14 February 2020 ASX Market Announcements ASX Limited 4 th Floor, - PDF document

14 February 2020 ASX Market Announcements ASX Limited 4 th Floor, 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, SCHAFFER CORPORATION LIMITED (ASX:SFC) INVESTOR PRESENTATION - HY20 RESULTS Please find attached SFC’s Investor Presentation for the first half of the 2020 financial year. The Board has authorised the document to be released to the ASX. For further information, please contact: Mr John Schaffer Mr Jason Cantwell Chairman Group Financial Controller & Company Secretary Schaffer Corporation Ltd Schaffer Corporation Ltd +61 8 9483 1201 +61 8 9483 1202 Yours sincerely Jason Cantwell Company Secretary Head Office : 1305 Hay Street, West Perth WA 6005 Postal Address : PO Box 770, West Perth WA 6872 Telephone : +61 8 9483 1222 Facsimile : +61 8 9481 0439 Website : www.schaffer.com.au Schaffer Corporation Limited ABN 73 008 675 689

Half-Year Results Presentation December 2019 Creating long-term shareholder value through the efficient operation and growth of our core businesses and investments

Organisation Chart (Core Businesses) SCHAFFER CORPORATION LIMITED Manufacturing Group Investments SFC (100%), Gosh Capital (83%) Automotive Leather (83% Owned) • Finishing Company Owned Property − Kosicé – Slovakia • Jandakot Rd, Jandakot, WA − Thomastown – Victoria, Australia • Campersic Rd, Herne Hill, WA (Delta) • Hay Street, West Perth, WA (Head Office) • Cutting • Bennett Ave, North Coogee (via Gosh) − Kosicé – Slovakia • Dixon Road, Rockingham (via Gosh) − Shanghai – China • Sales Offices Syndicated Investment Property − Australia / Slovakia / China / Japan / Germany • Partnership Syndicates • Unit Trust Syndicates • US LLC Investments Delta Equities • Precast Concrete – Herne Hill, WA 2

Group Consolidated Financial Performance Half-Year Ending Dec-2019 Dec-2018 Revenue ($m) $92.7 $106.4 NPAT 1 ($m) $13.9 $12.7 EPS (cents per share) 101.6 91.6 Ordinary dividends (fully franked) $0.45 $0.30 Profit up 10 % including unrealised non-cash net gains for the Group’s non-property investment • portfolio of $3.2m after tax (H1 F19: $0.2m) • FY20 fully franked interim dividend up 50% on previous corresponding period Group investments at market value 3 increased to $147.2m from $134.4m at 30 June 2019 • Movements during the half-year • New investments $15.1m • Unrealised gains (equities) $4.6m • Unrealised gains (property) $0.8m • Share buy-back ($2.3m) • SFC dividends ($5.5m) Net debt 2 increase of $20.0m to fund $15.1m of investments ($9.3m property, $5.8m equities) and • $2.3m of share buy-back 1. Net profit after tax and minority interests. 2. Net Debt excludes interest-bearing liabilities for operating leases recognised under AASB 16 from 1 July 2019 (refer to page 19). 3. Market value refers to pre-tax net equity value 3

Cash Flow Half-Year Ending ($m) Dec-2019 Jun-2019 Dec-2018 Capital expenditure included: (current) (pcp) ~$4.1m for Automotive Leather • NPAT 13.9 10.2 12.7 $2.1m for Thomastown • Finishing plant upgrade Unrealised gains – Group investments (4.7) (0.6) (0.4) $2.0m for Slovakian plant and • machinery, including 2 CNC Depreciation and other non-cash items 3.6 2.4 2.2 machines Profit on sale of businesses and assets - (0.1) (0.2) ~$1.0m for improvements to 39 • Dixon Road, Rockingham to Non-cash impairment of assets - 1.2 - accommodate a new national tenant. Add minority interests 2.2 2.2 2.6 Change in tax provisions (2.4) (0.8) (6.2) Group investments included: Change in Howe trade working capital (2.8) 2.3 - 5 local syndicate property • investments ($4.9m) Other changes in working capital - 8.4 (2.0) 1 US syndicate property • investment ($1.4m) Total operating cash generated 9.8 24.4 8.7 4 direct equity investments ($5.8m) • Proceeds from divestments 2.4 0.2 1.6 1 fixed income investment ($0.5m) • Balances paid on prior investment Capital expenditure (5.5) (2.2) (3.1) • commitments ($2.5m) Group investments (15.1) (3.9) (13.7) Capital raised / (share buy-back) (2.1) (0.3) (0.2) 1. Payments for leases previous classified as operating leases prior to the adoption of AASB 16 Dividends paid (7.7) (6.3) (8.2) on 1 July 2019. 2. Net Debt presented excludes interest-bearing Lease payments 1 (1.7) - - liabilities for leases previously classified as Net debt 2 (increase)/reduction operating leases prior to the adoption of AASB 16 (20.0) 11.9 (14.9) on 1 July 2019. 4

Group Net Debt Net Debt 1 increased $20.0m during the half with investments increasing by $15.1m. Syndicated Total Total Automotive SFC Investment Gosh 31 Dec 30 June Leather Investments Properties Capital 2019 2019 All amounts in $m’s Type of Debt: Bank debt (15.7) - (21.4) (6.1) (43.2) (29.2) Equipment finance (8.2) - - - (8.2) (9.0) Gross Debt 1 (23.9) - (21.4) (6.1) (51.4) (38.2) Cash and term deposits 9.4 16.7 1.0 - 27.1 33.9 Net (Debt)/Cash 1 (14.5) 16.7 (20.4) (6.1) (24.3) (4.3) % debt recourse to SFC 0% 11% 0% The Net Debt increase of $20.0m includes: • SFC Investments decreased cash: $4.4m • Automotive Leather increased net debt: $13.1m • New investments – ($15.1m) • Balance of FY19 dividends – ($18.4m) • Share buy-back – ($2.3m) • CAPEX – ($4.1m) • SFC Dividends – ($5.5m) • Operating cash flow - +$9.4m • Howe FY19 dividends received - $16.8m • Divestments - $2.0m 1. Gross Debt and Net Debt presented excludes $26.6m of interest-bearing liabilities for leases previously classified as operating leases prior to the adoption of AASB 16 on 1 July 2019 (refer to reconciliation on page 19) 5

Dividends The Board has declared an interim dividend of 45¢ per share fully franked which is a 50% increase compared to the prior corresponding period, payable on 13 March 2020. 6

Automotive Leather 7

Automotive Leather Half-Year Ending ($m’s) Dec-2019 Dec-2018 Revenue 78.5 91.0 Segment NPAT* 11.0 12.2 * NPAT excludes 16.83% minority interests. Volumes decreased – tougher global automotive conditions  Margins were positively impacted by cost management and continued improved process efficiencies.  Outlook Full year FY20 profit is expected to be similar to FY19.  Unknown impact of coronavirus on China and global economies.  Global risks include, Brexit, US/China trade war, currency volatility and European emission regulations.  8

Group Investments Company Owned Property Lots 701, 702 & 703 Jandakot Rd, Jandakot, WA Bennett Avenue, North Coogee, WA Syndicated Property Commercial Hotels Industrial 9

Group Investments Net Net Equity Equity Value Value Pre- Net Book Market Pre- Tax 2 Equity Cost 1 Tax 2 Value 3 Value Value Per ($m) ($m) ($m) ($m) share ($m) Property Used by SFC Operations $6.5 $6.5 $11.4 $11.4 $0.83 $9.9 Rental Properties $37.0 $36.5 $73.2 $47.7 $3.49 $37.0 Development Sites $10.1 $10.0 $43.2 $42.2 $3.09 $32.3 Total Property $53.6 $53.0 $127.8 $101.3 $7.41 $79.2 Equities $19.5 $27.7 $27.7 $27.7 $2.02 $25.3 Fixed Income $1.5 $1.5 $1.5 $1.5 $0.11 $1.5 Investment Assets $74.6 $82.2 $157.0 $130.5 $9.54 $106.0 Cash and Term Deposits $16.7 $16.7 $16.7 $16.7 $1.22 $16.7 Total $91.3 $89.9 $173.7 $147.2 $10.76 $122.7 All values represent SFC’s share, i.e. 83.17% for Gosh Capital and other subsidiary held assets 1. Depreciated cost applicable for directly owned property 2. Market value less debt 3. Market value less debt and tax on capital gain or loss 10