Schaffer Corporation Limited · ASX:SFC
Schaffer — FY2006 Earnings Presentation
18 slides from Schaffer's earnings presentation, Aug 23, 2006
Slide 1: Schaffer Corporation Limited Full Year Results – Jun 2006
Schaffer Corporation Limited Full Year Results – Jun 2006 1
Slide 2: Performance Summary
Performance Summary 2004/05 2005/06 Revenue (A$m) 145 145 Net Profit (A$m): Headline 9.4 8.1 Net Profit (A$m): Excluding investment property disposals 8.7 8.1 EPS: Excluding investment property disposals $0.62 $0.58 ROCE: Excluding investment property disposals 16% 16% EBITDA (A$m) 21.6 21.1 Cash Fl
Slide 3: Jun 2006 EBIT Contribution
Jun 2006 EBIT Contribution Building Products 43% Investment Property 13% Leather 31% Other Investments 13% n Return on Capital Employed – 16% 3
Slide 4: Operations – Leather (ALH)
Operations – Leather (ALH) (A$m) 2004/05 2005/06 Automotive Revenue 98 91 Furniture Revenue 9 7 Automotive EBIT 8.3 6.2 ALH EBIT 8.3 4.8 n Automotive revenue. n European volume increased with Land Rover ramp up; despite BMW loss n Asian Volume increased; remains well down on pre-suspension peak n Lo
Slide 5: Howe Sales by Region
Howe Sales by Region Australia USA 12% 28% Asia 27% Europe 33% n Asian OEM’s impact on North America market n Europe and Asia grew as % of total sales n New cutting plants have strengthened Howe’s position in the Europe and Asian markets n Howe’s sales focus is on growth opportunities in the Europea
Slide 6: Competitive Advantages
Competitive Advantages n Access to a consistent supply of raw materials: n Modern, global scale facilities: n New cutting plants in low cost zones n Quality Culture and accreditation: n Established Global Customer Base: n Supplying GM, Ford, Audi, Land Rover, Mazda & Toyota 6
Slide 7: Building Products
Building Products n UrbanStone q Premium paving products q national distribution network n Delta q pre-cast and pre-stressed products q W.A. construction market 7
Slide 8: Building Products (continued)
Building Products (continued) n Limestone Resources (Jul- 06) q Largest WA producer of limestone products; q Large limestone reserves; q Complementary to UrbanStone; q Distribution potential through UrbanStone’s national sales network q Services the n Commercial market n Residential market n Land Su
Slide 9: Building Products Performance
Building Products Performance (A$m) 2004/05 2005/06 Sales 28.8 39.0 EBIT 2.9 6.6 n Significantly improved performance n Driven by commercial and infrastructure projects n Acquisition expected to add $12m to $14m per annum; but at lower margins than UrbanStone/Delta. 2 n New 4,800m prestige showroom
Slide 10: Building Products – Competitive Advantages
Building Products – Competitive Advantages n UrbanStone n Delta q plant design and flexibility q Cost efficient product q cost control culture q Available capacity; q National distribution network q Strong industry q premium brand relationships and q Market leading product distribution innovation 10
Slide 11: Building Products – Competitive Advantages
Building Products – Competitive Advantages n Limestone Resources q Strong brand recognition q Unique product range q Working quarries - vast reserves and longstanding (EPA/CALM) approvals q Quarries are conveniently and well located; and q Leverage off the UrbanStone national distribution network 11
Slide 12: Property
Property n JV interests in 7 properties q Valued at approximately $32.5m; Debt: $16.2m. $14.9m in unrealised capital gains. q Leasing activities: $2.0m of EBIT and $1.1m of cash. n Mindarie q H2 EBIT contribution $1.8m (v $0.1m in H1); H2 stock releases were met with higher than expected demand; q A
Slide 13: Jun 06 Debt Position
Jun 06 Debt Position Recourse Non-Recourse Total Operating Businesses 0.3 40.0 40.4 Property 1.6 16.0 17.6 Group Debt 1.9 56.1 58.0 Cash on Deposit 13.6 Net Debt 44.4 n The ALH Subordinated Debt and the Investment Property Debt are effectively “structural” debt. n ALH subordinated non-recourse debt
Slide 14: Cash Flow
Cash Flow (A$m) 2004/05 2005/06 EBITDA 21.6 21.1 Net Interest Paid (2.8) (3.4) Tax Paid (6.1) (2.9) ALH Change in Trade Working Capital (8.5) 3.7 Other Changes in Working Capital (2.1) (2.3) Other 0.9 (0.1) Total Cash Generated 3.0 16.1 Debt Reduction (1.7) (1.6) Capital Expenditure 4.8 4.5 Divestme
Slide 15: Outlook – Earnings
Outlook – Earnings n Automotive Leather: q Outlook subdued: n Supplier overcapacity n Rising hide prices n Aggressive pricing climate across the global automotive market. q Margins consistently under pressure q North America will continue to be difficult q Focus on growth opportunities in the Europe
Slide 16: Outlook – Earnings (continued)
Outlook – Earnings (continued) n Building Products q Project timing expected to reduce H1 revenue for Delta & UrbanStone q Limestone Resources n $12m-$14m pa of additional revenue (at lower margins than UrbanStone/Delta). n $1m to $2m of CapEx for efficiency and capacity gains. n Investment Property
Slide 17: Outlook – Dividends
Outlook – Dividends n SFC to pay 25¢/share fully franked final dividend n Ex Dividend date: 8 September 2006 n Payment date: 19 September 2006 Totaling 50¢/share in fully franked dividends in for FY2005/06 n SFC intends to maintain a relatively high ordinary dividend payout ratio of at least 75%. 17
Slide 18: Summary
Summary n Financial and operating performance in line with expectations; n Business repositioning has Howe well placed for medium term growth; n New acquisition to drive Building Products revenue with CapEx to improve efficiency and capacity; n Expect H1 performance to be no less than pcp; n Corpora