Slide 1: Schaffer Corporation Limited Half Year Results Dec 2005
Schaffer Corporation Limited ait Half Year Results — Dec 2005
Slide 2: Performance Summary
Performance Summary Dec 2004 Dec 2005 6 months 6 months Revenue (A$m) 73.7 73.7 Net Profit (A$m) 6.6 3.6 EPS $0.47 $0.26 ROCE (excluding inv.prop.disposals ) 21% 15% EBITDA (A$m) 13.8 9.3 Cash Flow from Operating Activities 0.6 10.8 Cash Reserves 20.0 10.4 Net Interest Cover (EBIT) 8.3 4.2 Net Debt/
Slide 3: Dec 2005 EBIT Contribution
IDec 2005 EBIT Contribution Building Products 58% Investment Leather Property 27% Other Investments 13% 2% =» Return on Capital Employed — 15%
Slide 4: Operations — Leather (ALH)
| Operations — Leather (ALH) (A$m) Dec 2004 Dec 2005 6 months 6 months Automotive Revenue 46.5 46.4 Furniture Revenue 5.0 3.9 EBIT 5.2 2.1 s Automotive revenue: » Reductions: Loss of BMW (Europe); Lower demand from GM and Ford (US) =» Growth: European sales (L’Rover); Stabilisation in China market =
Slide 5: Howe Sales by Region
| Howe Sales by Region Australia 14% USA 32% Asia 24% Europe 30% » North America: declining sales as Japanese and Korean OEM’s win market share at the expense of GM and Ford. Europe: sales grew to 30% of Howe revenue China: sales recommenced (following Sep-04 suspension); now represents 24% of Howe
Slide 6: Competitive Advantages
| Competitive Advantages = Raw material supply: «= Australia has the 4 largest cattle herd globally = Secure supply of disease free hides = Range of hides to match product requirements = Modern, global scale finishing facility: = Commissioned 1998 = More than 50% operational overcapacity «= Expansio
Slide 7: Building Products
| Building Products a UrbanStone: Premium paving products; national distribution network a Delta: Pre-cast & pre- stressed concrete floors, beams & wall products
Slide 8: Building Products Performance
| Building Products Performance (A$m) Dec 2004 Dec 2005 Sales 15.6 20.8 EBIT 2.4 3.6 a Significant improvement on pcp a Drivers: commercial building market; supply to infrastructure projects = Building Products has strong free cash flow generating capacity and satisfactory return on capital employed
Slide 9: Building Products — Competitive Advantages
| Building Products — Competitive Advantages » UrbanStone = Delta a Plant flexibility a Cost efficient product a Cost control culture a Pre stressed niche a National distribution a Production capacity; network a Distribution a Product innovation; and a Premium branding
Slide 10: Property
| Property Investment Property: « SFC JV interests - 6 commercial and retail properties; = Current value approximately $28m; $14.4m of debt; » Investment property leasing: generated $1.0m of EBIT and $500,000 of cash for the half. Mindarie: » EBIT $100,000 (pcp: $1.2m) as subdivision staging issues
Slide 11: Dec Debt Position
| Dec 05 Debt Position Recourse | Non-Recourse Total Operating Businesses 0.1 38.7 38.8 Property 1.4 13.5 14.9 Group Debt 1.5 52.2 53.7 Cash on Deposit 10.4 Net Debt 43.3 =» Debt Structure: ALH Subordinated Debt and the Investment Property Debt are effectively “structural” debt. =» The ALH debt ($38
Slide 12: Cash Flow
| Cash Flow (A$m) Dec 2004 Dec 2005 6 months 6 months EBITDA 13.8 9.3 Net Interest Paid (1.4) (1.7) Tax Paid (3.9) (2.4) Change in Working Capital (3.6) 4.8 Other 0.8 1.2 Total Cash Generated 5.7 11.2 Debt Reduction 11 2.9 Capital Expenditure 2.1 2.1 Dividends Paid 11.0 8.5 Reduction in Cash on depo
Slide 13: Outlook — Earnings
| Outlook — Earnings » Automotive Leather: Q Q Q Supplier overcapacity and cost cutting programs at the OEM level bode for subdued industry outlook. Full year Howe earnings expected to be lower than last year North America will continue to be difficult as GM and Ford restructure their operations. Eu
Slide 14: Outlook — Earnings (continued)
| Outlook — Earnings (continued) » Building Products — Full year sales and EBIT will be significantly above last year’s performance. Strong free cash flow and minimal capital expenditure requirements expected. » Investment Property — Solid full year returns from our existing portfolio’s leasing acti
Slide 15: Outlook — Dividends
| Outlook — Dividends = As previously advised, SFC will pay a 25¢/share fully franked interim dividend in March 2006. =» Ex Dividend date: 9 March 2006 =» Payment date: 21 March 2006 =» Based on current second half earnings estimates, SFC expects to declare a final fully franked dividend of 25¢/shar