Slide 1: Schaffer Corporation Limited June 2003 Final Results
Schaffer Corporation Limited June 2003 Final Results
Slide 2: Agenda
| Agenda « Corporate Strategy « Performance Summary « Operations « Leather « Building Products « Non-Core Investments « Debt Position « Cash Flow « Outlook « Earnings « Dividends
Slide 3: Corporate Objective
| Corporate Objective “To efficiently operate and grow our core business for the benefit of shareholders” Operational Strategy To be number one or number two in each of our markets as measured by profitability. We will achieve this by: « Being a world low cost producer « Maintaining a leading distri
Slide 4: Performance Summary
| Performance Summary June 01; June 02; June 03 Revenue (A$m) 47 213 223 Net Profit (A$m) 8.0 13.0 17.0 EPS $0.66 $1.02 $1.25 ROCE 18% 21% 28% EBITDA (A$m) 15 29 37 Operating Cash Flow 5 44 32 Ordinary Dividend $0.17 $0.60 $1.00 Payout Ratio 26% 59% 80% Special Dividend $0.10 $0.10 $0.20 Interest Co
Slide 5: EBIT Contribution
107 EBIT Contribut [June 2003 Non-Core 13% Building Products 14% « Return on Capital Employed — 28% ed
Slide 6: Operations - Leather
| Operations - Leather ($m) June 00] June 01 June 02] June 03 Auto Revenue 148 186 194 156 Furn Revenue 41 35 25 21 EBIT 12.6 14.5 15.2 22.3 EBIT Margin 6.7% 6.6% 6.9% 12.6% « June 03 Automotive revenue is reduced due to: « Program timing issues « Higher SA ($13m) « Lower hide prices ($14m) « Loss o
Slide 7: Automotive Leather Market
| Automotive Leather Market World Leather Growth by Region & Total Scurce: CSM Werlawice (2003) « A$6bn global automotive leather market growing at 7% p.a. « 2002 global leather penetration of 15% (6.5m vehicles). « Howe has an established market presence from which to build. « Howe is ranked 6!" (b
Slide 8: Howe Sales by Region
| Howe Sales by Region Australia (11%) USA (40%) 7) Asia (26%) Europe (23%) « Focus is on the high growth European and Chinese markets. « Howe is looking at the feasibility of establishing additional cutting plants in China and Eastern Europe to reduce costs and improve customer response times.
Slide 9: Approved Supplier Status
| Approved Supplier Status *BMW * Audi * Porsche DORs He * General Motors aa * Ford * Chrysler «Landrover CHRYSLER * Subaru + Mitsubishi ae * Toyota ®. * Honda a * Suzuki * Mazda « Nissan
Slide 10: Competitive Advantages
| Competitive Advantages « Consistent supply of raw materials: « Australia has the 4" largest cattle herd globally « Secure supply of disease free hides « Range of hides to match product requirements « Modern, global scale finishing facility: « Commissioned 1998 « 50% operational overcapacity « Qual
Slide 11: Building Products
Building Products « Urbanstone Premium paving products, Australian distribution network. « Delta Pre-cast and pre-stressed concrete floors, beams & wall products. 1]
Slide 12: Building Products Performance
| Building Products Performance June 00) June 01] June 02| June 03 Sales 33.3 30.1 35.3 34.9 EBIT 6.4 6.1 5.3 4.3 EBIT Margin 19% 20% 15% 12% « Margins should be maintained in a highly competitive market. 12
Slide 13: Competitive Advantages
| Competitive Advantages « Urbanstone « Plant flexibility « Cost control « Distribution network « Product innovation « Premium branding « Delta « Cost efficient product « Pre-stressed niche « Capacity « Distribution 13
Slide 14: Non-Core Investments — Realising the Value
Non-Core Investments — Realising the Value « Investment Property « At June 30 SFC had JV interests in 13 commercial and retail properties valued at $37m with $22.7m of associated debt and generating an EBIT of $2.3m. « In August 03 SFC reached agreement on the sale of its interest in 5 properties fo
Slide 15: June Debt Position
| June 03 Debt Position Recourse | Non-Recourse| _ Total Debt Operating Businesses 1.4 38.7 40.1 Property 12.1 12.4 24.5 Group Debt 13.5 51.1 64.6 Cash on Deposit 21.1 Net Debt 43.5 « The ALH Subordinated Debt and the Investment Property Debt are effectively “structural” debt. « The $38.7m ALH subor
Slide 16: Cash Flow
| Cash Flow (A$m) June 01 | June 02] June 03 EBITDA 15.0 28.8 36.7 Less Net Interest (2.4) (3.9) (3.6) Less Tax Paid (3.2) (4.3) (7.4) ALH Change in Working Capital - 11.4 5.6 Other Change in Working Capital (4.5) 64 0.8 Other (Provisions, Entitlements, Other Debtors) (0.2) 5.5 11 Share Issues 0.5 5
Slide 17: Outlook — Earnings
| Outlook — Earnings « Automotive Leather — Ongoing tough market conditions for the balance of calendar 2003. Program timing issues and a strong A$ are impacting volume and margins. We expect first half leather earnings to be below the pcp. In the short to medium term there are significant opportuni
Slide 18: Outlook — Dividend Certainty
| Outlook — Dividend Certainty « We expect to maintain a fully franked Ordinary Dividend of at least $1.00 per share. « SFC has declared a Special Dividend of $0.20 (fully franked) payable in September 2003 following the sale of some investment properties. « We expect to pay additional Special Divid