Schaffer Corporation Limited · ASX:SFC
Schaffer — FY2005 Earnings Presentation
16 slides from Schaffer's earnings presentation, Aug 24, 2005
Slide 1: Schaffer Corporation Limited Full Year Results – June 2005
Schaffer Corporation Limited Full Year Results – June 2005 1
Slide 2: Performance Summary
Performance Summary 2003/04 2004/05 Revenue (A$m) 192 149 Net Profit (A$m) 16.6 9.9 EPS $1.20 $0.70 ROCE 27% 16% EBITDA (A$m) 33 22 Operating Cash Flow 25.9 0.3 Ordinary Dividend $1.00 $0.75 Special Dividend $0.40 $0.45 Net Interest Cover (EBIT) 10.0 6.2 Net Debt/Equity 42% 81% 2
Slide 3: Jun 2005 EBIT Contribution
Jun 2005 EBIT Contribution Non-Core Investment 17% Property 10% Leather 46% Building Products 27% Return on Capital Employed – 16% 3
Slide 4: Operations - Leather
Operations - Leather ($m) 2003/04 2004/05 Automotive Revenue 128 98 Furniture Revenue 13 9 EBIT 16.1 8.0 June 05 Automotive revenue is reduced primarily due to: Suspension of China sales ($23m) US aftermarket ($4m) and a lower selling price due to stronger $A strengthening ($2m) FX Impact Au
Slide 5: Howe Sales by Region
Howe Sales by Region Australia 13% USA Asia 37% 20% Europe 30% North America – difficult trading conditions for GM and Ford China - Inventory levels appear to be reducing prompting a partial recovery in orders. South Africa - MIDP scheme (which provides its beneficiaries a 23% prohibited subsi
Slide 6: Competitive Advantages
Competitive Advantages Consistent supply of raw materials: Australia has the 4th largest cattle herd globally Secure supply of disease free hides Range of hides to match product requirements Modern, global scale finishing facility: Commissioned 1998 50% operational overcapacity Low C
Slide 7: Building Products
Building Products Urbanstone Premium range of paving products, Australian distribution network. Delta Pre-cast and pre-stressed concrete floors, beams & wall products. 7
Slide 8: Building Products Performance
Building Products Performance ($m) 2003/04 2004/05 Sales 34.7 28.9 EBIT 4.2 2.9 Strong cash flow capability and satisfactory return on capital. Stable sales outlook. Some margin compression due to competition and input cost increases. Investigating alternatives to increase sales by extending
Slide 9: Building Products – Competitive Advantages
Building Products – Competitive Advantages UrbanStone Delta Plant flexibility Cost efficient product Cost control Pre-stressed niche Distribution network Capacity Product innovation Distribution Premium branding 9
Slide 10: Investment Property
Investment Property The investment property leasing operations provided $1.8m of EBIT and $0.9m of cash in 2004/05. SFC has sold down its investment property portfolio over the past two years funding a large portion of special dividends paid. At June 30, SFC had JV interests in 6 commercial an
Slide 11: Non-Core Investments
Non-Core Investments Development Property SFC has 15% interest in Mindarie Keys Residential subdivision Provided $1.7m of EBIT and 0.9m of cash in 2004/05 Forecast $2.0m of EBIT and $3.0m cash to be generated over the next 2½ years (after debt reduction of $0.4m). West Perth The sale of surp
Slide 12: June 05 Debt Position
June 05 Debt Position Recourse Non-Recourse Total Operating Businesses 0.3 41.6 41.9 Property 4.2 10.3 14.5 Group Debt 4.5 51.9 56.4 Cash on Deposit 12.7 Net Debt 43.7 The ALH Subordinated Debt and the Investment Property Debt are effectively “structural” debt. The $38.7m ALH subordinated non-re
Slide 13: Cash Flow
Cash Flow (A$m) 2003/04 2004/05 EBITDA 33.5 22.4 Less Net Interest (2.9) (2.8) Less Tax Paid (8.5) (6.1) ALH Change in Working Capital 3.4 (8.5) Other Changes in Working Capital (0.4) (0.1) Changes in Provisions/Entitlements 0.0 (3.0) Share Issues 1.2 1.1 Total Cash Generated 26.3 3.0 Debt Reduction
Slide 14: Outlook – Earnings
Outlook – Earnings Automotive Leather: Challenging trading conditions are expected to persist in 2005/06 as high oil prices continue to impact upper-end vehicle sales. Higher steel prices, supplier overcapacity and aggressive cost cutting programs by OEM’s will continue to put pressure on comp
Slide 15: Outlook – Earnings (continued)
Outlook – Earnings (continued) Building Products – Stable sales with some margin compression due to competitive pressures and input cost increases. Strong cash flow generating capacity with minimal capital requirements. Investment Property – Improved earnings are expected from the existing portf
Slide 16: Outlook – Dividends
Outlook – Dividends SFC has declared fully franked dividends totaling 60¢/share payable in Sep-05 (i.e. a 25¢/share ordinary final dividend plus a 35¢/share special dividend). Dividends for 2004/05 total $1.20/share fully franked (75¢ ordinary and 45¢ special) Including the special dividend to b