2012 Half Year Results Presentation 22 nd August 2012 21 August 2012 This presentation includes forward-looking estimates that are subject to risks, uncertainties Capral Limited and assumptions outside of Capral’s control and 1 CAPRAL LIMITED 22 AUGUST 2012 should be viewed accordingly. CAPRAL HALF YEAR RESULTS
WEATHERING THE STORM SIX MONTHS TO JUNE 2012 Highlights • Achieved in tough trading conditions ... EBITDA¹ profjt of $0.3m - Housing at a cyclical low - High A$ sustaining imports (dumped) (b efore restructuring & LME mark to market) - Ill-timed capacity expansion in the Australian industry resulting in sub optimal plant utilisation • Anchored by ongoing productivity improvements and cost savings • Impacted by high ongoing depreciation charge, $0.7m ... Net loss of $7.1m in restructuring costs and a $0.2m LME revaluation ... $3.5m positive Operating cash fmow • Tight control of working capital, inventory reductions ... A robust balance sheet with no net debt Net cash of $16.0m at 30 June 2012 ... Progress with • Government is progressing wide ranging reforms • Customs Compliance resources have strengthened Anti Dumping measures • Market impact to date has been modest ... High levels of customer service • Customer feedback is positive • Market share maintained and product quality • 28% reduction in Lost Time/Medical Treatment Injuries ... Safety remains a core value • Hours lost due to injuries remain below 0.14% ¹ Earnings before net interest, tax, depreciation and amortisation 2 22 AUGUST 2012 CAPRAL HALF YEAR RESULTS
FINANCIAL SUMMARY SIX MONTHS TO JUNE 2012 H1 H1 % 2012 2011 Sales Volumes - External (‘000 tonnes) 22.0 24.5 -10.2% $m $m Sales Revenue 149.2 179.5 -16.7%¹ ¹ Impacted by lower LME (London Metal Exchange) EBITDA 0.3 5.2 (before LME mark to market and restructuring) Less LME mark to market (0.2) 0.5 Restructuring/Abnormals (0.7) 0.4 EBITDA (0.6) 6.1 Depreciation/Amortisation (6.2) (6.1) EBIT (6.8) - Finance Cost (0.3) (1.3) (7.1) (1.3) 3 22 AUGUST 2012 CAPRAL HALF YEAR RESULTS
PROJECT RELAUNCH COST SAVINGS CONTINUE TO PLAY A CRITICAL ROLE MITIGATING NEGATIVE VOLUME, PRICE AND INFLATION IMPACTS EBITDA¹ $m $6.1m ($3.0m) 6 4 ($2.2m) 2 ($2.4m) ($0.4m) $2.4m 0.2m 0 ($0.5m) ($0.2m) $0.2m $0.1m -3 EBITDA Volume Price Inflation LME Valuation Billet Premium Equity LME Valuation Project Other EBITDA¹ 1H11 1H11 Compensation 1H12 Relaunch 1H12 1 EBITDA before restructuring cost 4 4 22 AUGUST 2012 CAPRAL HALF YEAR RESULTS
The fjrst half Trading EBITDA 1 break even of the business has reduced b y 32% since 2008 Tonnes per day Underlying costs have reduced in excess 350 of $33m pa over the 2008 base. 331 • Employee head count has reduced in excess of 40% since 2008 to around 820 employees 300 • Manufacturing effjciency • Metal recovery % improvement 267 258 • Warehouse consolidation 250 32% • Aluminium Centres rationalisation and revitalisation • Freight and Logistics effjciencies 200 • Procurement savings 193 181 • Corporate cost reductions 167 • General costs pruning. 150 June 2012 The breakeven point rose as a result of margin squeeze and cost infmation 100 JUNE 2007 JUNE 2008 JUNE 2009 JUNE 2010 JUNE 2011 JUNE 2012 ¹ Trading EBITDA is Earnings before net interest, taxation, depreciation, amortisation and log inventory revaluation. 5 22 AUGUST 2012 CAPRAL HALF YEAR RESULTS
THE CASH POSITION IS IN GOOD SHAPE $m $m 6 months to JUN 12 JUN 11 EBITDA (0.6) 6.1 Working Capital 3.8 (6.8) Operating Cash Flow is positive Finance Cost (0.3) (1.3) Equity Compensation Amortisation 0.4 0.5 Other 0.2 0.5 Operating Cash Flow 3.5 (1.0) Capex Spend (2.2) (2.5) Increase in Net Cash (3.5) 1.3 $m $m $m Jun 12 Dec 11 Jun 11 Resulting in a robust balance sheet Net Assets 149.5 156.2 161.2 with a positive cash balance 1 Net Cash/(Debt) 16.0 14.8 7.6 ¹ Intramonth debt levels ranged up to $12m Gearing - Net Debt/(Debt + Equity) - - - $m $m Balance The fjnance facility with GE is Capral Finance Facilities Limit Jun 12 Dec 11 Jun 11 primarily utilised for intramonth¹ GE Term Debt 30 Nil Nil Nil GE Revolver 60 Nil Nil 4.7 working capital funding ANZ Overdraft 0.4 0.3 0.3 0.4 6 6 22 AUGUST 2012 CAPRAL HALF YEAR RESULTS
DWELLING COMMENCEMENTS AND OUTLOOK MONTHLY UNITS DWELLING APPROVALS MONTHLY ANNUAL DWELLING COMMENCEMENTS ‘000 200 17000 16000 175 168 15000 173 Underlying demand 160 14000 -20% fall TREND Commencements are 148 SEASONALLY 150 145 +18% forecast to rise by ADJUSTED 13000 -10% 18% by 2014 135 12000 125 11000 10000 100 MAY DEC JUNE DEC JUNE 2010 2010 2011 2011 2012 Source Bureau of Statistics Approvals have continued to be weak. 75 The June 2012 quarter has seen some pick up in activity, showing early signs that improv ed affordability could be aiding demand. UNDERLYING DEMAND (‘000) 2012/13 - 2016/17 50 ANNUAL AVERAGE New South Wales 43.2 Victoria 39.5 25 Queensland 42.1 South Australia 10.6 Western Australia 28.5 0 Tasmania 2.2 2010 2011 2012F 2013E 2014E Northern Territory 2.3 Commencements are SOURCE: BIS SHRAPNEL, A.C.T 2.6 forecast to decline by MAY 2012 10% in 2012, a 20% Australia 172.7 fall in the last 2 years SOURCE: BIS SHRAPNEL MAY/JUNE 2012 7 22 AUGUST 2012 CAPRAL HALF YEAR RESULTS
ALUMINIUM EXTRUSION DEMAND IS EXPECTED TO DECLINE A FURTHER 6% IN 2012 TO A CYCLICAL LOW 000 ALUMINIUM EXTRUSION MARKET Tonnes PA 200 200 • Market has fallen 30% from its high in 2007 and is poised for a recovery 183.3 175 • Low consumer sentiment has delayed the 30% 170.7 recovery phase. 165.2 148.1 150 6.0% 139 125 CAPRAL EXTRUSION VOLUMES 80 62.0 Note: 59.1 60 52.4 • Capral has maintained share at around 30% 50.6 45.4 • Imports have declined broadly in line with 40 market demand 32.7 28.1 30.3 28.8 29.3 26.725.7 23.0 22.5 22.4 • Australian press capacity has 20.5 20 expanded by ~20% in the last three years 0 2007 2008 2009 2010 2011 2012 Forecast H1 H2 FY 8 22 AUGUST 2012 CAPRAL HALF YEAR RESULTS
ANTI DUMPING The impact of the imposed • The levels of duties are relatively low • There are indications of a concerning level of circumvention by anti dumping measures to importers of the measures imposed date has been modest • The Australian Government is implementing an Anti Dumping reform agenda with 28 measures announced. Four tranches have been Response approved by or are before Parliament • Th e Federal Government have set up a taskforce “Bluenet” to pursue anti circumvention activities • John Brumby (ex Premier of Victoria) is undertaking a review of Australia’s Anti Dumping regime. • Achieve legislation change to enable the use of “surrogate” methodology in Australia, similar to the USA, Canada and the E.U. Key issues being pursued • Anti circumvention measures to capture surreptitious practices before the Border controls, as well as “sales at a loss” and “rebates” once the imports are in Australia. 9 22 AUGUST 2012 CAPRAL HALF YEAR RESULTS
SAFETY Measure/Year 2008 2009 2010 2011 H1 2012 LTI/MTI 41 31 43 30 10 LTI/MTI Frequency* 17.5 16.3 22.8 18.7 16.9 LTI Severity* 162.1 92.9 273.0 186.0 193.7 ENVIRONMENTAL * Frequency = No. of injuries per million work hours * Severity = No. of days lost per million hours worked Excludes Austex Dies Capral is committed to minimising the environmental impacts of its extrusion and distribution activities. Safety performance improved in H1 2012 Capral has a relatively modest carbon footprint and is not included in the top 500 site emitters. • Campbellfjeld and Canning Vale Manufacturing achieved 3 years LTI/ MTI free and Penrith Manufacturing achieved 12 months Emissions come from two sources: • Wangara Distribution Centre achieved 2.5 years LTI/MTI free and KTPA Erskine Park Distribution Centre achieved 12 months Scope 1 Mainly from the use of gas for 10 heating ovens • A number of Aluminium Centres achieved LTI/MTI free milestones: Scope 2 From electricity 40 Glenorchy (TAS) 15.5 years, Rockdale (NSW) 14 years, Cardiff (NSW) 7 years, Slacks Creek (QLD) 6.5 years, Malaga (WA) 6 years It is anticipated that the additional cost from the carbon tax linkage to • Ongoing focus on lead indicator management including safe electricity charges will be around $1.5m p.a. commencing July 2012. behaviour observations, hazard ID process and perception surveys. 10 22 AUGUST 2012 CAPRAL HALF YEAR RESULTS
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