Slide 1: Schaffer Corporation Limited Full Year Results — June 2004
Schaffer Corporation Limited iy He” (NY Full Year Results — June 2004
Slide 2: 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 3: Performance Summary
| Performance Summary June 01 | June 02 | June 03/ June 04 Revenue (A$m) 47 213 223 192 Net Profit (A$m) 8.0 13.0 17.0 16.6 EPS $0.66 $1.02 $1.25 $1.20 ROCE 18% 21% 28% 27% EBITDA (A$m) 15 29 36 33 Operating Cash Flow 5 44 32 26 Ordinary Dividend $0.17 $0.60 $1.00 $1.00 Special Dividend $0.10 $0.10
Slide 4: June 2004 EBIT Contribution
[June 2004 EBIT Contribution Non-Core 27% Leather 58% Building Products 15% x Return on Capital Employed -— 27%
Slide 5: Operations - Leather
| Operations - Leather ($m) June 01] June02] June 03} June 04 Auto Revenue 186 194 156 128 Furn Revenue 35 25 21 13 EBIT 14.5 15.2 22.3 16.1 EBIT Margin 6.6% 6.9% 12.6% 11.4% June 04 Automotive revenue is reduced due to: » Program timing issues w Higher $A ($16m) w Comparable split is $21m reduction
Slide 6: Automotive Leather Market
| Automotive Leather Market World Leather Growth by Region & Totai w A$6bn global automotive leather market growing at 7% p.a. uw European growth is driven by a forecast increase in leather penetration from 11.3% in 2003 to 16.5% in 2007 (ims Consulting 2003) nw Howe has an established market presen
Slide 7: Howe Sales by Region
| Howe Sales by Region Australia (11%) Asia (26%) Europe (23%) w Focus is on the high growth European and Chinese markets. w An Eastern European cutting plant should be operational by March 2005. This will reduce costs and strengthen our European market position. w Howe is also considering a Chinese
Slide 8: Automotive customers
*BMW « Audi * Porsche PSoRSCie * General Motors au * Ford * Chrysler CHRYSLER «Landrover * Subaru + Mitsubishi ae * Toyota D * Honda wid * Suzuki SUZUKI « Mazda « Nissan
Slide 9: Competitive Advantages
| Competitive Advantages w 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 w Modern, global scale finishing facility: = Commissioned 1998 «= 50% operational overcapacity w Qua
Slide 10: Building Products
| Building Products » Urbanstone Premium paving products, Australian distribution network. = Delta Pre-cast and pre-stressed concrete floors, beams & wall products. 10
Slide 11: Building Products Performance
| Building Products Performance June 01| June 02] June 03 | June 04 Sales 30.1 35.3 34.9 34.7 EBIT 6.1 5.3 43 4.2 EBIT Margin 20% 15% 12% 12% # Margins should be maintained in a highly competitive market. « Opportunity exists to increase sales through extending the Urbanstone product range. il
Slide 12: Competitive Advantages
| Competitive Advantages = Urbanstone a Plant flexibility a Cost control a Distribution network a Product innovation a Premium branding = Delta Cost efficient product Pre-stressed niche Capacity Distribution
Slide 13: Non-Core Investments
Non-Core Investments = Investment Property mw At June 30 SFC had JV interests in 6 commercial and retail properties valued at $21m with $15m of associated debt and generating an annual EBIT of $1.7m. » Development Property m $3.9m net cash to be generated over the next 4 years (after debt reduction
Slide 14: June Debt Position
| June 04 Debt Position Recourse | Non-Recourse| —_ Total Debt Operating Businesses 1.1 38.7 39.8 Property 6.4 8.6 15.0 Group Debt 7.5 47.3 54.7 Cash on Deposit 28.5 Net Debt 26.2 m The ALH Subordinated Debt and the Investment Property Debt are effectively “structural” debt. a The $38.7m ALH subordi
Slide 15: Cash Flow
| Cash Flow (A$m) June 04 June 02 June 03 June 04 EBITDA 15.0 28.8 36.1 33.5 Less Net Interest (2.4) (3.9) G.8) (4.0) Less Tax Paid (3.2) (4.3) 7A) (8.5) ALH Change in Working Capital - 11.4 56 3.4 Other Change in Working Capita! (4.5) 6.4 0.8 (0.4) Other (Provisions, Entitlements, Other Debtors) (0
Slide 16: Outlook — Earnings
Outlook — Earnings u Automotive Leather — Low volumes and a strong A$ will impact earnings in the first half. Additional costs associated with new program commencement (Audi & Land Rover) may impact margins initially. However in the medium term Howe is internationally competitive and has established
Slide 17: Outlook — Dividend Certainty
| Outlook — Dividend Certainty « We expect to maintain a fully franked Ordinary Dividend of $1.00 per share. w SFC has declared a Special Dividend of $0.20 (fully franked) payable in September 2004. m We expect to pay additional Special Dividends totaling approximately $0.60 per share (fully franked