2015 Full Year Results Presentation 19 FEBRUARY 2016 CAPRAL LIMITED - - PowerPoint PPT Presentation

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2015 Full Year Results Presentation 19 FEBRUARY 2016 CAPRAL LIMITED - - PowerPoint PPT Presentation

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2015 Full Year Results Presentation 19 FEBRUARY 2016 CAPRAL LIMITED 1 19 FEBRUARY 2016 CAPRAL FULL YEAR RESULTS GENERAL INFORMATION Important Notes Footprint This presentation includes forward-looking estimates that are Darwin subject to

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19 FEBRUARY 2016 CAPRAL FULL YEAR RESULTS

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19 FEBRUARY 2016

CAPRAL LIMITED

2015 Full Year Results Presentation

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19 FEBRUARY 2016 CAPRAL FULL YEAR RESULTS

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Darwin Cairns Townsville Mackay Springwood Bremer Park Gold Coast Newcastle Rockdale Erskine Park Laverton Angaston Welshpool Canning Vale Wangara Bibra Lake Kilburn Lynbrook Hobart Campbellfield Penrith Parramatta Extrusion site Warehouse/ Aluminium Centre Corporate office Minto Austex Dies Kunda Park

GENERAL INFORMATION

This presentation includes forward-looking estimates that are subject to risks, uncertainties and assumptions outside of Capral’s control and should be viewed accordingly. Trading EBITDA is the Statutory EBITDA adjusted for signifjcant items that are material items of revenue or expense that are unrelated to the underlying performance of the business. Capral believes that Trading EBITDA provides a better understanding of its fjnancial performance and allows for a more relevant comparison of fjnancial performance between fjnancial periods. These items are LME and Premium revaluation, and costs relating to restructuring that are non-recurring in nature. Trading EBITDA is presented with reference to the Australian Securities and Investment Commission Regulatory Guide 230 “Disclosing non-IFRS fjnancial information” issued in December 2011.

Footprint Important Notes

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OVERVIEW OF RESULTS

FULL YEAR TO DECEMBER 2015

Housing market is strong, industrial markets turning

  • Dwelling commencements increase to 211,500 in 2015²
  • Detached housing and medium density up 9%
  • High density (apartments) up 43%
  • Non-residential building activity increased by 3%²
  • Business conditions remained soft in the manufacturing, marine and

transport sectors but are showing signs of improvement

Highly competitive environment

  • Ongoing dumping of aluminium extrusions from China was found and

increased measures have been imposed

  • Dumping measures are beginning to assist in addressing excess

domestic capacity

$13.0m Trading EBITDA $5.1m EBITDA

  • Trading EBITDA¹ profjt of $13.0m (2014: $9.2m)
  • EBITDA profjt of $5.1m (2014: $11.0m)
  • Sales revenue up 7.5% on 2014
  • Volumes up 2.3%. Extrusion up 3.5%, Rolled products down 4.5%
  • Strong housing market driving volume increase

Net loss of $2.5m

  • Net loss of $2.5m (2014: $2.7m profjt) includes:
  • LME and Premium revaluation of negative $7.0m
  • Restructuring costs of $0.7m to complete OneSteel Aluminium integration
  • Depreciation and amortisation of $6.4m
  • Finance costs of $1.2m

Safety performance remains a key focus

  • TRIFR³ of 13.3 (2014: 7.9)
  • LTI severity rate (days lost per million hours worked) of 51 (2014:74)
  • Ongoing focus on leading safety indicator management

3 TRIFR is total reportable lost time and medically treated injuries per million work hours 1 See Important Notes (page 2) and reconciliation to EBITDA (page 4) 2 Source: BIS Shrapnel year end June 2015 actual

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FINANCIAL SUMMARY

TWELVE MONTHS TO DECEMBER 2015

2015 Sales Volumes - External (‘000 tonnes) 57.8 Sales Revenue 402.6 Depreciation/Amortisation (6.4) EBIT (1.3) Finance Cost (1.2) (2.5) $m Restructuring related cost Trading EBITDA (0.7) 5.1 2014 56.5 374.7 (7.1) (1.2) $m (0.6) 11.0 3.9 2.7 EBITDA 9.2 13.0

1

Statutory (Loss)/Profit after Tax Other one off costs (0.8) (0.2) LME Revaluation (7.0) 3.2

1 See Important Notes (page 2)

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Trading EBITDA $m

2 4 6 8 10 10 12 14 Trading EBITDA FY14 Volume Margin and Mix Inflation Other Cost Management Initiatives Trading EBITDA FY15 $9.2m $1.3m $1.9m ($3.3m) $3.8m $0.1m $13.0m

TRADING EBITDA BRIDGE

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BALANCE SHEET REMAINS STRONG

Operating cash fmow level maintained, supported by reducing inventory levels and metal cost Robust fjnancial position The fjnance facility with GE is primarily utilised for working capital funding

$m $m Dec 13 Dec 15 EBITDA (41.4) Working Capital 3.6 Finance Cost (0.8) Equity Compensation Amortisation 0.8 Other (0.1) Operating Cash Flow 0.5 Capex Spend (3.6) Increase/ (Decrease) in Net Cash (5.1) 12 months to Impairment 5.1 2.9 (1.2) 0.6 (0.1) 7.3 (3.7) 3.6 41.5

  • Gain on acquisition

(3.1)

  • Interest Received

Acquisition (15.9)

  • Capital Raising

13.8

  • $m

Dec 14 11.0 (1.2) (1.2) 0.7

  • 0.6

7.7 (3.0) (2.8)

  • 1.9
  • 0.1

Acquisition Restructuring Costs

  • (2.2)
  • $m

$m $m Dec 13 Dec 15 Dec 14 Net Assets 109.5 110.7 112.9 Net Cash 14.6 20.1 16.5 Franking Credits 27.1 27.1 27.1 Accumulated unrecognised tax losses 287.7 289.6 297.6

1

$m Capral Finance Facilities Limit Dec 15 GE Revolver 60 Nil Dec 14 Nil Drawn Down

¹ Intramonth average net debt levels $5.6m, $15.6 maximum debt level

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METAL COSTS HAVE FALLEN FROM MULTI-YEAR HIGHS

0.00 0.50 1.00 1.50 2.00 2.50 Q4 Q1 Q2 A$/kg 3.00 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Metal Cost (AUD

  • Quarterly Average)

LME MJP Premium (Major Japanese Ports)

2012 2013 2014 2015

Source: London Metal Exchange, Reserve Bank of Australia, Reuters

  • Metal costs reached multi-year highs in

Q1 2015

  • Metal costs collapsed during the second

half of 2015

  • LME down from USD $1,802t to $1,495t
  • MJP down from USD $425t to $95t
  • Resulted in a negative raw material inventory

revaluation of $7.0m during the period

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LEVERAGE TO RECOVERY IN RESIDENTIAL CONSTRUCTION

2000 4000 6000 8000 10000 12000 14000 16000 18000 20000

March 2010 June 2010 June 2011 March 2011 Sept 2010 Dec 2010 Dec 2011 March 2012 Sept 2011 June 2012 Sept 2012 Dec 2012 MONTHLY UNITS

A P P R O V A L S C O M M E N C E M E N T S

Source: ABS and BIS Shrapnel March 2013 June 2013 Sept 2013 Dec 2013 March 2014 June 2014 Sept 2014 Dec 2014 BIS Shrapnel forecast March 2015 June 2015 Sept 2015 Dec 2015

MONTHLY DWELLING APPROVALS AND QUARTERLY DWELLING COMMENCEMENTS

SOURCE: BIS SHRAPNEL, ABS ¹ BIS Shrapnel Feb 2016 - two quarters delayed

2010 2011 2012 75 100 125 150 200

ANNUAL DWELLING COMMENCEMENTS

175 155 152 ‘000 198 2013 2014 175 25 50 214 2015E¹ 169 225 2016F¹ 217

RECOVERY STARTED IN 2013. VERY STRONG MULTI-RES ANTICIPATED TO GROW AT A SLOWER PACE THROUGH 2016

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ALUMINIUM EXTRUSION DEMAND IS RECOVERING FROM CYCLICAL LOW LEVELS

  • Extrusion Market in 2015 still ~11% below 2007 high
  • Recovery is ongoing in the housing sector with

dwelling approvals exceeding 211,500 units1

  • An increase in apartments relative to houses

has increased the lag between approval and completion and reduced the intensity of aluminium extrusions

  • Non-residential building demand increased by 3%1
  • Key Industrial sectors (manufacturing, marine

and transport) remained soft in 2015 but are showing signs of improvement Note:

  • Capral has an estimated 28% share of the

Australian aluminium extrusion sales volume

  • New domestic extrusion capacity has been

commissioned over recent years, including extrusion capability installed by traditional Capral customers

  • Import market share has fallen to around 35%

1 Source BIS Shrapnel year end June 2015 actual

2007 2008 2009 2010 2011 20 40 60 80 29.3 32.7 62.0 30.3 28.8 22.5 28.1 50.6 26.725.7 23.0 52.4 59.1 150 175 200 ‘000 Tonnes PA 200 183.3 165.2 171.5 160.5 ALUMINIUM EXTRUSION MARKET SALES VOLUME CAPRAL EXTRUSION PRODUCTION VOLUME H2 FY 156.0 22.4 45.4 H1 2012 20.5 125 21.7 42.2 2013 2014 160.9 20.6 Forecast 173.0 22.2 42.8 22.7

(Based on BIS Shrapnel forecasts and GDP projections)

23.0 45.7 178.7 2015 22.7 23.2 45.9 183.6 2016 e

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  • Widest aluminium product offer
  • Large scale extrusion capability
  • National distribution network
  • Committed and experienced people
  • Continue to reduce cost base
  • Lean manufacturing drive to world class productivity
  • Optimise the supply chain to reduce inventory levels
  • Leverage our technical expertise with key customers
  • Develop innovative new products and value-add opportunities
  • Capitalise on positive anti-dumping outcomes

BUILD

On our strengths

OPTIMISE

What we do

GROW

In the future

KEY STRATEGIC INITIATIVES

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INCREASED ANTI-DUMPING MEASURES AGAINST CHINESE IMPORTS

  • Case won in 2010 but the levels of duties imposed were low
  • Circumvention activities diminished the impact

The impact of the initial anti-dumping measures was modest Key issues being pursued

  • Continuing to interact with Government around strengthening the anti-dumping regime
  • Continue to monitor and pursue anti-circumvention/non compliance activities
  • Preparing anti-dumping cases against other countries in the region

Response and Action

  • A sustained campaign by Capral and others has resulted in signifjcant reforms to federal

legislation and anti-dumping methodology

  • In February 2015 duty avoidance by the largest exporter/importer was found and

substantial additional duties were imposed. Their import businesses subsequently closed

  • Continuation of measures review fjnalised in October 2015. Anti-Dumping Commission

found ongoing dumping

  • Increased anti-dumping measures were imposed for a further fjve years to 2020
  • Two importers have appealed against higher measures and case is before Anti-Dumping

review panel. This should be fjnalised in fjrst half 2016

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OUTLOOK

  • Housing commencements are forecast¹ to be around 216,700 for the 2016 year, up 1% on

the strong 2015 market. Detached housing to remain at 2015 levels with multi-residential up 2.5%

  • The weakening AUD is positive for local manufacturing and under normal circumstances

should assist Capral’s competitive position

  • Continuation of anti-dumping measures at higher levels should have a positive impact on

local extruders

  • Capral expects to generate positive operating cash fmow in 2016, and be net cash positive at

balance dates

  • Full year Trading and Statutory EBITDA² is forecast to be between $13m and $15m
  • On this basis, and absent any unforeseen events, Capral would be in a position to consider a fully

franked dividend.

1 BIS Shrapnel Feb 2016 forecast - two quarters delayed 2 See Important Notes (page 2)