Other
reserve
$’000
-
Total
reserves
$’000
(815)
Share
capital
$’000
108,063
Retained
earnings
$’000
(47,838)
Total for owners
of the
Company
$’000
59,410
Non-
controlling
interests
$’000
2,165
Total
equity
$’000
61,575
-
-
-
-
-
(816)
-
236
-
-
236
(816)
-
236
(816)
-
-
-
-
-
-
-
5,651
5,651
326
5,977
(816)
-
-
(816)
(26)
(842)
236
-
-
236
-
236
(580)
-
-
(580)
(26)
(606)
(580)
-
5,651
5,071
300
5,371
-
(89)
-
-
89
-
-
-
-
-
-
-
-
-
-
(3,574)
(3,574)
-
-
-
-
(89)
-
-
80
(373)
-
-
-
-
-
(3,574)
(2,327)
(5,901)
(9)
(373)
-
-
-
(138)
(9)
(373)
(138)
-
-
89
-
-
89
-
89
192
(1,587)
(3,574)
(4,969)
107,770
(42,187)
60,614
-
60,614
12
Coventry Group Ltd and its controlled entities
Consolidated statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash used in operations
Interest paid
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities
Proceeds from Discontinued operation
Proceeds from sale of property, plant and equipment
Payment for acquisitions of business, net of cash acquired
Interest received
Acquisition of property, plant and equipment
Acquisition of intangible assets
Net cash (used in)/from investing activities
Cash flows from financing activities
Proceeds from Borrowings
Repayment of Borrowings
Proceeds from issue of shares
Share issue costs
Share buy-back
Dividends paid to non-controlling interests
Transactions with non-controlling interests
Net cash from/(used in) financing activities
Note
24
4
3
14
15
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of movements in exchange rates on cash and cash equivalents
Cash and cash equivalents at 30 June
10
2019
$’000
217,522
(220,872)
(3,350)
(624)
(396)
(4,370)
-
85
(43,208)
34
(1,092)
(393)
(44,574)
194,597
(185,186)
42,673
(2,894)
-
-
-
49,190
246
4,966
102
5,314
2018
$’000
183,487
(186,827)
(3,340)
(509)
(230)
(4,079)
21,012
527
-
9
(1,782)
(324)
19,442
68,896
(76,941)
-
-
(373)
(138)
(5,927)
(14,483)
880
5,149
(1,063)
4,966
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes to the consolidated financial
statements.
13
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
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 2019 comprises the Company and its controlled entities (together
referred to as the “Group”).
The financial report was authorised for issue by the Directors on 23 August 2019.
(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.
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(v)) to all years presented in this consolidated
financial report. Certain prior year figures have been reclassified to conform with the presentation in the current year.
Going Concern
In preparing the financial report, the Directors have made an assessment of the ability of the Group to continue as a going concern,
which contemplates 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 Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 July
2018:
• AASB 9 Financial Instruments
• AASB 15 Revenue from Contracts with Customers
• AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment
Transactions
• AASB 2017-1 Amendments to Australian Accounting Standards – Transfer to Investment Property, Annual Improvements 2014 –
2016 Cycle and Other Amendments
• AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration
The impact of the adoption of AASB 9 and AASB 15 and new accounting policies is disclosed in note 26.
The other amendments listed above did not have a material or significant impact on the Group’s consolidated financial report.
(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.
14
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
1. Significant accounting policies (continued)
(d) Basis of consolidation (continued)
When the excess is negative, a bargain purchase gain is recognised immediately in 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.
Non-controlling interests
NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
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 profit or loss. Any interest retained in the former subsidiary is
measured at fair value when control is lost.
(e) Foreign currency
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 statement of profit or loss.
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. 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.
Foreign currency differences are recognised in other comprehensive income, and presented in the translation reserve in equity.
However, if the operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is
allocated to the non-controlling interests.
(f) Discontinued operation
A Discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
•
•
•
represents a separate major line of business or geographic area of operations;
is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or
is a subsidiary acquired exclusively with a view to re-sale.
Classification as a Discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as
held-for-sale.
(g) 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.
(h)
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.
15
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
1. Significant accounting policies (continued)
(i) Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost less loss allowance.
(j) 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.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group
will obtain ownership by the end of the lease term.
The estimated useful lives for each class of asset are:
Class of Fixed Asset
- Plant and Equipment
(k)
Intangibles
Depreciation Rate
5% - 40%
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.
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 profit or loss over their estimated useful
lives, from the date that they are available for use. In current and comparative periods, computer software was estimated to have a
useful life of 3 to 10 years, and 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.
(l) Financial Instruments
The accounting policies for the Group’s financial instruments (including derivative financial instruments) are explained in note 26.
(m) Impairment 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.
(n) 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.
(o) 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.
16
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
1. Significant accounting policies (continued)
(p) Trade and other payables
Trade and other payables are stated at amortised cost.
(q) Revenue and other income
The accounting policies for the Group’s revenue from contracts with customers are explained in note 26.
Rental income
Rental income is recognised in the statement of profit or loss on a straight line basis over the term of the lease. Rental income from
subleased property is recognised as other income.
(r) Leases
Leased assets
Assets held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified
as finance leases. Assets held under other leases are classified as operating leases and are not recognised in the Group’s statement
of financial position.
Lease payments
Payments made and material incentives received under operating leases are recognised in profit or loss on a straight-line basis over
the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the
lease.
(s) Finance income and finance costs
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in profit or loss, using the
effective interest method.
Finance costs comprise interest expense on borrowings and finance leases.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in
profit or loss using the effective interest method.
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.
(t)
Income tax
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.
17
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
1. Significant accounting policies (continued)
(t)
Income tax (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.
(u) 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.
(v) 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 – note 1(t) and note 8
estimated useful life of intangible assets – note 1(k)
estimated impairment of non-financial assets and measurement of the recoverable amount of cash generating units – note 16
estimation of impairment of inventories – note 1(h)
(w) New standards and interpretations not yet adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not
been adopted by the Group for the annual reporting period ended 30 June 2019 are outlined below.
AASB 16 Leases
The Group is required to adopt AASB 16 Leases from 1 July 2019. The Group has substantially completed the assessment of the new
standard on its consolidated financial statements, as described below.
AASB 16 will have a significant impact on the consolidated financial statements of the Group. The standard will affect primarily the
accounting for the Group’s non-cancellable operating lease commitments as disclosed in note 22.
Transition
The Group will apply AASB 16 initially on 1 July 2019, using the modified retrospective approach. Therefore, the cumulative effect of
adopting AASB 16 will be recognised as an adjustment to the opening balance of retained earnings at 1 July 2019, with no restatement
of comparative information.
18
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
1. Significant accounting policies (continued)
(w) New standards and interpretations not yet adopted (continued)
Leases in which the Group is a lessee
AASB 16 will result in higher assets and liabilities on the statement of financial position. On 1 July 2019, the Group will recognise a
right-of-use asset and a lease liability for its operating leases of rental premises, branches and motor vehicles. Right-of-use assets will
be measured at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).
The Group also expects to retain the classification of existing contracts as leases under current accounting standards (‘grandfathering’)
instead of reassessing whether existing contracts are or contain a lease at the date of application of the new standard. Further, the
Group does not currently intend to bring short term leases (12 months or fewer to run as at 1 July 2019 including reasonably certain
options to extend) or low value leases on the statement of financial position.
In addition, the nature of expenses related to those leases will now change as AASB 16 replaces the straight-line operating lease
expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. The impact will likely cause some
movements in overall expenses in the consolidated statement of profit or loss broadly in line with contract renewal dates. Operating
cash flow will increase under AASB 16 as the element of cash paid attributable to the repayment of principal will be included in financing
cash flow. The net increase/decrease in cash and cash equivalents will remain the same.
As at reporting date, the Group has non-cancellable operating lease commitments with a nominal value of $47,418,000 (refer to note
22). Of these commitments, approximately $1 million relate to short-term leases which will be recognised on a straight-line base as an
expense in profit and loss. For the remaining lease commitments, the preliminary assessment concluded that the Group may be required
to recognise a right-of-use asset and lease liability of between $31 million to $37 million on its statement of financial position on adoption
of the standard on 1 July 2019. This preliminary assessment excludes lease extension options which the Group are currently assessing
the likelihood of extension of each option. Amounts recognised in the consolidated statement of financial position at 30 June 2019 (i.e.
straight-line lease liabilities and onerous lease provisions) of $3.2 million are derecognised and offset against the right-of-use asset on
transition.
Leases in which the Group is a lessor
The Group has reassessed the classification of sub-leases in which the Group is a lessor. The Group expects that it will reclassify all
sub-leases as a finance lease, resulting in recognition of an Investment in a sub-lease asset as at 1 July 2019 and de-recognition of
the related right-of-use asset of the head lease previously recognised.
Other standards
The following amended standards and interpretations are not expected to have a significant impact on the Group’s consolidated
financial statements.
•
•
•
•
AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015-2017 Cycle.
AASB Interpretation 23 Uncertainty over Income Tax Treatments.
AASB 2018-2 Amendments to Australian Accounting Standards – Plan Amendment, Curtailment of Settlement (AASB 119).
AASB 2017-7 Amendments to Australian Accounting Standards – Long-term Interests in Associates and Joint Ventures
(AASB 128).
AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with Negative Compensation (AASB 9).
•
19
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
2. Operating segments
(a) Description of segments
The Group has reportable segments as described below. For each of the strategic operating segments, the CEO reviews internal
management accounts on a monthly basis. The following summary describes the operations of each of the Group’s reportable
operating segments:
Trade
Distribution
Includes the importation, distribution and marketing of industrial fasteners, industrial hardware supplies and
associated products and cabinet making hardware.
Fluid Systems
Includes the design, manufacture, distribution, installation and maintenance of lubrication and hydraulic fluid
systems and hoses.
(b) Segment information
Information regarding the results of each reportable segment is included below.
Information about reportable
segments
Trade
Distribution
Fluid Systems
30 June 2019
Segment revenue
Inter-segment revenue
Revenue from external customers
Timing of revenue recognition at
point in time
over time
EBIT
Depreciation and amortisation
$’000
118,074
-
118,074
118,074
-
118,074
2,713
486
$’000
83,253
-
83,253
83,253
-
83,253
8,262
572
Other business
units and
consolidation
adjustments
$’000
-
-
-
-
-
-
(9,887)
604
Total reportable
continuing
segments
$’000
201,327
-
201,327
201,327
-
201,327
1,088
1,662
Information about reportable
segments
30 June 2018
Segment revenue
Inter-segment revenue
Revenue from external customers
Trade
Distribution
Fluid
Systems
$’000
102,256
-
102,256
$’000
65,396
-
65,396
Other
business units
and
consolidation
adjustments
$’000
-
-
-
Total
reportable
continuing
segments
$’000
167,651
-
167,651
Gaskets
(discontinued)
Total
$’000
$’000
6,947 174,598
336
7,283 174,934
336
EBIT
(2,972)
4,986
(8,504)
(6,490)
1,648
(4,842)
Depreciation and amortisation
368
550
419
1,337
56
1,393
20
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
2. Operating segments (continued)
(c) Other segment information
i. Segment Revenue
A reconciliation of segment revenue to total revenue from the sale of goods in the Statement of Profit or Loss is provided as follows:
Total segment revenue from continuing operations
Foreign exchange translation variance
Total revenue from continuing operations
2019
$’000
201,327
1,019
202,346
2018
$’000
167,651
399
168,050
ii. Segment Operating Profit/(Loss)
The ELT measures the performance of the Group’s reportable segments based on EBIT (Earnings before Interest and Tax). This
measurement basis excludes the effects of interest on external borrowings and income tax expense. A reconciliation of EBIT to operating
profit/(loss) from continuing operations in the Statement of Profit or Loss is provided as follows:
Total segment EBIT from continuing operations
Foreign exchange translation variance
Significant expenses
Net financing expense
Income tax expense
Other
Total operating loss from continuing operations
(d) Geographic information
Note
7
8
2019
$’000
1,088
57
(1,354)
(532)
(685)
-
(1,426)
2018
$’000
(6,490)
(43)
-
(747)
(1,026)
5
(8,301)
Revenue from continuing operations based on the geographic location of customers were Australia $168,360,000 (2018: $138,066,000)
and New Zealand $33,986,000 (2018: $29,984,000).
3. Business Combination
(a) Torque Acquisition
On the 31 October 2018, the Group acquired the business and assets of Torque Industries Pty Ltd, a South Australian based diversified
engineering services provider trading under the name Torque Industries.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
Deferred consideration (ii)
Total purchase consideration
$’000
8,522
895
9,417
21
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
3. Business Combination (continued)
(a) Torque Acquisition (continued)
The provisional fair value of the identifiable assets and liabilities recognised at acquisition date are as follows:
Inventories
Prepayments
Property, plant and equipment (note 14)
Other creditors
Employee benefit obligations
Net deferred tax assets
Net identifiable assets acquired (iii)
Add: Goodwill on acquisition (note 15) (iv)
Purchase consideration
(i) Acquisition Related costs
Provisional
fair value
$’000
1,302
45
353
(44)
(614)
184
1,226
8,191
9,417
The total of transaction costs directly attributable to the issue of shares of $1,147,000 was deducted from share capital. Acquisition-
related costs were insignificant and included in restructuring and other significant expenses in profit or loss and in operating cash flows
in the statement of cash flows.
(ii) Deferred consideration
The deferred consideration arrangement required the Group to pay Torque Industries a maximum of $1.05 million 2 years from the
acquisition date. The deferred amount acts as a security for future warranty claims.
The fair value of the deferred consideration arrangement of $895,000 was estimated as the present value of the future cash flows. The
estimates are based on the Group’s incremental borrowing rate of 8.32%.
(iii) Provisional assessment
The net assets recognised in the financial statements are based on a provisional assessment of fair value at reporting date.
(iv) Goodwill
The goodwill is attributable to Torque Industries’ strong profitability and a number of identified growth opportunities. The acquisition
provides the Group with a large and fully equipped South Australian based facility that will generate a more diversified and de-risked
revenue stream, also allowing the Group to gain a more stable footing in the South Australian market. It has been allocated to the Fluid
Systems business segment. Refer to note 15 for the changes in goodwill as a result of the acquisition.
(b) Nubco Acquisition
On the 1 March 2019, the Group acquired 100% of the issued share capital of Nubco Proprietary Limited (“Nubco”), a Tasmanian based
independent supplier of industrial and hardware products.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
Ordinary shares issued (ii)
Total purchase consideration
$’000
34,686
1,968
36,654
22
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
3. Business Combination (continued)
(b) Nubco Acquisition (continued)
The provisional fair value of the identifiable assets and liabilities recognised at acquisition date are as follows:
Cash and cash equivalents
Trade Receivables
Inventory
Prepayments
Deferred tax assets
Property, plant and equipment (note 14)
Intangible assets: brand name (note 15)
Intangible assets: customer relationships (note 15)
Trade Payables
Employee benefit obligations
Other payables
Deferred tax liability
Net identifiable assets acquired (iii)
Add: Goodwill on acquisition (note 15) (iv)
Purchase consideration
(i) Acquisition related costs
Provisional
fair value
$’000
5
4,174
9,489
257
303
1,089
11,376
6,102
(3,996)
(1,104)
(675)
(5,243)
21,777
14,877
36,654
The total of transaction costs directly attributable to the issue of shares of $1,747,000 was deducted from share capital. Acquisition-
related costs were insignificant and included in restructuring and other significant expenses in profit or loss and in operating cash flows
in the statement of cash flows.
(ii) Ordinary shares issued
The fair value of the 2,400,000 shares issued as part of the consideration paid for Nubco ($1.968m) was based on the published share
price on 28 February 2019 of $0.82 per share.
The shares issued were issued and placed in escrow for a 2-year period from the acquisition date until 28 February 2021.
(iii) Provisional assessment
The net assets recognised in the financial statements are based on a provisional assessment of fair value at reporting date.
(iv) Goodwill
The goodwill is attributable to Nubco’s historic strong profit performance and the strategic compliment to the Group. This acquisition
of Nubco offers tangible synergies that will benefit Coventry Group’s Australian-wide business, including procurement cost savings and
knowledge transfer.
(c) Revenue and profit contribution
The acquisition of Torque contributed revenues of $7,608,000 and net profit of $1,237,000 to the Group for the period from 31 October
2018 to 30 June 2019 (eight months trading). The acquisition of Nubco contributed revenues of $14,926,000 and net profit of $2,282,000
to the Group for the period from 1 March 2019 to 30 June 2019 (four months trading).
If both acquisitions had occurred on 1 July 2018, Group consolidated revenue and consolidated profit after tax for the year ended 30
June 2019 would have been $234,326,000 and $3,299,000 respectively.
4. Discontinued operation
On 20 November 2017 the Group announced the sale of the AA Gaskets business assets in Australia and New Zealand to GUD
Holdings Limited. The AA Gaskets business, sold on 1 December 2017, was reported in the financial statements for the year ended
30 June 2018 as a discontinued operation.
23
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
5. Auditor's remuneration
Audit services
Auditors of the Group
KPMG Australia:
Engagement of audit and review of financial reports
Prior year additional charges and out of scope audit services
Other services
Auditors of the Group
KPMG Australia:
Transaction services
KPMG New Zealand:
Tax services
6. Employment costs
Wages and salaries
Liability for annual leave and long service leave
Contributions to superannuation funds
Payroll taxes
Other associated personnel expenses
7. Finance income and finance expenses
Interest income from other entities
Net foreign exchange gain
Financial income
Interest expense
Net foreign exchange loss
Financial expenses
Net financial (expense)/income
8.
Taxes
Current tax expense/(benefit)
Current year
Underprovision/(overprovision) prior year
Tax recognised in the profit or loss
Deferred tax expense
Origination and reversal of temporary differences
Total deferred tax expense/(benefit)
Total income tax expense/(benefit)
24
2019
$
2018
$
220,000
7,000
227,000
110,575
10,300
120,875
2019
$’000
38,175
3,629
3,425
2,165
1,282
48,676
2019
$’000
34
58
92
(624)
-
(624)
(532)
2019
$’000
470
36
506
179
179
685
195,000
39,819
234,819
-
11,100
11,100
2018
$’000
33,090
3,369
2,993
1,806
1,444
42,702
2018
$’000
9
-
9
(509)
(247)
(756)
(747)
2018
$’000
796
(19)
777
629
629
1,406
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
8.
Taxes (continued)
Income tax expense is attributable to:
Loss from Continuing operations
Profit from Discontinued operation
Reconciliation of effective tax rate
Loss from Continuing operations for the period
Total income tax loss
Loss excluding income tax
Income tax using the Company’s domestic tax rate of 30%
Tax profit on sale of assets
Revenue tax losses (recognised)/not recognised
Non-deductible expenditure
Over provision in prior periods
Effect of lower tax rate applicable to foreign controlled entity
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
2019
$’000
685
-
685
(1,426)
685
(741)
(222)
-
881
26
36
(36)
685
2018
$’000
1,026
380
1,406
(8,301)
1,026
(7,275)
(2,183)
2,072
1,131
(21)
-
27
1,026
Trade and other receivables
Inventories
Property, plant and equipment
Intangible assets
Employee benefits
Trade and other payables
Tax assets/(liabilities)
Set off of deferred tax liability
Net deferred tax asset
Assets
2019
$’000
111
1,731
2,360
-
1,813
413
6,428
(5,243)
1,185
2018
$’000
122
1,918
2,360
-
1,194
526
6,120
-
6,120
Liabilities
2019
$’000
-
-
-
(5,243)
-
-
(5,243)
5,243
-
2018
$’000
-
-
-
-
-
-
-
-
-
Net
2019
$’000
111
1,731
2,360
(5,243)
1,813
413
1,185
-
1,185
2018
$’000
122
1,918
2,360
-
1,194
526
6,120
-
6,120
Within the Group Australian operations there are unutilised carried forward tax losses of $71,946,759 (2018: $70,804,729) for which no
deferred tax asset has been recognised.
9.
Earnings per share
Earnings used in basic and diluted earnings per share calculation
($)
Weighted average of shares in year used in basic and diluted
earnings per share (number)
(Loss)/earnings per share (cents)
10. Cash and cash equivalents
Cash on hand
Bank balances
Cash and cash equivalents
2019
2018
Continuing
operations
Continuing
operations
Discontinued
operation
Total
(1,425,920)
(8,301,311)
13,952,925
5,651,614
60,714,882
(2.3 cents)
37,513,388
(22.1 cents)
37,513,388
37.2 cents
37,513,388
15.1 cents
2019
$’000
4
5,310
5,314
2018
$’000
4
4,962
4,966
Non-cash investing and financing activities
Except for the escrow shares issued for the acquisition of Nubco (refer note 3(b)), there were no non-cash investing and financing
activities during the year (2018: $Nil).
25
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
10. Cash and cash equivalents (continued)
Net debt reconciliation
2019
2,896
1,063
(8,925)
(4,966)
2018
$’000
28,235
(407)
27,828
1,464
1,212
2,676
30,504
2018
$’000
52,821
(6,377)
46,444
Financing
liabilities
Borrowings
(included
finance leases)
$’000
-
-
Other assets
Cash
$’000
Net debt
$’000
(4,966)
(4,966)
Financing
liabilities
Borrowings
(included finance
leases)
$’000
2018
Other assets
Cash
$’000
Net debt
$’000
11
9,411
9,411
(359)
(5,314)
11
9,052
4,097
8,045
-
(8,045)
-
(5,149)
1,063
(880)
(4,966)
Analysis of changes in net debt
Opening balance at the beginning
of the financial year
Foreign exchange adjustment
Cash movements excluding
exchange movements
Closing balance
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 21.
11. Trade and other receivables
Current
Trade receivables
Loss allowance (note 21)
Other receivables
Prepayments
Total trade and other receivables
2019
$’000
36,206
(373)
35,833
2,023
1,487
3,510
39,343
Information about the Group’s exposure to credit risk, foreign currency risk and interest rate risk is disclosed in note 21.
12.
Inventories
Finished goods
Provision for obsolescence
Net Inventory balance
2019
$’000
65,723
(5,837)
59,886
$1,058,334 (2018: $387,000) of inventory write-downs were recognised during the year.
13. Parent entity disclosures
As at, and throughout, the financial year ending 30 June 2019 the parent company of the Group was Coventry Group Ltd.
Results of the parent entity
Loss for the period
Other comprehensive income
Total comprehensive loss for the period after tax
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Issued capital
Reserves
Retained earnings
Total equity
26
Company
2019
$’000
(5,046)
(116)
(5,162)
72,936
160,325
43,817
47,201
149,517
75
(36,468)
113,124
2018
$’000
(8,945)
236
(8,709)
68,361
91,434
29,719
36,085
107,770
192
(52,613)
55,349
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
14.
Property, plant and equipment
Cost at 1 July 2018
Accumulated Depreciation at 1 July 2018
Carrying amounts at 1 July 2018
Additions
Acquisition through business combination
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Carrying amounts at 30 June 2019
Cost at 1 July 2017
Accumulated Depreciation at 1 July 2017
Carrying amounts at 1 July 2017
Additions
Depreciation charge for the year
Discontinued operation
Disposals
Effect of movements in foreign exchange
Carrying amounts at 30 June 2018
15.
Intangible assets
Carrying amounts at 1 July 2018
Acquisition through business combination
Additions
Amortisation for the year
Carrying amounts at 30 June 2019
Carrying amounts at 1 July 2017
Additions
Amortisation for the year
Carrying amounts at 30 June 2018
16. Impairment of non-financial assets
Note
3
Note
Goodwill
3
$’000
3,327
23,068
-
-
26,395
3,327
-
-
3,327
Brand
name
$’000
-
11,376
-
-
11,376
Customer
relationships
$’000
-
6,102
-
(203)
5,899
Computer
software
$’000
2,744
-
393
(245)
2,892
-
-
-
-
-
-
-
-
2,608
324
(188)
2,744
Plant and
equipment
$’000
41,582
(37,001)
4,581
1,092
1,442
(1,218)
(36)
3
5,864
40,500
(35,802)
4,698
1,782
(1,205)
(407)
(293)
6
4,581
Total
$’000
6,071
40,546
393
(448)
46,562
5,935
324
(188)
6,071
For the purpose of impairment testing, goodwill and indefinite life intangible assets are allocated to the Group's operating divisions. The
aggregate carrying amounts of goodwill and indefinite life intangible assets allocated to each CGU are as follows.
Fluid Systems
Trade Distribution
2019
$’000
11,518
26,253
37,771
2018
$’000
3,327
-
3,327
The key assumptions used in the value in use calculations include projected sales growth, projected gross margins, terminal value,
improvements in working capital and the discount rate. These assumptions are based on historical experience and projected
performance incorporating in the company's restructure programme.
The Group assessed the carrying value of its assets as follows:
Trade Distribution
For the year ended 30 June 2019, the Group's value in use model indicated no evidence of the requirement for impairment in the
carrying amount of the assets of this business. Value in use was based on the following key assumptions:
• Sales growth at 32.5% (includes full financial year sales growth for Nubco) for FY20 and 4.8% thereafter
•
Terminal growth 2.5%
• Pre-tax WACC of 14.95%
27
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
16. Impairment of non-financial assets (continued)
Fluid Systems
For the year ended 30 June 2019, the Group's value in use model showed the recoverable amount exceeded the carrying amount of
the Fluid Systems CGU. The values assigned to the key assumptions were:
• Sales growth at 7.3% (includes full financial year sales growth for Torque) for FY20 and 4.8% thereafter
•
Terminal growth 2.5%
• Pre-tax WACC of 14.95%
Any adverse change in the key assumptions may result in impairment.
17. Trade and other payables
Trade payables
Non trade payables and accrued expenses
Total trade and other payables
Current
Non-current
Total trade and other payables
2019
$’000
31,070
10,362
41,432
38,204
3,228
41,432
The Group's exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 21.
18.
Interest-bearing loans and borrowings
Current
Debtor Financing Facility
Total interest-bearing loans and borrowings
2019
$’000
9,411
9,411
2018
$’000
24,882
8,837
33,719
30,522
3,197
33,719
2018
$’000
-
-
Details about the Group’s financing facilities, exposure to interest rate, foreign currency and liquidity risks is provided in note 21.
19. Share-based payments
Executive and Director Incentive Plan
An Executive and Director Incentive Plan was approved by shareholders in 2017. The Plan governs the future granting of performance
rights and issue of shares based on annual Company performance. Vesting of performance rights varies with the extent that
performance hurdles have been met. On vesting, the performance rights entitle the recipient to receive fully paid shares in the Company.
20. Capital and reserves
Share capital
On issue at 1 July 2018
Conversion of performance rights (i)
Share buyback – unmarketable parcels (ii)
Share buyback (iii)
Share issue (iv)
Share issue (v)
Share issue (vi)
On issue at 30 June 2019
Ordinary shares
2019
‘000
37,380
-
-
-
13,084
36,836
2,400
89,700
Ordinary shares
2018
‘000
37,636
80
(336)
-
-
-
-
37,380
(i) On 8 December 2017, 80,000 performance rights issued in accordance with the Executive and Director Incentive Plan were converted
to ordinary shares.
(ii) In December 2017, the Group announced a buyback of ordinary shares for holders of unmarketable parcels of shares. On 23
January 2018, the Company completed its unmarketable parcel minimum holding share buyback, where 336,075 ordinary shares were
acquired and cancelled at a price of $1.1108 per share.
(iii) In March 2019, the Group announced an on-market share buyback of up to 10% of its issued ordinary shares. The 12 month buy-
back period commenced on 1 March 2019 and will end on 11 March 2020.
28
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
20. Capital and reserves (continued)
(iv) On 26 September 2018 the Company announced an underwritten $15m equity raising to fund the acquisition of Torque
Industries. The raising successfully completed in October 2018 with the issue of 13,083,533 ordinary shares at $1.15 from a 1 for 5
accelerated non-renounceable pro-rata entitlement offer and an institutional placement.
(v) On 5 February 2019 the Company announced an underwritten $27.6m equity raising to fund the acquisition of Nubco Proprietary
Ltd. The raising successfully completed in February 2019 with the issue of 36,835,730 ordinary shares at $0.75 from a 1 for 1.37
accelerated non-renounceable pro-rate entitlement offer.
(vi) On 1 March 2019, the Company issued 2,400,000 shares in escrow as part of the purchase price consideration for the acquisition
of Nubco Proprietary Limited (refer note 3(b)).
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 profit or loss as the hedged cash flows affect profit or loss.
Dividends
No dividends have been declared or paid for the year ended 30 June 2019 (2018: $Nil).
Dividend franking account
30 per cent franking credits available to shareholders of the Company for subsequent
financial years
21. Financial risk management
The Group has exposure to the following risks from their use of financial instruments:
Credit risk
Liquidity risk
•
•
• Market risk
Company
2019
$’000
10,843
2018
$’000
6,009
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
(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.
29
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
21. Financial risk management (continued)
(a) Credit risk (continued)
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:
Cash and cash equivalents
Trade and other receivables
Note
Carrying amount
10
11
2019
$’000
5,314
37,856
43,170
2018
$’000
4,966
29,292
34,258
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
$33,449,000 (2018: $24,993,000) and New Zealand $4,407,000 (2018: $4,299,000).
Cash at bank and short or long term deposits are held with Australian and New Zealand banks with acceptable credit ratings.
Impairment of Trade Receivables
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance
for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days
past due.
The expected loss rates are based on the payment profiles of sales over a period of five years before 1 July 2018 respectively and the
corresponding historical credit losses experienced within this period.
On that basis, the loss allowance as at 30 June 2019 was determined as follows for trade receivables:
30 June 2019
Australia
Expected loss rate (%)
Gross carrying amount ($’000) / balance outstanding as
reporting date
Loss allowance ($’000)
New Zealand
Expected loss rate (%)
Gross carrying amount ($’000) / balance outstanding at
reporting date
Loss allowance ($’000)
Current More than 30
days past
due
More than 60
days past
due
More than
120 days
past due
Total
0.0%
28,833
0
0.0%
3,988
0
0.1%
1,772
1
0.1%
119
0
1.2%
47.8%
681
8
629
301
31,915
310
1.2%
45.1%
47
1
137
62
4,291
63
30
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
21. 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 $25 million
securitised trade receivables 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:
Non derivative financial liabilities
Trade and other payables
Debtor financing facility
Carrying
amount
$’000
Contractual
cash flow
$’000
38,204
9,411
47,615
(38,204)
(9,411)
(47,615)
2019
6 mths
or less
$’000
(38,204)
(9,411)
(47,615)
6-12 mths
$’000
1-2 years More than 2
years
$’000
$’000
-
-
-
-
-
-
-
-
-
The outflows associated with forward contracts used for hedging are US$6.1 million (A$8.5 million), 2018: US$5.8 million, (A$7.6
million) and will have been made within 6 months or less.
Non derivative financial liabilities
Trade and other payables
Carrying
amount
$’000
Contractual
cash flow
$’000
2018
6 mths
or less
$’000
6-12 mths
$’000
1-2 years More than 2
years
$’000
$’000
30,522
(30,522)
(30,522)
-
-
-
Debtor financing facility
The Group has a $25 million (2018: $13 million), securitised trade receivables facility with Scottish Pacific with a current expiry of
August 2020. The facility is subject to a floating interest on funds drawn.
Guarantee facility
In addition to the borrowing facilities above, the Group has a guarantee facility, whereby the bank guarantees the performance of the
Group in relation to certain contractual commitments, up to the limit specified in each individual guarantee. The Guarantee facility
available at 30 June 2019 was $155,000 (2018: $155,000).
Securities
The securitised trade receivables facility is secured by a fixed and floating charge over relevant assets. The guarantee facility is
secured by fixed and floating charges over the assets and undertakings of the Company, general security agreements as well as
corporate guarantees and indemnities from Coventry Group Limited and Coventry Group (NZ) Limited, a deed of priority and a
security sharing deed.
Interest rate risk
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Variable rate financial assets
Carrying amount
2019
$’000
5,310
2018
$’000
4,962
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any 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.
Cash flow sensitivity analysis for variable rate instruments
The impact of a change of 100 basis points in interest rates at the reporting date is immaterial.
31
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
21. Financial risk management (continued)
(b) Liquidity risk (continued)
Fair values
The fair values of financial assets and financial liabilities of the Group approximate their carrying amounts in the statement of financial
position.
(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.
22. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
2019
$’000
11,464
26,005
9,949
47,418
2018
$’000
8,725
20,378
10,506
39,609
The Group leases various premises, plant and equipment and motor vehicles under operating leases. The leases typically run for
periods ranging from 1 month to 8.5 years and in some cases provide for an option to renew the lease after expiry. Lease payments
are reviewed periodically to reflect market rentals. None of the leases include contingent rentals.
During the financial year ended 30 June 2019 the Group recognised $8,953,921 (2018: $8,510,459) as an expense in the statement of
profit or loss in respect of operating leases.
Leases as lessor
At the end of the reporting period, the future minimum lease payments under non-cancellable leases are receivable as follows.
Less than one year
Between one and five years
More than five years
2019
$’000
1,411
1,090
-
2,501
2018
$’000
1,513
1,915
-
3,428
The Group subleases various premises under operating leases. The leases typically run for periods ranging from 6 months to 3.5 years
and in some cases provide for an option to renew the lease after expiry.
During the financial year ended 30 June 2019, the Group recognised $1,655,262 (2018: $1,875,497) as income in the statement of
profit or loss.
32
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
23. Controlled entities
COV Holdings (Aust) Pty Ltd
Coventry Group (NZ) Limited
COV Holdings (NZ) Pty Ltd (i)
Nubco Proprietary Limited (ii)
The ultimate parent entity is Coventry Group Ltd.
Country of
Incorporation
Australia
New Zealand
New Zealand
Australia
Ownership interest
2019
%
100
100
100
100
(i) The company is a 100% controlled entity of COV Holdings (Aust) Pty Ltd and operates in New Zealand.
(ii) On 1 March 2019, the Company acquired 100% of the issued capital of Nubco Proprietary Limited. Refer to note 3(b).
Note
7
8
24. Reconciliation of cash flows from operating activities
Cash flows from operating activities
Profit/(loss) for the period
Adjustments for:
Gain on sale of discontinued operation
Provision for stock obsolescence
Depreciation and amortisation
Other non-cash or non-operating exceptional items
Interest income from other entities
Interest expense
Dividend received
Net (gain) on disposal of property, plant and equipment
Income tax expense/(benefit)
Operating profit/(loss) before changes in working capital
and provisions
Change in trade and other receivables
Change in inventories
Change in trade and other payables
Change in provisions and employee benefits
Interest paid
Income taxes paid
Net cash used in operating activities
25. Related parties
Transactions with key management personnel
Key management personnel compensation
Key management personnel compensation comprised the following:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
2018
%
100
100
100
-
2018
$’000
5,977
(13,094)
(1,993)
1,337
441
(9)
509
(362)
(234)
1,026
(6,402)
(5,077)
71
6,824
1,244
(3,340)
(509)
(230)
(4,079)
2019
$’000
(1,426)
-
(540)
1,666
(4)
(34)
624
-
(50)
685
921
(4,499)
(2,111)
2,103
236
(3,350)
(624)
(396)
(4,370)
2019
$
908,797
62,895
76,369
5,723
-
1,053,784
2018
$
866,281
59,345
69,447
-
88,800
1,083,873
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.
33
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
25. Related parties (continued)
Transactions with other related parties
The Group has a related party relationship with its controlled entities (see Note 23). Transactions between the parent entity and its
controlled entities are eliminated on consolidation and are not disclosed.
26. Change in accounting policies
This note explains the impact of the adoption of AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers
on the Group’s financial statements and also discloses the new accounting policies applied from 1 July 2018.
AASB 9 Financial Instruments
(i) Accounting policies applied effective 1 July 2018
Investments and other financial assets
From 1 July 2018, the Group classifies its financial assets in the following measurement categories:
•
•
Those to be measured subsequently at fair value (either through other comprehensive income (“OCI”), or through profit or
loss), and
Those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.
At initial recognition, 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. Transactions costs of
financial assets carried at FVPL are expensed in profit or loss.
Impairment of financial assets
From 1 July 2018, the Group assesses on a forward looking basis the expected credit losses associated with its instruments carried at
amortised costs and fair value through 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 required 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.
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure to make a contractual payment for a period of greater than 120
days past due.
Derivative and hedging
The Group uses forward foreign exchange contracts to hedge the variability in cash flows arising from changes in the foreign exchange
rates relating to foreign currency borrowing, receivables, and sales. The Group designates only the change in fair value of the spot
element of the forward exchange contract as the hedging instrument in cash flow hedging relationship.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
the cash flow hedge reserve as a separate component of equity. The gain or loss relating to the ineffective portion is recognised
immediately in the profit or loss.
(ii) Accounting policies applied for comparative reporting period ended 30 June 2018
Financial assets that are measured at amortised cost are assessed to determine whether there is objective evidence that an impairment
has been incurred but not yet identified. For these receivables the estimated impairment losses are recognised in a separate provision
for impairment.
34
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
26. Change in accounting policies (continued)
AASB 9 Financial Instruments (continued)
(iii)
Impact on adoption on 1 July 2018
The Group has adopted AASB 9 using the retrospective approach to implementation (with practical expedients) with the effect of
initially applying the standard recognised at the date of initial application which is 1 July 2018. The practical expedients allow for
differences in the carrying amounts of financial assets and financial liabilities to be recognised in retained earnings and reserves at 1
July 2018. Accordingly, the information presented for comparative periods has not been restated.
On transition to AASB 9, there was no impact on retained earnings or reserves at 1 July 2018. As such, there was no impact on basic
or diluted earnings per share.
Classification and Presentation
On 1 July 2018, the Group’s management has reassessed and reclassified its financial assets instruments into the appropriate AASB
9 categories based on the entity’s business model.
The Group’s financial assets remain classified as amortised cost. There is no impact on the Group’s accounting for financial liabilities.
The foreign exchange forwards and foreign exchange swap in place at 30 June 2018 qualified as cash flow hedges under AASB 9.
(iv)
Impact on the financial statements for year ended 30 June 2019
There was no impact for the year ended 30 June 2019 in the loss allowance for trade receivables and contract assets compared with
the amount that would have been reflected under AASB 139.
The Group has also changed the presentation of certain amounts in the statement of financial position to reflect the terminology of
AASB 9 as follows:
• Other current receivables, prepayments and derivative financial instruments were previously presented together with trade
receivables but are now presented as other financial assets at amortised cost (receivables), other current assets (prepayments)
and derivative financial instruments respectively in the statement of financial position, to reflect their different nature.
AASB 15 Revenue from Contracts with Customers
(v) Accounting policies applied effective 1 July 2018
Under AASB 15, 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. The following amended revenue recognition accounting policies have
been applied from 1 July 2018:
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 the
transfer of significant risk and rewards of ownership of the goods to the customer to indicate that the customer has the ability to direct
the use of and obtain substantially all of the remaining benefits from the goods. The timing of the transfer of risk and reward 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 Free-In-Store (“FIS”) / Delivered at Place (“DAP”)
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
• 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
35
Coventry Group Ltd and its controlled entities
Notes to the consolidated financial statements
For the year ended 30 June 2019
26. Change in accounting policies (continued)
AASB 15 Revenue from Contracts with Customers (continued)
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.
(i)
Accounting policies applied for comparative reporting period ended 30 June 2018
Sale of goods
Revenue from sale of goods 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 the significant risks and rewards of ownership have been transferred to the buyer, recovery of the
consideration is probably, the associated costs and possible return of goods can be estimated reliably, there is no continuing
management involvement with the goods, and the amount of revenue can be measured reliably.
(ii)
Impact on adoption on 1 July 2018
The Group has adopted AASB 15 using the cumulative approach to implementation (with practical expedients) with the effect of initially
applying the standard recognised at the date of initial application which is 1 July 2018. The practical expedients allow the new standard
to be applied only to contracts that remain in force at 1 July 2018. Accordingly, the information presented for comparative periods has
not been restated.
On transition to AASB 15, there was no impact on retained earnings at 1 July 2018. That is, because there were no contracts that
remain in force at 30 June 2018 for the fluids business. As such, there was no impact on basic or diluted earnings per share.
(iii)
Impact on the financial statements for year ended 30 June 2019
There was no impact for the year ended 30 June 2019.
The Group has disaggregated revenue from contracts with customers using existing segments and the timing of the transfer of goods
and services (at a point in time vs over time) in accordance with AASB 15. Refer to note 2.
27. Events occurring after the reporting period
Other than the matters outlined elsewhere in the Group’s financial statements, no 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
on the Group in subsequent accounting periods.
36
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
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 2019.
Contents of Directors' Report
1. Directors
2. Principal activities
3. Consolidated results
4. Dividends
5. Review of operations and results
6. Earnings per share
7. Significant change in the company's affairs
8. Events subsequent to reporting date
9.
Likely developments
10. Remuneration report - audited
10.1 Key Management Personnel (KMPs)
10.2 Principles used to determine the nature and amount of compensation
10.3 Details of compensation
10.4 Service contracts
10.5 Director share movement
11. Environmental regulation
12.
Insurance of officers
13. Corporate governance
14. Non-audit services
15.
Lead auditor's independence declaration
16. Company secretary
17. Rounding off
Directors' Declaration
Lead Auditor’s Declaration under S307C of the Corporations Act 2001
Independent Auditor’s Report
Shareholder Information
Corporate Directory
Page
38
39
40
40
40
41
41
41
41
41
41
44
45
45
45
45
45
46
46
46
46
47
48
49
54
55
37
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
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:
Name, qualifications, independence
status and special responsibilities
Neil George Cathie
FCPA, GAICD, FCIS
Independent non-executive Chairman
Chairman of Remuneration Committee
Member Audit and Risk committee
Experience and other directorships
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. He
is currently a director of and advisor to a number of private companies.
Mr Cathie was a non-executive director of Millennium Services Group Ltd from
16 October 2018 to 7 March 2019.
He held no other listed company directorships during the past three financial years.
Robert James Bulluss
FCPA, GAICD, B Bus (Acc)
Managing Director
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
Finance 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.
Andrew William Nisbet
GAICD
Independent non-executive Director
Member of Audit and Risk Committee
Member of Remuneration Committee
James Scott Charles Todd
B.Comm, LLB, FFin, MAICD
Independent non-executive Director
Chairman of Audit and Risk Committee
Member of Remuneration Committee
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 two other ASX listed companies, IVE Group Ltd
(director since June 2015) and HRL Holdings Ltd (director since March 2018).
He has held no other listed company directorships during the past three financial years.
38
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
1.
Directors (continued)
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:
NG Cathie
RJ Bulluss
AW Nisbet
JSC Todd
Number of Ordinary Shares
734,520
300,000
119,885
116,746
During the 2018/19 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.
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 2019, and the number of meetings attended by each director.
NG Cathie
RJ Bulluss
AW Nisbet
JSC Todd
11
11
11
11
Held
Attended
Board of Directors
Eligible
to attend
11
11
11
9
11
11
11
9
Attended
Held
Audit & Risk Committee
Eligible
to attend
3
3
3
2
3
3
3
2
3
3
3
3
Attended
Held
Remuneration Committee
Eligible to
attend
2
0
2
1
2
2
2
2
2
0
2
1
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.
2.
Principal activities
The principal activities of the Group during the financial year were:
Trade Distribution
•
•
•
Fluid Systems
•
•
•
•
•
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.
design and installation of lubrication systems
distribution of hose, connectors, fittings and hydraulic hose assemblies
design and supply of service truck components
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 repairs
39
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
3.
Consolidated results
Results of the Group for the year ended 30 June 2019 were as follows:
Revenue from sale of goods
Loss before tax
Income tax expense
Loss for the year from Continuing operations
Profit from Discontinued operations, net of tax
(Loss)/profit for the year from Continuing and Discontinued operations
(Loss)/profit after tax for the year attributable to:
- Owners of the Company
- Non-controlling interests
(Loss)/profit after tax for the year
4.
Dividends
2019
$’000
202,346
(741)
(685)
(1,426)
-
(1,426)
(1,426)
-
(1,426)
2018
$’000
168,050
(7,275)
(1,026)
(8,301)
14,278
5,977
5,651
326
5,977
There were no dividends paid or declared by the Group to members for the year ended 30 June 2019 (2018: $Nil).
5.
Review of operations and results
People
The Group had 8 Lost Time Injuries (LTI’s) during the year which is a disappointing result. Our aspiration is for zero LTI’s and plans
are being implemented to improve our safety systems to achieve this goal.
We remain fully focussed on our Customers, Suppliers and People, applying our values of Respect, Fairness, Teamwork,
Professionalism and Integrity.
Financial performance
Revenue from sale of goods
Underlying EBITDA
Underlying EBIT
NPAT
NTA per share ($)
Net cash/debt
Share price at year end ($)
Excluding the discontinuing operations of AA Gaskets
Excluding the profit on sale of the AA Gaskets assets.
n/m = not meaningful
Review of businesses
2019
$M
202.3
+2.8
+1.1
-1.4
0.59
-4.1
0.91
2018
$M
168.1
-4.7
-6.1
-8.3
1.30
5.0
1.35
% change
+20.4
n/m
n/m
n/m
-54.2
n/m
-32.6
Fluid Systems
Fluid Systems (FS), have had another outstanding year with exceptional sales growth. Sales growth of 27.3% (15.7% excluding
Torque) was achieved following 20.9% achieved in FY18. Sales growth is being driven by an increase in service, maintenance, upgrade
and new equipment activity in the mining and resources sector. Underlying EBITDA in FY19 of $8.8m including Torque compared to
$5.5m in FY18.
Trade Distribution
Trade Distribution (TD) sales for the year including acquisitions up 16.1% on the prior year and excluding acquisitions up 1.5% on the
prior year. The underlying EBITDA for TD was $3.3m compared to -$2.5m loss in FY18.
KANZ have continued to perform strongly with sales up 13.3% on last year with highlights including continuing growth in the construction
industry and the opening of two new branches. The Auckland CBD branch has also been relocated to a much larger facility. KANZ is
the leading fastening systems business in the construction and roofing and cladding markets in New Zealand and has good growth
prospects.
40
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
5.
Review of operations and results (continued)
KAA sales are in line with PCP excluding one-off project sales to Chevron in WA ($1.282m) and the impact of unprofitable store closures
($1.467m). Whilst a solid improvement in KAA contribution has been achieved, we remain well short of achieving a breakeven result.
Our progress has been slowed in the main due to the difficulty attracting quality experienced people into the business.
In the last six months we have made quality key appointments including Peter Shaw (ex Wesfarmers) as General Manager, Chris Smith
(ex Blackwoods) as Qld Regional Manager, Mark Ramsdale (ex Bunzl Safety) as NSW Regional Manager, Christian McCormack (ex
Stanley Black and Decker) as Artia Manager and Tim Holland (ex Blackwoods) as Southern Regional Manager. We are continuing to
strengthen our sales team with new Business Development Manager appointments in NSW, Queensland, Victoria and WA.
Nubco had a positive start with the Group recording sales and earnings in line with expectations for the four months post acquisition.
6.
Earnings per share
Basic loss per share for the year ended 30 June 2019 was 2.3 cents. This compares to a basic earnings from continuing and
discontinued operations per share of 15.1 cents for the previous year.
7.
Significant change in the Company's affairs
Except for the capital raising, acquisition of Torque Industries and acquisition of Nubco Proprietary Limited, 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 directors are not aware of any matter or circumstance having arisen since the end of the financial year and the date of this report
that has significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state of
affairs of the Group, in future financial years.
9.
Likely developments
The Group will continue to implement its 5 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
NG Cathie
RJ Bulluss (CEO and Managing Director)
AW Nisbet
JSC Todd (appointed 3 September 2018)
Key Management Personnel
RJ Jackson
A Donaldson (resigned 11 September 2018)
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 approved by shareholders at the Annual General Meeting of the Company in November 2017.
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 (2018: $550,000) per annum, which 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.
41
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
10. Remuneration report – audited (continued)
10.2 Principles used to determine the nature and amount of compensation (continued)
As at 30 June 2019 the non-executive directors’ fees were allocated as follows (includes statutory superannuation contributions):
Chairman (inclusive of Board and Committee work)
Non-executive Directors (inclusive of Board and Committee work)
Executive pay
2019
$
96,000
72,000
2018
$
96,000
72,000
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:
(1) Fixed, cash-based remuneration which includes salary, superannuation and benefits
(2) Eligibility to participate in the Company’s short term incentive plan (STI Plan)
(3) 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 individuals performance.
The LTI Plan was approved by shareholders at the 2017 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.
Currently, the principal hurdle for both the STI Plan and the LTI Plan is EBIT growth. The targets are set by the Board at the beginning
of the financial year.
Business Performance
The Board is pleased with the turnaround of the Group’s performance across 2018 and 2019. 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.
Sales revenue
EBITDA
EBIT
NPAT (ii)
Dividends paid
Share price at year end ($)
2019
$’000
202,346
2,811
1,145
(1,426)
-
0.91
2018
$’000
168,050
(4,748)
(6,085)
(8,301)
-
1.35
2017(i)
$’000
169,146
(5,790)
(8,714)
(35,539)
-
0.60
2016
$’000
176,784
2,036
(1,291)
(1,821)
-
0.94
2015
$’000
190,706
(2,266)
(6,353)
(24,616)
-
1.34
(i) Comparative information for the year ended 30 June 2017 has not been restated for the effects of the application of AASB 5 Non-
Current Assets for sale and Discontinued Operations following the disposal of the AA Gaskets business.
(ii) Profit is one of the financial performance targets considered in setting the Short Term Incentive (STI). Profit amounts have been
calculated in accordance with Australian Accounting Standards (AASBs).
In relation to FY19, the CEO and Managing Director (R Bulluss) was granted 178,718 performance rights under the terms of the LTI
Plan following the successful passing of a resolution at the 2018 Annual General Meeting of the Company. These performance rights
had a performance period that ended on 30 June 2019 with performance hurdles relating principally to the EBIT of the Company. The
Board has determined 67% of the performance rights granted will vest in accordance with the LTI Plan. The unvested balance will be
forfeited. Although the Board is pleased with the turnaround progress made in FY19 and since Mr Bulluss’s appointment, Konnect and
Artia Australia (KAA) did not return to profitability in FY19. For this reason, the percentage of vesting has been reduced to a level
considered fair and which strikes a balance between motivation, reward, retention and outcomes. In the board’s view, missing the KAA
hurdle in no way diminishes the broader and substantial turnaround achievements of FY19.
42
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
10. Remuneration report – audited (continued)
10.2 Principles used to determine the nature and amount of compensation (continued)
In relation to FY19, an offer to participate in the LTI Plan was made to four other Company senior executives. The total performance
rights granted was 310,574. The Board has determined 67% of the performance rights will vest in accordance with the LTI Plan in the
same manner and for the same reasons as outlined for the CEO and Managing Director.
It is intended that the CEO and Managing Director will participate in the LTI Plan in relation to FY20. The maximum face value of the
CEO’s FY20 grant is based on the LTI opportunity of 60% 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 2019. The performance
rights will vest based principally on the EBIT achieved by the Company for FY20. An appropriate resolution will be put to the 2019
Annual General Meeting of the Company.
It is intended that six senior executives will participate in the LTI Plan in relation to FY20. The maximum face value of each senior
executive’s FY20 grant is based on the LTI opportunity of 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 2019. The
performance rights will vest based principally on the EBIT achieved by the Company for FY20 and at the discretion of the Board.
43
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
10. Remuneration report – audited (continued)
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 2019.
Directors
NG Cathie - Chairman
RJ Bulluss (appointed August 2017) (ii)
AW Nisbet (appointed October 2017)
JSC Todd (appointed September 2018)
KR Perry (resigned November 2017)
NJ Willis (resigned August 2017)
V Papachristos (resigned July 2017)
Total directors' remuneration
Key Management Personnel
RJ Jackson (appointed September 2017)
A Donaldson (resigned September 2018)
Total key management personnel
remuneration
Total directors' and key management
personnel remuneration
Short-term
Cash salary,
leave paid
and fees
STI
cash
bonus
Non-
monetary
benefits
Total
Post-
employment
Super-
annuation (i)
$
87,671
87,671
379,469
379,951
65,753
49,315
55,233
34,931
12,176
6,088
588,126
570,132
299,517
230,952
21,154
65,197
320,671
296,149
908,797
866,281
2019
2018
2019
2018
2019
2018
2019
2018
2018
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
87,671
87,671
379,469
379,951
65,753
49,315
55,233
34,931
12,176
6,088
588,126
570,132
-
-
-
-
-
-
-
-
299,517
230,952
21,154
65,197
320,671
296,149
908,797
866,281
8,329
8,329
20,531
20,049
6,247
4,685
5,247
3,319
1,156
578
40,354
38,116
20,531
15,036
2,010
6,193
22,541
21,229
62,895
59,345
Other
long-term
Long-service &
annual leave
provision
accrual
$
-
-
46,500
45,097
-
-
-
-
-
-
46,500
45,097
29,869
17,997
-
6,353
29,869
24,350
76,369
69,447
Share-based payment
Termination
benefits
Share-
based
payment (iii)
Proportion of
remuneration
performance
related
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,723
-
5,723
-
5,723
-
$
$
-
55,500
-
-
-
33,300
-
-
-
-
-
88,800
-
-
-
-
-
-
-
88,800
96,000
151,500
446,500
445,097
72,000
87,300
60,480
38,250
13,332
6,666
674,980
742,145
349,917
263,985
28,887
77,743
378,804
341,728
1,053,784
1,083,873
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
Includes statutory superannuation contributions and additional voluntary contributions.
(i)
(ii) Total remuneration for the 2019 year is included and the 2018 remuneration represents the remuneration paid as a key management personnel for the period of appointment.
(iii) In November 2017, shares in the Company were issued to NG Cathie (50,000) and AW Nisbet (30,000) pursuant to their participation in the Company’s Director and Executive Incentive Plan. Approval for the issue was
obtained under listing rule 10.14 at the November 2017 Annual General Meeting.
44
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
10. Remuneration report – audited (continued)
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
•
•
•
•
• Other than for an act that may have a serious detrimental effect on the Company, such as wilful disobedience, fraud or misconduct,
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.
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:
Directors
NG Cathie
AW Nisbet
RJ Bulluss
JSC Todd (appointed September 2018)
Held at
30 June
2018
237,972
57,750
40,000
N/A
Purchases
496,548
62,135
260,000
116,746
Conversion
of
Performance
Rights
-
-
-
-
Sales /
Cancelled
Held at
Resignation/
Retirement
-
-
-
-
-
-
-
-
Held at
30 June
2019
734,520
119,885
300,000
116,746
No other key management person held shares, directly, indirectly or beneficially, in the Company at 30 June 2019 (2018: Nil).
11. Environmental regulation
The Group is not subject to any specific environmental regulation.
The Group mainly operates 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.
For the financial year ended 30 June 2019 and as at the date of this report, the Group has not been prosecuted nor incurred any
infringement penalty for environmental incidents.
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.
45
Coventry Group Ltd
Directors’ Report
For the year ended 30 June 2019
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
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 5 to the full financial report.
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 and Ms Lisa Deramond of Mertons Corporate Services Pty Ltd have were appointed joint Company Secretaries on
11 September 2018. Ms. Angela Donaldson resigned from the position of Company Secretary on 11 September 2018. Ms Lisa
Deramond resigned from the position of Company Secretary on 21 November 2018.
Mr Licciardo (B.Bus (Acc), GradDip CSP, FAICD, FGIA, FCIS) is the founder and Managing Director of Mertons Corporate Services
Pty Ltd and a former company secretary of a number of ASX 50 companies. His expertise includes working with boards of directors in
the areas of corporate governance, business management, administration, consulting and company secretarial matters.
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.
N.G. CATHIE
Chairman
Melbourne
23 August 2019
R.J. BULLUSS
CEO and Managing Director
Melbourne
23 August 2019
46
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 38 to 46, are in
accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of their performance, for the
financial year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
b)
c)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(a) of the full financial
report;
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and
payable.
2. The directors have been given the declarations by the chief executive officer and chief financial officer for the financial year ended
30 June 2019 pursuant to Section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors.
N.G. CATHIE
Chairman
Melbourne
23 August 2019
R.J. BULLUSS
CEO and Managing Director
Melbourne
23 August 2019
47
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Coventry Group Ltd
I declare that, to the best of my knowledge and belief, in relation to the audit of Coventry Group Ltd for
the financial year ended 30 June 2019 there have been:
i.
ii.
K
KPMG
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
J Carey
Partner
Melbourne
23 August 2019
48
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Independent Auditor’s Report
To the shareholders of Coventry Group Ltd
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Coventry Group Ltd (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
•
•
giving a true and fair view of the
Group’s financial position as at 30
June 2019 and of its financial
performance for the year ended on
that date; and
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2019
• Consolidated statement of profit or loss,
Consolidated statement of comprehensive income,
Consolidated statement of changes in equity, and
Consolidated statement of cash flows for the year
then ended
• Notes including a summary of significant accounting
policies
• Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
49
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Key Audit Matters
The Key Audit Matters we identified are:
• Valuation of inventory; and
• Acquisition of Torque and Nubco.
Valuation of inventory ($59.9 million)
Refer to Note 12 to the Financial Report
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in
our audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
The key audit matter
How the matter was addressed in our audit
We considered valuation of inventory to be a
key audit matter given:
•
•
Relative magnitude - inventory is a key
audit matter due to its significant size to
the Group’s financial position (and
represents 38% of the Group’s total assets
at 30 June 2019); and
The extent of audit effort – inventory is a
key audit matter due to the high proportion
of audit effort we applied to gather
sufficient appropriate audit evidence on the
net realisable value of inventory.
Our procedures included:
•
Testing key controls designed by the Group to
identify slow moving and obsolete inventories
such as monthly management review and
approval of inventory ageing report;
• Obtaining, on a sample basis, the most recent
sales invoices of selected product lines to
compare the carrying amount to the realisable
value of the product line;
•
•
•
Attending year end stock takes in significant
locations. We observed and tested the
process of identifying slow moving and
potentially obsolete inventory. We traced this
to the accounting records for inventory
valuations of slow moving and obsolete stock
on a sample basis;
Assessing the mathematical accuracy of the
computation of the provision for slow moving
and obsolete stock; and
Assessing the Group’s inventory valuation
methodologies and the Group’s disclosure in
respect of inventory valuation against the
requirements of relevant accounting
standards.
50
Acquisition of Torque and Nubco
Refer to Note 3 to the Financial Report
The key audit matter
How the matter was addressed in our audit
On 31 October 2018, the Group acquired the
business and assets of Torque Industries Pty
Ltd (Torque) for a consideration of $9.4m.
On 1 March 2019, the Group acquired 100% of
the issued share capital of Nubco Proprietary
Limited (Nubco) for a consideration of $36.7m.
These acquisitions are a key audit matter due
to:
•
•
The size of the acquisitions and their
pervasive impact on the financial
statements. The acquisitions resulted in an
increase in non-current assets of $42.0m,
including $23.1m of goodwill; and
The Group’s judgement involved in
establishing the fair value of assets
acquired and liabilities assumed, in
particular the identifiable intangible assets
such as brand name and customer
relationships.
We involved our valuation specialists to
supplement our senior team members in
assessing this key audit matter.
Our procedures included:
•
•
Review of the transaction documents to
understand the key terms and conditions of
the acquisitions, assessing the acquisitions
against the criteria of a business combination
in the accounting standards, and assessing the
date of acquisition.
Review of consideration transferred and
assessing the completeness of the total
purchase consideration.
• Working with our valuation specialists,
challenging the assumptions, judgments and
methodologies used by the Group and their
external expert in fair value determination of
assets acquired and liabilities assumed by:
-
-
-
Assessing the scope, competence and
objectivity of the external expert;
Assessing the valuation and purchase
price allocation methodology applied for
consistency with observed valuation
practices and criteria set out in the
accounting standards; and
Comparing relevant inputs used by the
external expert to external observable
information.
•
Assessing the adequacy of the Group’s
disclosures in respect of the acquisitions
based on accounting standard requirements.
51
Other Information
Other Information is financial and non-financial information in Coventry Group Ltd’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we consider whether the Other Information is materially inconsistent with
the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
•
•
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error
assessing the Group and Company’s ability to continue as a going concern and whether the
use of the going concern basis of accounting is appropriate. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our Auditor’s
Report.
52
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report
of Coventry Group Ltd for the year ended
30 June 2019, complies with Section
300A of the Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration
Report in accordance with Section 300A of the
Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in
the Directors’ report for the year ended 30 June 2019.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
J Carey
Partner
Melbourne
23 August 2019
53
Ordinary Shares
Number
31,718,453
9,058,629
5,488,600
5,128,104
4,075,147
1,356,660
1,120,244
1,021,237
1,000,000
902,924
836,619
763,712
455,333
425,000
425,000
417,638
411,649
400,000
400,000
396,000
65,800,949
Number of
shares
239,344
1,736,456
1,565,406
10,588,059
75,570,402
89,699,667
% of Total
36.33
10.38
6.29
5.87
4.67
1.55
1.28
1.17
1.15
1.03
0.96
0.87
0.52
0.49
0.49
0.48
0.47
0.46
0.46
0.45
75.37
%
0.27
1.94
1.75
11.80
84.25
100.00
Coventry Group Ltd
Shareholder Information
As at 21 August 2019
TWENTY LARGEST SHAREHOLDERS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
14
16
17
18
18
20
Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS (NZ) LTD
ONE MANAGED INVT FUNDS LTD
DORSETT INVESTMENTS PTY LTD
DIXSON TRUST PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MRS ANNE KYLE
CITICORP NOMINEES PTY LIMITED
DEVADIUS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
ELLAND ROAD PTY LTD
ARUMA BEACH PTY LTD
MR GEOFFREY KYLE
CHARLES PETER TAYLOR
ROMNEY LODGE PTY LTD
GARSIND PTY LTD
TPSC SMIRK PTY LTD
DRNEWNHAM SUPER PTY LTD
DISTRIBUTION OF SHAREHOLDING
Size of holding
1 – 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Unmarketable parcels field information:
SUBSTANTIAL SHAREHOLDERS
Number of
holders
406
680
213
344
62
1,705
%
23.81
39.88
12.50
20.18
3.63
100.00
Minimum
Parcel Size
556
Holders
Units
163
47,926
The Company's register of substantial shareholders showed the following particulars as at 21 August 2019.
Name of Substantial Shareholder
Viburnum Funds Pty Ltd
Sandon Capital Pty Ltd
Spheria Asset Management Pty Ltd
Lanyon Asset Management Pty Limited
Castle Point Funds Management
* Intrepid Capital Management Inc ceased to be a substantial shareholder during the year.
UNQUOTED EQUITY SECURITIES
Nil
Extent of
Interest
(Number of
Shares)
26,849,323
7,286,886
5,953,902
5,614,615
5,153,693
Date of last
notification
28.02.2019
31.07.2019
09.07.2019
28.02.2019
27.05.2019
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
54
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
Australian and New Zealand Banking Group Limited
Scottish Pacific Business Finance Pty Ltd
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: web.queries@computershare.com.au
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.
55