Schaffer Corporation p Full Year Results Presentation June 2011 Full Year Results Presentation June 2011
Corporate Objective p j “To create long-term shareholder value through the efficient operation and growth of our core the efficient operation and growth of our core businesses” 2
Organisation Chart (Business Segments) g ( g ) SCHAFFER CORPORATION LIMITED Building Materials Division Property Division Automotive Leather Division Delta Syndicated JV Property Howe Schaffer Building Products Group UrbanStone Company Owned Property Limestone Resources Lumeah Archistone (including Limestone Blocks, Imported Natural Stone and Masonry Blocks) Urbanstone Central 3
Tough trading conditions for operating divisions offset by profit on sale of in estment propert sale of investment property % Full Year Ending 30 Jun (A$m) g ( ) Jun-11 Jun-10 change change Revenue 137.8 136.8 1% 17.1 15.1 EBITDA 13% EBIT (net interest basis) 12.2 10.2 19% Net profit after tax N t fit ft t 4 8 4.8 4 5 4.5 7% 7% 0.34 0.32 EPS 7% Return on average capital employed (ROACE) Return on average capital employed (ROACE) 11% 11% 8% 8% Ordinary dividend (fully franked) $0.20 $0.40 Excluding profit on sale of property and one-off costs on divestment of Howe de Mexico: E l di fi l f d ff di f H d M i Net profit after tax 2.4 3.8 - 36% 7% 7% Return on average capital employed (ROACE) g p p y ( ) -1% 4
Net Profit before Tax 10.0 8.0 6.0 4.0 M's 2.0 $M 0.0 Automotive -2.0 Building Leather Property Materials Corp./Interest -4 0 -4.0 -6.0 -8.0 FY11 FY10 5
Cash flow Year Ending 30 Jun (A$m) Jun-11 Jun-10 EBITDA 17.1 15.1 (5.2) (0.9) Other non-cash items Net interest paid (4.5) (4.1) (2 1) (2.1) (4 6) (4.6) T Tax paid id Automotive Leather change in trade working capital (7.1) 8.1 Other changes in working capital 1.4 2.2 Total operating cash generated/(utilised) (0.4) 15.8 Debt reduction/(increase) 17.4 7.6 4 9 4.9 5 0 5.0 Capital expenditure Capital expenditure Divestments (property, plant & equip.) (19.5) (4.0) Dividends paid 4.3 6.1 (7.5) 1.1 Increase (decrease) in cash on deposit Total cash applied / (sourced) (0.4) 15.8 6
Jun-11 Debt Position Direct Schaffer Net Debt reduced to $3.0m 3 distinct and separate All amounts in $m's Build. Mat. + JV Invest. Automotive Total “debt pools”. Corporate Properties Leather 30 June 2011 Type of Debt :- Bank Debt - recourse 3.3 3.9 - 7.2 Separate loan facilities Bank Debt - non-recourse - 19.4 - 19.4 for each individual JV Govt. Loans - non-recourse - - 30.7 30.7 Equipment Finance q p 2.0 - 0.1 2.1 property investment. property investment $ 5.3 $ 23.4 $ 30.8 $ 59.4 Interest Type :- Debt associated with Fixed rate $ 2.0 $ 7.6 $ 13.8 $ 23.4 Variable rate $ 3.3 $ 15.8 $ 17.0 $ 36.0 the JV properties and Automotive Leather division is essentially Maturity Profile :- - FY12 $ 3.9 $ 9.2 $ 30.7 $ 43.8 “non-recourse” - FY13 $ 0.6 $ 7.1 $ 0.0 $ 7.8 against other assets against other assets - FY14 - FY14 $ $ 0 4 0.4 $ $ 7.1 7 1 $ $ 0.0 0 0 $ $ 7.5 7 5 - FY15 & beyond $ 0.4 $ - $ 0.0 $ 0.4 within the group. $ 5.3 $ 23.4 $ 30.8 $ 59.4 Automotive Leather Net Debt Position : Net Debt Position :- negotiations for Gross Debt $ 5.3 $ 23.4 $ 30.8 $ 59.4 refinancing the Cash & bank balances -$ 2.2 -$ 0.7 -$ 5.0 -$ 8.0 Net Debt $ 3.0 $ 22.7 $ 25.8 $ 51.5 Government Loan from Feb 2012 are well Feb 2012 are well $ $ 13 9 13.9 $ $ 25.6 25 6 $ $ 21.6 21 6 $ $ 61.1 61 1 Net Debt Jun-10 b advanced -$ 10.9 -$ 2.9 $ 4.2 -$ 9.6 Reduction during FY11 7
Jun-11 Debt & Assets Summary Market value of Group Net Tangible Assets $5.81/share vs. Book Value of $3.50/share Build. Mat. + JV Invest. Automotive Total Corporate p Properties p Leather 30 June 2011 Net Debt ($m) $ 3.0 $ 22.7 $ 25.8 $ 51.5 % debt recourse to SFC 100% 17% 0% 15% Net Assets (Book) ($m) $ 34.0 -$ 1.8 $ 22.2 $ 54.4 Net Assets (Market Value) ($m) $ 47.6 $ 17.2 $ 22.2 $ 86.9 Asset Backing (NTA -Book) ki ( k) $ $ 2.15 -$ $ 0.14 $ $ 1.49 $ $ 3.50 Asset Backing (NTA -Market Value) $ 3.11 $ 1.21 $ 1.49 $ 5.81 LVR (Market Value) 8% 57% 41% 33% Approximately $46 5m ($32 5m post tax) in unrecognised property value Approximately $46.5m ($32.5m post tax) in unrecognised property value Group Net Debt reduced by $9.6m (16%) during the year (FY10 – 12% reduction) 8
SFC Dividend Yield History SFC Dividend Yield History Over $98 million in fully franked dividends paid in the last 10 years Average dividend yield of 8.5% over the past 10 years, fully franked. . 12 0% 12.0% 10.0% ld* 8.0% Dividend Yiel 6.0% 4.0% 2.0% 0.0% Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Financial Year ended * - Yield based on mean average share price for the year 9
Automotive Leather 10
Automotive Leather Results A$M $ Jun-11 Jun-10 % change g Revenue 79.2 81.5 -3% Segment EBIT 3.2 -0.1 6,112% Margin 4% 0% • Revenue down due to withdrawal from low margin (whole hide) market segment in Asia and withdrawal from the loss making market in North America. • Margins are increased by the withdrawal from the market segments mentioned above. • Hide costs were decreased by the appreciation of the AUD against the USD. However this is offset by lower selling prices as selling in Euros and USD. • AUD appreciated on average by approximately 26% against the USD and 6% against the EUR during FY11. Howe is a net importer in USD and a net exporter in EUR. • Result includes approximately $1.5m of one-off costs related to the sale of the North pp y $ American (Mexico) subsidiary. 11
Automotive Leather Sales $90.0 $80.0 Asia $70.0 $70.0 ) Revenue ($M's) Asia Asia $60.0 $50.0 $40.0 Europe Europe $30.0 $20.0 N America N A N America i $10.0 Australia Australia $- 2011 2010 Asia $24.8 $35.7 Europe $42.5 $26.8 N America $7.2 $15.0 Australia $4.7 $4.0 12
Automotive Leather Strategy Repositioning keeps Howe competitive in a tough market R iti i k H titi i t h k t • Europe and Asia (Howe’s market focus) covers 75% of the global market. [Source CSM Worldwide] • Exit from loss making North American market due to current economic conditions in the US and the high appreciation of the AUD against the USD. t e US a d t e g app ec at o o t e U aga st t e US . • Focus is on upper end product with potential for higher margin. • High labour intensive cutting operations are based in lower labour-cost countries (Slovakia and China) to lower Howe’s cost base and provide local sales and service (Slovakia and China) to lower Howe s cost base and provide local sales and service presence. • Slovakia grown to over 400 employees • Chi China grown to nearly 300 employees l 300 l • New Nissan programs have potential to increase production in China. • Landrover continues to drive growth in Slovakia. g 13
A t Automotive Leather -Global Footprint ti L th Gl b l F t i t Aachen, Germany Tokyo, y Kosice, Japan Slovakia Shanghai, China Melbourne , Australia Offices Factories 14
Schaffer Building Materials Building Products g 15
Building Materials Results g Building Materials g A$M Jun-11 Jun-10 % change Revenue R 51.8 51 8 47 2 47.2 10% 10% Segment EBIT 3.9 7.3 -47% Margin 8% 15% • • Increase in revenue primarily due to increase in Delta turnover Major contributing Increase in revenue primarily due to increase in Delta turnover. Major contributing contracts during the year include Fiona Stanley Hospital, Reid Alexander Interchange, Reid/Mirrabooka Bridges, Sino Iron Barge Conveyor, Austrak Turnout Sleepers and Gorgon Projects Gorgon Projects. • Reduced margins for Building Products and Delta based on an increasingly competitive environment. Lower demand and increased imports as a result of economic conditions, high exchange rates tight bank credit and reduced consumer spending high exchange rates, tight bank credit and reduced consumer spending. 16
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