Slide 1: Schaffer Corporation Limited Annual General Meeting Chairman's Address
16 November 2022 ASX Market Announcements ASX Limited 4th Floor, 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, SCHAFFER CORPORATION LIMITED (ASX:SFC) ANNUAL GENERAL MEETING CHAIRMAN’S ADDRESS Please find attached the Chairman’s Address to the Annual General Meeting of SFC. The Chairman has author
Slide 2: Good morning, Ladies and Gentlemen
Good morning, Ladies and Gentlemen. My name is John Schaffer. I am the Chairman and Managing Director of Schaffer Corporation. It is my pleasure to welcome you all to the 68th Annual General Meeting of Schaffer Corporation Limited. I would like to acknowledge that we meet on the homelands of the Wha
Slide 3: Introduction of executives and auditor
I would also like to introduce our Chief Financial Officer, Mr Ralph Leib, and our Company Secretary, Mr Jason Cantwell. Today, we are also joined by our General Manager of Automotive Leather, Mr Dan Birks, and from Delta Corporation, our General Manager, Mr Jason Walsh. Matt Perrella, who retired a
Slide 4: Annual Report
Schaffer Corporation’s Annual Report, including reports of the Directors and the Auditors, for the year ended 30 June 2022 have been in members’ hands for the statutory period. I will now commence my Chairman’s address after which I will invite questions and comments from members. 3
Slide 5: Results for the 2022 financial year
I am pleased to share the results for the 2022 financial year with you, my fellow shareholders. The 2022 financial year was another pleasing year for Schaffer Corporation Limited (SFC), although it was a year of many challenges, particularly for our manufacturing businesses. For the Automotive Leath
Slide 6: Group investments
Group investments, which includes the Jandakot Logistics Estate (now branded South Connect), our syndicated property investments, equity investments and cash, continues to grow in importance to the Group. The pre-tax net equity value of Group Investments ended the financial year at $188 million or $
Slide 7: The group reported a profit of $26 million
The group reported a profit of $26 million, our second highest profit on record. This compares with our record profit of $41 million in FY21. It is important to note that our profits include the financial impacts from unrealised, non-cash revaluations of our investments, in accordance with required
Slide 8: Investment sales and revaluations; dividend maintained
▪ The sale of various syndicated properties managed by Ascot Capital. ▪ The sale of equity investments in Centuria and the internally managed global equity portfolio. ▪ The sale of 23 lots at Beachside, North Coogee. o $15.2 million of unrealised, non-cash gains associated with Jandakot and other in
Slide 9: The Group generated $36 million of cash
The Group generated $36 million of cash, down from $55 million in the prior year. Automotive Leather consumed $20.7 million of cash, primarily to fund: • An increase in hide purchases in anticipation of sales growth in Europe; and • Covid related buffer inventory, to mitigate elongated supply chains
Slide 10: Total Shareholder Return
Total Shareholder Return (TSR*) measures the combined returns to shareholders from share price movements, dividends, and dividend imputation credits. Over the last five years, Schaffer Corporation’s average annual TSR is 35% per year. Taking a long-term perspective, if an investor had invested $100,
Slide 11: Handover to Ralph Leib
I now handover to Ralph Leib. Ralph is both Schaffer Corporation’s and Automotive Leather’s Chief Financial Officer and will review the financial performance of the Automotive Leather division. 10
Slide 12: Automotive Leather
Thank you, Chairman, and good morning, ladies and gentlemen. Automotive Leather The Automotive Leather division performed well in an environment filled with multiple challenges. While revenues fell to $136 million from $165 million in the prior year, the second half saw a recovery as the global semi
Slide 13: Renewed key programs with Jaguar Land Rover; new Mercedes and Audi programs
As announced previously, our European operations successfully renewed key programs with Jaguar Land Rover and won new programs with Mercedes and Audi. Under normal economic circumstances, these programs should result in higher volumes from the 2023 financial year onwards. In anticipation, management
Slide 14: Automotive Leather 1H23 update
Automotive Leather 1H23 update In the immediate to short-term, while our OEMs continue to report strong demand for new vehicles, their production and sales volumes remain below prior periods, primarily due to chip shortages. For the first half of FY23, our sales volumes and profitability are being n
Slide 15: Current estimate for 1H23
Our current estimate for 1H23, considering the abovementioned mentioned challenges, is for: • Revenues to be around $65 - $70 million; and • NPAT1 to be around $4.5 - $5.0 million, lower than the $7.5m achieved in 1H22 We once again remind shareholders that the prospects of the Automotive Leather di
Slide 16: Automotive Leather outlook and new programs
Thanks Ralph. Good morning to everyone. After 3 years it is a pleasure once again to be able to attend the Schaffer AGM in person. Fortunately, since the start of 2022, we have again been able to visit our customers and colleagues in our plants in Slovakia - but are still unable to enter China due t
Slide 17: Group Investments underlying valuation
Thank you Dan. Group Investments Schaffer Corporation’s underlying valuation continues to be underpinned by tangible assets. Group Investments aims to maximise shareholder value over the medium and long- term by: • Continuing to grow our investment portfolio. • Accessing unique investment opportunit
Slide 18: Five-year growth in net equity market value
Over five years, the increase in value in our pre-tax net equity market value represents an annual compounded increase of 14.5% per year. Over the same five-year period, pre-tax net equity value of Group Investments has increased by $92 million, after having paid out $51 million of fully franked div
Slide 19: Group Investments NPAT contribution
During the financial year, Group Investments contributed NPAT of $11.5 million compared to a re-stated FY21 of $18.2 million. The $11.5 million included: • $11.7 million of realised gains and revaluations from: o The sale of various syndicated properties managed by Ascot Capital. o The sale of equit
Slide 20: Our Jandakot property - South Connect
Thank you Ralph. Our Jandakot property - South Connect Jandakot Logistics Estate is a strategic property asset that we are currently developing. It is located between Kwinana Freeway and Roe Highway and 15 minutes south of the Perth CBD. The site has approximately 34 hectares of developable land wit
Slide 21: Delta
Thank you Todd. Delta Delta produces precast and prestressed concrete products, predominantly for the Western Australian market. Delta incurred a loss of around $600k for the year due to delays, and design and engineering complexity issues on a major government project. Profitability was also impact
Slide 22: Delta operations overview
Thanks John. Good morning everyone and thank you for giving me the opportunity to provide a brief overview of Delta's operations. As many of you would know, Delta, has played a key role in supplying precast to many major projects in Western Australia, including the New Perth Stadium, Fiona Stanley H
Slide 23: Evolve Bayswater Train Station project
At the moment, Delta is busy completing the precast for the Evolve Bayswater Train Station project - the most complex and challenging precast concrete project we have ever undertaken. The project comprises columns, headstocks and pre- stressed post tensioned beams. We are about two thirds of the way
Slide 24: Conclusion
Conclusion In conclusion, the economic and geopolitical conditions have many uncertainties and risks, including: • the war in Ukraine, • the semiconductor chip shortages, • higher energy prices, • volatile currency movements, • inflationary pressures, • the impact of higher interest rates, • potenti
Slide 25: Dividends
Dividends While we acknowledge the short-term challenges, particularly the those affecting the Automotive Leather division, subject to Board approval in February, we expect to continue pay a 45c fully franked dividend, the same as the last two halves. On behalf of the board, we would like to sincere
Slide 26: Questions or comments from members
I now invite questions or comments from members regarding the accounts and reports, and the management of the company. Members are also invited to ask our auditors questions relevant to the conduct of the audit and the preparation and content of the auditor’s report. 25
Slide 27: First item of ordinary business
I now turn to the first item of ordinary business in the Notice of Meeting “To receive and consider the annual financial statements and reports of the directors and the auditors for the period ended 30 June 2022” The Corporations Act requires that the Annual Financial Report, including the Directors
Slide 28: Resolution 1, Re-election of Director
I would now like to move to Resolution 1, Re-election of Director “That Mr David Schwartz, who retires in accordance with the Company’s constitution and, being eligible for re-election, be re-elected as a Director” A total of 8,546,318 proxies were received, which represents 63% of the Company’s iss
Slide 29: Resolution 2, Remuneration Report
I would now like to move to Resolution 2, Remuneration Report “That the Remuneration Report for the period ended 30 June 2022 be adopted” Full details of the Company’s approach to remuneration for Directors and Senior Executives are included in our Remuneration Report contained within this year’s An
Slide 30: Meeting closed
As there is no further business to be transacted and the formal proceedings have been completed, I declare the meeting closed. 29