Slide 1: Schaffer Corporation Limited Half Year Results — Dec 2003
Schaffer Corporation Limited Half Year Results — Dec 2003
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. SFC will achieve this by: # Being a world low cost producer # Maintaining a leading distrib
Slide 3: Performance Summary
| Performance Summary 6 mths 6 mths Dec 02 Dec 03 Revenue (A$m) 125 104 Net Profit (A$m) 10.3 10.1 EPS $0.76 $0.73 ROCE 29% 28% EBITDA (A$m) 21.2 19.5 Ordinary Dividend $0.50 $0.50 Special Dividend - $0.20 Payout Ratio 66% 96% Interest Cover (EBIT) 8.6 8.3 Cash Reserves (A$m) 15.5 24.3 Net Debt/Equi
Slide 4: Dec 2003 EBIT Contribution
Dec 2003 EBIT Contribution Non-Core 28% Leather 51% Building Products 21% =» Return on Capital Employed — 28%
Slide 5: Operations - Leather
| Operations - Leather (A$m) 6 mths 6 mths Dec 02 Dec 03 Auto Revenue 87.3 66.0 Furn Revenue 12.7 8.3 EBIT 14.0 8.6 EBIT Margin 14.0% 11.6% = Dec 03 Automotive revenue is reduced due to: w Lower selling price ($11.6 M of which $A impact is $10.4 M) « Lower volume ($9.7 M) due to the loss of the Mits
Slide 6: Automotive Leather Market
| Automotive Leather Market World Leather Growth by Region & Total Source: CSM Worldwide (2008) « A$4.5bn global automotive leather market growing at 7% p.a. » 2002 global leather penetration of 15% (6.5 M vehicles). » Howe has an established market presence from which to build. » Howe is ranked 6¢
Slide 7: Howe Sales by Region
| Howe Sales by Region Australia (11%) USA (40% Asia (26%) Europe (23%) » Sales focus is on the high growth European and Chinese markets. » Howe is planning to establish an additional cutting plant in Eastern Europe or China by end 2004 to support new sales programs and reduce costs.
Slide 8: Automotive customer list
* BMW * Subaru SUBARU ¢ Audi ¢ Mitsubishi ae ¢ Porsche A * Toyota DP * General Motors aa ¢ Honda eb, * Ford ‘Suzuki SUZUKI * Chrysler CHRYSLER * Mazda © weasel «Land Rover * Nissan a
Slide 9: Competitive Advantages
| Competitive Advantages « Consistent supply of raw materials: w Australia has the 4" largest cattle herd globally iw Secure supply of disease-free hides m Range of hides to match product requirements Modern, global scale finishing facility: iw Commissioned 1998 w 50% operational overcapacity « Qual
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 6 mths 6 mths Dec 02| Dec 03 Sales 18.4 19.5 EBIT 2.9 3.6 EBIT Margin 15.8% 18.5% = Margins should be maintained in a highly competitive market.
Slide 12: Competitive Advantages
| Competitive Advantages = Urbanstone Q Q Q Plant flexibility Cost control Distribution network Product innovation Premium branding Delta a Cost efficient product a Pre-stressed niche a Capacity a Distribution 12
Slide 13: Non-Core Investments — Realising the Value
Non-Core Investments — Realising the Value = Investment Property « At December 31, SFC had JV interests in 7 commercial and retail properties valued at $24.2 M with $15.3 M of associated debt and generating an EBIT of $1.5 M. a The balance of the portfolio should realise profit of $5.0 M, $15.3 M of
Slide 14: Dec Debt Position
| Dec 03 Debt Position Recourse | Non-Recourse Total Debt Operating Businesses 1.4 38.7 40.1 Property 8.4 8.6 17.0 Group Debt 8.0 48.8 57.1 Cash on Deposit 24.3 Net Debt 32.8 w The ALH Subordinated Debt and the Investment Property Debt is effectively “structural” debt. w The $38.7 M ALH subordinated
Slide 15: Cash Flow
| Cash Flow (A$ M) Dec 02 Dec 03 6 months | 6 months EBITDA 21.2 19.5 Less Net Interest (1.9) (1.6) Less Tax Paid (5.1) (6.2) ALH Change in Working Capital 2.3 1.6 Other Change in Working Capital 1.3 (3.3) Other (Provisions, Entitlements) 1.7 2.0 Share Issues (option exercise) 0.4 0.7 Property Dispo
Slide 16: Outlook — Earnings
Outlook — Earnings « Automotive Leather — Program timing issues and a strong A$ are impacting volume and margins. In the short term there is continued earnings uncertainty driven by A$ volatility and the timing of new program deliveries (Howe will commence supply to Audi and Land- Rover during the s
Slide 17: Outlook — Dividend Certainty
| Outlook — Dividend Certainty « SFC will pay an ordinary dividend of $0.50 and a special dividend of $0.20 (both fully franked) in March 2004. « We expect to maintain a fully franked Ordinary Dividend of at least $1.00 per share for FY04. « We expect to pay additional Special Dividends totaling app