Gale Pacific Limited · ASX:GAP
Gale Pacific — H1 FY2006 Earnings Presentation
27 slides from Gale Pacific's earnings presentation, Feb 28, 2006
Slide 1: daG
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Slide 2: Agenda
Wes Overview Strategic Progress Interim Results Asia Pacific Americas Europe/Middle East/Africa Dividend Outlook Appendix I: Segment Results DAE a A oo c] A
Slide 3: Overview
Overview = Underlying NPAT $1.1m in December half year |" Solid result in seasonally weaker period Significant progress with global growth strategy On track to achieve FY NPAT above last year’s $5.09m (AIFRS) Northern hemisphere to drive stronger June half year and longer term growth
Slide 4: China Manufacturing, Management Team, Northern Hemisphere
# China Manufacturing =» Management Team = Northern Hemisphere Ga aU aaauianncna i y aiuuesaneicnuenss e see Se ie icine ae oe [fant hon
Slide 5: World class manufacturing plant now built and operating to expectations
World class manufacturing plant now built and operating to expectations.... Transfer of plant from Melbourne to China to be complete by 30 June 2006 Successful transfer of know-how has substantially diminished risk Large volumes already being delivered to northern hemisphere markets Anticipated redu
Slide 6: Management Changes
Management Changes Peter McDonald, MD - USA (C.0.0.) 4 years managing US market through local manager now hands on. Steve Carroll, MD — Australia 3 years as Sales & Marketing Manager Australia, Braeside factory moving to China Jeff Cox, Group CFO Many years experience in a like international group w
Slide 7: Northern Hemisphere
Northern Hemisphere = : Bey = Growth platform emerging in Europe & Americas = Increased distribution capability | - More retail outlets - More countries - Commercial fabric opportunities = Potential to leverage China manufacturing - Broader product range - Speed to market
Slide 8: Interim Results
Interim Results with AIFRS LS 6 MONTHS y ENDED % Change Underlying profit $1.1m | Revenue 23.1% Northern hemisphere seasonally weaker | Pre-tax excluding 66.6% 1 $1.8m pre-tax cost of plant relocation NPAT 1 266.7% Results yet to reflect benefits of global excluding ‘ growth strategy NPAT including
Slide 9: Seasonality
Seasonality 31 DEC ’03 | 30JUN’04 | ) 30 JUN '05 $m | $m SIX MONTHS ENDED Revenue 34.42.03 30.06.04 31.12.04 30.06.05 31.12.05 31.12.03 30.06.04 31.12.04 30.06.05 34.12.05 6 months ended 6 months ended GA a i/ osts - relocation of plant to China-$1.8m (beforetax) ef :)
Slide 10: Six months ended Dec 2005
Six months ended 34 Dec 2005 versus Revenue up 23.8% to $41.50m from $33.53m previously Pre-tax profit up 38.1% to $4.93m from $3.57m previously One-off China relocation cost of $1.8m pre- tax, $1.3m after tax Additional China relocation of $1.3m pre-tax, $1.0m after tax, expected in June 2006 half
Slide 11: Asia Pacific
Asia Pacific 30 JUN 04 | 30 JUN ’05 $m Flat Australian sales Difficult DIY trading market Significant increase in NZ revenue Donaghys acquisition integrated 31.12.03 30.06.04 31.12.04 30.06.05 31.12.05 oo a First time contribution of external sales from 6 months ended Asia and China
Slide 12: Asia Pacific
Asia Pacific 31 DEC 03 | 30JUN'04 | | 30 JUN ’05 SIX MONTHS ENDED : $m gm | sm Some duplication of costs during China plant relocation phase Inventories higher Tight cost control elsewhere Australian DIY market conditions improved in 34.1203 30.06.04 31.12.04 30.06.05 31.12.05 December 2005 6 months
Slide 13: Six months ended Dec 2005
Six months ended 34 Dec 2005 versus 7 6 5 44 34 24 1] 07 1 2 Revenue Pre-tax Loss LEE LS RTE. Revenue up 51.3% to $6.02m from $3.98m previously Pre-tax loss decreased to $0.83m from $1.23m previously COO Peter McDonald relocated to US Revenue growth highlights more focused management Ne
Slide 14: Americas
Americas 30 JUN 04 | 30 JUN ’05 Stronger sales in window furnishing products, retail fabrics and commercial fabrics Two major new retail partners, store number increased Product range expanded it : Expanded presence in commercial fabrics 1 market HATHA LN)
Slide 15: Americas
Americas 31 DEC 03 | 30 JUN 04 | 30 JUN ’05 . SIX MONTHS ENDED / $m $m / $m Business yet to reach critical mass Revenue growth in seasonally weaker December half very encouraging for seasonally stronger June half : : . . 1 Plans for further expansion of US business 31.12.03 30.06.04 31.42.04 30.06.0
Slide 16: Six months ended Dec 2005
Six months ended 34 Dec 2005 versus Revenue Pre-tax Loss Revenue up 14.6% to $18.1m from $15.8m previously Pre-tax loss increased to $3.64m from $1.91m previously Loss increased due to significant one-off expenses related to investment phase and non-recurring marketing costs New MD Europe appointed
Slide 17: Europe/Middle East/Africa
Europe/Middle East/Africa Revenue 31.12.03 30.06.04 31.12.04 30.06.05 31.12.05 6 months ended Europe operations focused on building a platform to deliver a broader product range to a larger market Growth expected in retail sales in line with increased product range Growth expected in commercial fabr
Slide 18: Europe/Middle East/Africa
Europe/Middle East/Africa 31 DEC 03 | 30 JUN 04 | SIX MONTHS ENDED $m 30 JUN ’05 $m Pre-tax Profit A 31.12.03 30.06.04 34.12.04 30.06.05 34.12.05 6 months ended Investment phase costs to diminish Focus on delivering broader product range to larger market More stores in more countries Stronger distri
Slide 19: Net Debt
Net Debt Equity Net debt to equity June ’05 $78.9m $54.8m 1.44
Slide 20: Cash Flow and Investing
Cash Flow and Investing June ’05 Free Cash Flow provided/(Used) Investing Outflow Comprising: Plant and Equipment Acquisition NN)
Slide 21: Net Working Capital
Inventory Receivables Subtotal Less Payables Net Working Capital June ’05 $50.6m $32.7m $83.3m $19.8m $63.5m NN
Slide 22: Free Cash Flow
Free Cash Flow Strong positive free cash flow is forecast to June’ 06 Significant Inventory reduction by June ’06 = Seasonal Sales to Northern Hemisphere = Reduced “buffer” inventory as China risk lowers Receivables will increase due to sales to seasonal Northern Hemisphere customers. Only Maintenan
Slide 23: Ratios to Revenue
ee ci Ratios to Revenue Cost of sales/inventory Employee Expenses Operating Overheads encegnanmucnunaaay ‘i LE i: TTT TTT LLL SUN
Slide 24: Future interim and final dividends to reflect profit seasonality
« Future interim and final dividends to reflect profit seasonality Dividend | Pre-tax Profit = tf rh od a 34.12.03 30.06.04 91.1204 30.06.05 31.12.05 34.42.03 30.06.04 34.12.04 30.06.05 31.12.05 6 months ended 6 months ended
Slide 25: Dividend
Dividend = December interim dividend 1.5 cents » Reduced from 3.5 cents = In future, final dividend likely to be proportionally greater than interim dividend = No change to 50 to 55% payout policy
Slide 26: Global growth strategy underway
Ec Global growth strategy underway Benefits of China manufacturing to accrue: lower costs; speed to market; broader product range Stronger management reduces risk Distribution capability building in northern hemisphere FY 2006 NPAT to exceed FY 2005 NPAT Strategic progress underpins growth in FY 200
Slide 27: Appendix I: Segment Results
SIX MONTHS ENDED 31 DEC ’03 $m 30 JUN 04 31 DEC ’04 $m 30 JUN 705 $m 31 DEC ’05 Re Asia Pacific Americas Europe/ME/Africa Asia Pacific Americas Europe/ME/Africa costs - relocation of plant t December 2005 exclude China - $1.8m (before tax)