Slide 1: Schaffer Corporation Ltd - Delivering Shareholder Returns
Schaffer Corporation Ltd “Delivering Shareholder Returns” 19 February 2003
Slide 2: Agenda
Agenda ‘3 Corporate Strategy ‘a Performance Summary ‘@ Operations (a Leather { Building Products ta Non-Core Investments ™@ Debt Position ™ Cash Flow ™ Outlook & Earnings § Dividends 19 February 2003
Slide 3: Corporate Strategy
Corporate Strategy “To be number 71 or number 2 in each of our markets as measured by profitability” World low cost producer Leading distribution network wConstant attention to detail 19 February 2003
Slide 4: Performance Summary
Performance Summary 2001 Actual 2002 Actual 2003 Forecast Revenue (A$m) 47 212 240 Net Profit (A$m) 8.0 13.0 17.1 EPS $1.02 $1.26 ROCE 21% 26% EBITDA (A$m) 29 37 Operating Cash Flow 44 NA Ordinary Dividend Payout Ratio Interest Cover (EBIT) 19 February 2003
Slide 5: Dec 2002 EBIT Contribution
Dec 2002 EBIT Contribution (Operating EBIT $19m) Non-Core Building Bey Ti, Lo Leather 75% ‘§ Return on Capital Employed — 29% 19 February 2003
Slide 6: Operations - Leather
Operations - Leather ($m) 2000 12 months 2001 412 months 2002 12 months Auto Revenue 148 186 194 Furn Revenue 41 35 25 EBIT 12.6 14.5 15.2 EBIT Margin 6.7% 6.6% 6.9% t@ Dec 02 Automotive revenue run rate is lower due to: f@ Higher $A la Lower hide prices fa Loss of GMH contract {Programme timing @ E
Slide 7: Automotive Leather Sales
Automotive Leather Sales M Asia (15%) OOUSA (49%) @ Eur (24%) ClAust (12%) 1999 2000 2001 19 February 2003 2002
Slide 8: Automotive Leather Market
Automotive Leather Market @ A$6bn automotive leather market. i Howe has an established market presence from which to build: 210.0% Australasian market share. 43.0% European market share. 92.6% U.S. market share. @) Howe is ranked No.6 by revenue globally. 19 February 2003
Slide 9: Competitive Advantages
Competitive Advantages ™ Consistent supply of raw materials: @ Australia has the 4" largest cattle herd globally {@ Secure supply of disease free hides {4 Range of hides to match product requirements @ Modern, global scale finishing facility: {@ Commissioned 1998 { 50% operational overcapacity ™ Qua
Slide 10: Building Products
Building Products a@l Urbanstone (100%) — Premium paving products, Australian distribution network. i Delta (100%) — Pre-cast and pre-stressed concrete floors, beams & wall products. 19 February 2003
Slide 11: Building Products Performance
Building Products Performance 2000, 2001; 2002) Dec 02 12 months 12 months 412 months 6 months Sales 33.3) 30.1 35.3 18.4 EBIT 6.4 6.1 5.3 2.9 EBIT Margin 19% 20% 15% 16% @ 2002 EBIT margin reduced due to the increased allocation of corporate expenses totalling $2.2m. 19 February 2003
Slide 12: Competitive Advantages
Competitive Advantages i Urbanstone @ Delta — Plant flexibility — Cost efficient product — Cost control — Pre-stressed niche — Distribution network — Capacity — Product innovation — Distribution — Premium branding 19 February 2003
Slide 13: Non-Core Investments
Non-Core Investments @ Investment Property a JV interests in 13 commercial and retail properties valued at $35m with $22m of associated debt. ‘aDec 2002 EBIT of $1.2m al Development Property a$5m cash over 5 years. @ Equity Investments 3$1.0m portfolio 19 February 2003
Slide 14: Dec Debt Position
Dec 02 Debt Position Recourse Nor- Total Interest Interest Debt | Recourse Debt Cover Operating Businesses 1.9 38.7) 40.6 1.6 10.6 Investment Property 10.0 12.0| 22.0 0.7 1.7 Group Total 11.9} 50.7] 62.6 2.3 8.1 The ALH Subordinated Debt and the Investment Property Debt are effectively “structural”
Slide 15: Cash Flow
Cash Flow (A$m) Dec 02 6 months 2002 412 months 2001 12 months EBITDA 21.2 28.8 15.0 Less Interest (1.9) (3.9) (2.4) Less Tax Paid (5.1) (4.3) (3.2) ALH Change in Working Capital 2.3 11.4 Other Change in Working Capital 1.3 6.4 (4.5) Other (Provisions, Entitlements, Other Debtors) 17 5.5 (0.2) Share
Slide 16: Outlook - Earnings Growth
Outlook — Earnings Growth Automotive Leather — In the second half we expect slightly lower sales volumes with some margin compression. In the medium term there are significant opportunities to win new programmes. Howe is internationally competitive and has established global market shares from which
Slide 17: Outlook - Dividends
Outlook - Dividends { At least $1.00 per share (fully franked) to be paid on FY03 earnings. {1 SFC intends to maintain a relatively high Payout Ratio. & Strong Group Cash Flow: ~ Leather @ Good Margins, low Capex. @ Improved Working Capital Management. ~ Building Products @ Mature cashflow from Urba