Slide 1: Schaffer Corporation Half-Year Results Presentation: Dec-06
Slide 2: A focus on creating long term shareholder value
A focus on creating long term shareholder value * Consistently earned a return on capital in excess of our target of 15% return on capital * Continue high ordinary dividend payout ratio of approx 75%* + Schaffer provides access to capital and leadership across all businesses Success driven by the Sc
Slide 3: Our performance is not dependent on one industry sector
Our performance is not dependent on one industry sector because our core businesses operate in different markets + Market leader nay. $250im ~ $300m natural » Vast raw material reserves Building Products — . , : : : - . . and reconstituted Commercial / Residential Fragmented * Quality product Limest
Slide 4: Profit rises on stable revenue
Profit rises on stable revenue Revenue EBITDA 9.3 Net profit 3.6 EPS 0.26 ROCE 16% Cash flow from operating activities 10.8 Cash reserves 10.4 Net interest cover (EBIT/Net Interest) 4.2 Net debt / equity 88% Ordinary dividend $0.25
Slide 5: Increased earnings in Leather supported by another strong performance from Building Products
Increased earnings in Leather supported by another strong performance from Building Products Operating EBIT (by Segment) 10.0 9 9.0 4 8.0 4 7.0 7 6.0 4 5.0 4 4.0 4 3.0 4 2.0 | 1.0 4 0.0 Other Investments Investment Property Leather $m Building Products Dec-05 Dec-06
Slide 6: Dec-06 Debt Position
Dec-06 Debt Position a i Building Products Leather 0 40.8 Property Freehold 3.6 3.6 Property JV’s 2.1 19.6 Total Debt 8.3 64.5 Cash Reserves 4.7 Net Debt 59.8 * Debt is largely non-recourse to the parent company * Cash reserves as at 30-Jun-06 were $13.6m. Applied during period to Limestone Resource
Slide 7: SFC Group Gearing Structure
SFC Group Gearing Structure Total Group Debt ($62.2m) FHold Prop & B'Product JV Property, $19.6 Subordinated Govt Debt - Leather, $38.7 Senior Debt - Lecther, $2.1 * The Leather debt and JV Property debt are effectively ‘Structural’ debt with low financial risk to the Group ¢ $38.7m of the Leather d
Slide 8: Why actual gearing is significantly less than it appears
Why actual gearing is significantly less than it appears * Group gearing (Net Debt /Equity) per balance sheet @ 116%. Gearing overstated because properties are recorded at book value; not market value. Substituting Market Value for Book Value would show Group gearing @ 85%. 8 Investment JV’s 2 Subdi
Slide 9: Cash flow
Cash flow EBITDA Net interest paid Tax paid ALH change in trade working capital Other changes in working capital Other Total cash generated Debt reduction/(increase) Capital expenditure Acquisitions (L’Resources, Frobisher St, Canning Vale, Neerabup) Dividends paid Increase (decrease) in cash on dep
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Slide 11: Urbanstone, innovative national market leader commanding a brand premium
i Urbanstone, innovative national market leader commanding a brand premium * Unmatched plant & design flexibility to satisfy residential & commercial sectors ¢« Embedded cost control culture * Owned national distribution network established since 1993 Urbanstone Timeline of Major Commercial, Residen
Slide 12: Strengthened by acquisition of Limestone Resources
Strengthened by acquisition of Limestone Resources, a WA leader in natural and reconstituted limestone * Revenue contribution $12 - $14m per annum * Vast and centrally located reserves * Potential for significant operational improvement * Leverage Urbanstone national distribution network to drive sa
Slide 13: Delta, leading the way in technically engineered concrete products in WA
Delta, leading the way in technically engineered concrete products in WA + Low cost, profitable product * Strong industry relationships and distribution « Current projects include Bishops See, Century City and Ikea jects and Product Innovations Hajar Projects 1986 2007 grommet ne (itove tower a Ron
Slide 14: Building Products continues to ride robust WA economy
14 Building Products continues to ride robust WA economy Sales EBIT 3.6 +10% EBIT Margin 17% * Sales grew with the first-time inclusion of Limestone Resources * Improvement driven by the continued strength in WA of resource-fuelled commercial and infrastructure projects where Delta is a major suppli
Slide 15: Opportunities to grow Building Products
15 Opportunities to grow Building Products ¢ Delta pursuing profitable, large scale, medium to long term projects ¢ Urbanstone and Limestone Resources 4,800m2 prestige showroom in Osborne Park opening in May 2007. Osborne Park is one of Perth’s most central and popular home improvement retail destin
Slide 16: Leverage a solid foundation for growth: Leather
Slide 17: Tough conditions in the automotive leather industry
17 Tough conditions in the automotive leather industry + demand from US customers facing intense competition from Japanese OEMs * Loss of BMW asa customer due to South African industry support scheme * Production overcapacity within the industry * Widespread cost cutting programs at OEM level 6,000,
Slide 18: In response, Howe changed strategy to remain globally competitive
Slide 19: Strengthening our position in the growth markets of Europe and Asia
Strengthening our position in the growth markets of Europe and Asia Howe sales by region 100% 7 Australia 75% 7 Asia 50% 7 Europe 25% 7 North America 0% — 1 Dec-05 Dec-06 19
Slide 20: We have performed well in a tough market
20 We have performed well in a tough market : Automotive revenue Furniture revenue 3.9 -61% Automotive EBIT 2.4 +83% ALH EBIT 2.1 +95% EBIT Margin 4.1% * ALH’s reported $4.0m EBIT was higher than the pcp due to: - A significant reduction in redundancy expenses (pcp: $1.3m); ~ Removal of cutting dupl
Slide 21: Pursuing growth opportunities to build scale
21 Pursuing growth opportunities to build scale * World low cost producer * Increased sales team in growth markets of Europe and Asia
Slide 22: Property
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Slide 23: Valuable portfolio of assets with recurring income
Valuable portfolio of assets with recurring income Acquire prestigious properties at below F Pent, reve! creases int 23
Slide 24: JV partners are industry experts with track record of success
24 JV partners are industry experts with track record of SUCCESS
Slide 25: Strong earnings and cash flow contribution
25 Strong earnings and cash flow contribution EBIT Cash Book value Debt Market value Loan to valuation (debt / market value) * includes $0.7im in Subdivision debt resulting from the refinance of the [BM Investment Property which part funded the Neerabup acquisition. 0.5 13.8 14.4 28.0 51% +18% +15%
Slide 26: Strong demand for Mindarie Keys residential subdivision contributed to an improved EBIT
Strong demand for Mindarie Keys residential subdivision contributed to an improved EBIT * Expect Mindarie to generate another $3.0m of EBIT and $4.0m cash over the next 18 months after repaying $0.7m of associated debt. ¢ Set for future demand for industrial land — Acquired 20% JV interest in 26ha p
Slide 27: Outlook - Earnings
27 Outlook - Earnings * Building Products Integration of Limestone Resources producing: ¢ Significant operational improvement * Sales and marketing synergies through Urbanstone national distribution network Opening of UrbanStone Central in Osborne Park will assist revenue growth Delta, the Precast D
Slide 28: Outlook — Earnings (continued)
28 Outlook — Earnings (continued) * Property — Solid and steadily improving returns are expected from our Investment Property leasing activities ~ Mindarie earnings should be in line with the previous year but will depend on when stock is released to market (potentially resulting in a significant po
Slide 29: Outlook - Dividends
29 Outlook - Dividends ¢ Interim Dividend — SFC will pay a 25¢/share fully franked ordinary dividend — Ex Dividend Date: 8-Mar-07; Payment Date: 20-Mar-07 * Dividend Outlook ~- SFC does not expect to lift its dividend payout ratio significantly beyond the 75% range in the medium term to conserve fun