CAPRAL LIMITED — Annual Report 2015

Mar 1, 2016

i Capral's Resolutions

Capral Limited Annual Report 2015 ABN 78 004 213 692

Capral's Resolutions

We consider safety first. We know that no job is so important that it can't be done safely. We accept nothing less than zero injuries.

We recognise our customers as the people who determine our success. We know who our customers are and the SERVICE they expect. And we deliver.

We take ownership for everything that we do. We are empowered to make decisions and always think about the business as our own.

We know that teamwork will achieve the best overall business outcome. We share ideas and resources to achieve more for us all. We trust each other to do a good job.

We have a passion for excellence. We stretch ourselves to do the very best we can. We work with urgency and share a will to win.

We have integrity. We are honest and straight-talking and we do the right thing.

Contents IFC Capral's Resolutions

• Key Statistics
• Chairman's Report
• Managing Director's Operations and Financial Review
• Board Of Directors
• Corporate Social Responsibility Statement
• Directors' Report
• Auditor's Independence Declaration
• Consolidated Statement of Profit or Loss and Comprehensive Income
• Consolidated Statement of Financial Position
• Consolidated Statement of Cash Flows
• Consolidated Statement of Changes In Equity
• Notes to the Financial Statements
• Directors' Declaration
• Independent Auditor's Report
• Member Details
• Corporate Directory

02 KEY STATISTICS

Key Statistics

FOR THE YEAR ENDED 31 DECEMBER	2015	2014	VARIANCE
Sales Volumes - External ('000)	57.8	56.5	1.3
	\$m	\$m	\$m
Revenue	402.6	374.7	27.9
EBITDA	5.1	11.0	(5.9)
Trading EBITDA1	13.0	9.2	3.8
(Loss)/ Profit after Tax	(2.5)	2.7	(5.2)
Operating Cash Flow	7.3	7.7	(0.4)
Net Cash	20.1	16.5	3.6

1 Please refer to note on page 3.

CAPRAL ANNUAL REPORT 2015

03 Chairman's Report

Chairman's Report

Financial Results

The Company recorded a net loss after tax of \$2.5 million for the year ended 31 December 2015 (2014: profit \$2.7 million). However, on the positive side, the year under review saw an improved performance at the operating level. Trading EBITDA* of \$13 million was higher than the \$9.2 million reported in 2014. Statutory EBITDA was negatively impacted by the material fall in LME aluminium prices and market premiums in the second half of the year, which resulted in a \$7 million write down of inventory during the year compared to a \$3.2 million positive inventory revaluation in 2014. This \$10.2 million year-on-year swing in inventory valuation, together with one-off costs of \$0.9 million (2014: \$1.4million), saw the Company's Statutory EBITDA reduce from \$11 million in 2014 to \$5.1 million in 2015. Refer to page 4 of the 2015 Full Year Results Presentation lodged today for the reconciliation of Trading and Statutory EBITDA.

2015 revenues of \$403 million increased over the \$375 million reported in 2014. This 7.5% increase in revenues was primarily driven by the resurgent residential construction market and some favourable anti-dumping outcomes which are having a positive impact on local extrusion volumes.

Management continued to deliver meaningful cost savings and efficiencies through productivity improvements, which played a significant part in the uplift in the trading result. Positive net cash flows resulted in year-end net cash on hand increasing by \$3.6 million to \$20.1 million (2014: \$16.5 million).

While the Company continues to face competitive challenges, volumes of low priced Chinese imports are slowing, with a positive impact on Australian extruders. This, combined with the strong dwelling construction currently taking place, has gone some way to reduce the excess capacity in local aluminium extrusion. As a result of these factors and the Company's continued focus on cost reduction and efficiencies, the Company is forecasting an increase in profits in 2016. I refer shareholders to the Outlook section of the Managing Director's Operations and Financial Review.

Safety

Despite the Company's strong commitment to safety, the year under review saw the key safety measurement of total reportable lost time and medically treated injuries per million work hours slip back to 2012 levels although the severity of these injuries was at an all-time low. We will continue to focus on a safer work environment and strive to improve our safety record.

Dividends

No dividends have been declared or paid for the Financial Year. If the 2016 forecast earnings referred to in the Outlook section of the Managing Director's Operations and Financial Review are achieved, and absent any unforeseen events, Capral would be in a position to consider a fully franked dividend.

I would like to extend the Board's appreciation to all of Capral's stakeholders and especially the entire Capral team for their ongoing commitment and support. I thank my co-directors for their continued support.

Rex Wood-Ward Chairman 19 February 2016

* Trading EBITDA is the Statutory EBITDA adjusted for significant 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 financial performance and allows for a more relevant comparison of financial performance between financial periods. These items are LME and Premium revaluation, and one-off 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 financial information' issued in December 2011.

Managing Director's Operations and Financial Review

During 2015 Capral experienced fluctuating market conditions. The first half of the year was relatively soft, with the strength in the housing market offset by weakness in the industrial segments (manufacturing, transport and marine). During the second half, market conditions strengthened considerably as a result of a buoyant housing market, some improvement in the industrial segments and positive outcomes from anti-dumping reviews.

Dwelling commencements for the year ended June 2015 grew by 17% to a very high 211,500. This was driven by the highdensity sector, up 43%. The new housing and medium-density sectors, which have a greater influence on Capral's volumes, grew by a more modest 9%.

The weakening of the Australian dollar assists Capral's competitiveness against imports and also assists our local manufacturing customers that have survived three to four years of sustained strength in the Australian currency. Unfortunately a number of Australian manufacturing businesses either closed, or moved their operations off-shore during this period and are unlikely to return.

The year started with metal costs at multi-year highs, but midway through 2015 aluminium costs (both LME and premiums) collapsed. Trading margins were adversely impacted in the first half but were restored to equilibrium in the second half. The collapse in metal cost resulted in a write down of inventory during the period.

Capral delivered an improved Trading EBITDA¹ of \$13.0 million (2014: \$9.2 million) on sales revenue growth of 7.5%. Statutory EBITDA of \$5.1 million (2014: \$11.0 million) included a negative inventory revaluation of \$7.0 million and one-off costs of \$0.9 million which mainly consisted of restructuring costs relating to completing the OneSteel Aluminium integration. Refer to page 4 of the 2015 Full Year Results Presentation lodged today for the reconciliation of Trading and Statutory EBITDA.

Capral recorded a net loss after tax of \$2.5 million (2014: profit \$2.7 million). The net cash position improved by \$3.6 million during the year, primarily as a result of reduced inventory levels and metal cost. The balance sheet remains strong with net cash of \$20.1 million at year end.

Key Initiatives and Strategies

The key high level strategies remain consistent:

• » Build on our strengths; product offer, scale, capability and our people.
• » Optimise what we do; improve efficiencies in manufacturing and supply chain.
• » Grow for the future; innovative new products and services and capitalise on anti-dumping outcomes.

Cost management initiatives are a key focus for the business as we continue our lean management programme to enable us to compete effectively against both imports and independent local extruders.

The fastest growing market sector is high-density dwellings which has in recent years been dominated by imports of fully assembled windows. Capral is working with our key customers to develop innovative solutions to provide us with an opportunity to capture a share of this market.

Fair Trade

Capral continues to take the lead industry role in taking effective action against imports of dumped aluminium extrusions into the Australian market. During 2015 a number of positive outcomes were achieved on this front. These include:

• » The finding by the Anti-Dumping Commission of anti-circumvention activities by the largest exporter of aluminium extrusions from China to Australia. This was followed by the closure of their related import businesses.
• » A full review of the 2010 dumping duties was concluded with the Anti-Dumping Commission finding ongoing dumping of aluminium extrusions from China. Overall increased anti-dumping measures were imposed.
• » Continuation of the measures for a further five years to 2020.

These outcomes have started to have a positive impact for local extruders. Combined with the weaker Australian dollar this has recently resulted in reasonable volume returning on-shore.

The battle for fair trade continues as we see new exporters and importers from various countries attempt to establish themselves in the Australian market.

¹ Refer to Trading EBITDA explanation in footnote to Chairman's Report on page 3

05

Safety

Capral continues to prioritise the safety of its employees with an ongoing focus on safety training, systems and culture. During 2015 Capral maintained its AS4801 safety management accreditation on all its sites. TRIFR rose to 13.3 (injuries per 1 million hours worked), albeit the severity rate fell by 32% to a new low of 51 (days lost per million hours worked).

Outlook

External forecasts are for the housing market to remain strong throughout 2016 with starts forecast to remain at the current high levels. Pent-up demand and a strong pipeline for home builders will have a positive impact on volumes for the year ahead.

We also expect to see an improvement in the transport and industrial sectors as infrastructure projects progress and the lower Australian dollar assists local manufacturers.

Improved market conditions are forecast to grow sales revenue and earnings in 2016. Trading and Statutory EBITDA¹ is forecast to lift and deliver a full year result between \$13 million and \$15 million.

The team at Capral is committed to developing a sustainably profitable business that will provide quality products and service for our customers, secure the future of our employees, and deliver good returns to our shareholders.

Tony Dragicevich Managing Director 19 February 2016

Board of Directors

Directors in office at the date of this report:

Rex Wood-Ward Chairman of Board (Independent)

Appointed 6 November 2008

Chairman of the Board and member of the Audit Committee and the Remuneration & Nomination Committee.

Mr Wood-Ward has over 40 years of international experience in general management, mergers and acquisitions, corporate strategy and structuring, including in manufacturing and distribution. Over his career he has been a director of over 10 publically listed companies in Australia, the United Kingdom and South Africa.

Directorships of other listed companies held in last 3 years before end of the Financial Year: None

Tony Dragicevich B. Comm A.C.A Managing Director (Non-independent)

Appointed 15 April 2013

Mr Dragicevich joined Capral in January 2013 and became the Managing Director and Chief Executive Officer on 15 April 2013. Mr Dragicevich is an experienced CEO and business leader who has been involved in the improvement of a number of businesses, having previously served as Managing Director of the Wattyl Group, and as Chief Executive of GWA Bathroom and Fittings, Managing Director of the Red Paper Group and General Manager of Tasman Insulation.

Directorships of other listed companies held in last 3 years before end of the Financial Year: None

Philip Jobe B. Comm Non-executive director (Non-independent)

Appointed 24 April 2009

Member of the Audit Committee and the Remuneration & Nomination Committee.

Mr Jobe became a non-executive director following the expiry of his term as Capral's Chief Executive Officer and Managing Director in April 2013. Before joining Capral, Mr Jobe was the Executive General Manager of Boral Limited's Cement Division, including Managing Director of Blue Circle Southern Cement Pty Limited. This also encompassed the role of Chairman of the Cement Industry Federation. He also had executive responsibility for Boral's expanding Asian construction materials businesses.

Mr Jobe was previously Managing Director of Stegbar Pty Limited from 1989 to 1994.

Directorships of other listed companies held in last 3 years before end of the Financial Year: None

Ian Blair M.Mgt, FCA Non-executive director (Independent)

Appointed 23 May 2006

Chairman of the Audit Committee and member of the Remuneration & Nomination Committee.

Mr Blair is a Chartered Accountant and Company Director. He spent almost 20 years as a partner in major accounting firm Deloitte, and retired after 5 years as CEO of that firm. Mr Blair is currently Chairman of Bisley & Co Pty Ltd.

Directorships of other listed companies held in last 3 years before end of the Financial Year: None

Graeme Pettigrew FIPA, FAIM, FAICD Non-executive director (Independent)

Appointed 18 June 2010

Chairman of the Remuneration & Nomination Committee and member of the Audit Committee.

Mr Pettigrew has held chief executive roles at CSR Building Products Pty Ltd and Chubb Australia Ltd and he is currently a non-executive director of Adelaide Brighton Ltd. He has relevant experience in the construction and building materials industry, as well as manufacturing and distribution businesses.

Directorships of other listed companies held in last 3 years before end of the Financial Year:

• » Non-executive director of Adelaide Brighton Ltd: 27 August 2004 to Current.
• » Non-executive director of Bisalloy Steel Group Ltd: 24 April 2006 to 30 September 2013.

CAPRAL ANNUAL REPORT 2015

Corporate Social Responsibility Statement

Capral has implemented policies and management systems to deliver in the areas of safety and the environment. Capral contributes to local communities where it operates.

Safety

Capral understands the necessity of providing a safe workplace and is committed to ensuring people return home safely through safe working conditions and behaviours. We aim to maximise our safety effectiveness and assurance through understanding, engagement and accountability. Capral recognises the value of a strong safety culture and run numerous safe work programs each year to bring us closer to our zero injury goals.

Below is a summary of the safety results from 2015:

• » For the Capral Group, there were 23 reportable injuries, an increase on 2014. The LTI/MTI Frequency Rate increased to 13.3. However, the injuries were less severe, with time lost and LTI Severity Rate having reduced.
• » The Capral Group performance is set out in the table below.

• » Capral Group retained its AS4801 (Safety Management) accreditation across all sites and Extrusion maintained its ISO9001 (Quality Management) and ISO14001 (Environmental Management) accreditation, following audits.

• » A number of training programs, safety system reviews and initiative programs continued and were completed. Perception surveys showed overall improvements in safety culture and leadership.

• » Canning Vale Manufacturing site reached 6 years LTI free and Austex 4 years LTI free.
• » A number of Distribution Centres remained LTI/MTI free: Kilburn (11 years), Wangara and Bibra Lake 6 years, Erskine Park and Townsville (4 years).
• » A number of Aluminum Centres remained LTI/MTI free: Hobart (19 years), Rockdale (17 years), Springwood, Cardiff and Kunda Park (10 years), Laverton (9 years), Cairns (8 years), Darwin (6 years), Mackay and Lynbrook (4 years), Welshpool (3 years) and Gold Coast (2 years).

In 2016, Capral will re-focus its plan to achieve improved safety outcomes. This includes adherence to Capral's Letter of Assurance Audit Program and High Risk Group Reviews as well as enhanced utilisation of Capral's safety recording and reporting systems. Capral will also seek to obtain accreditation to ISO14001 (Environmental Management) and ISO9001 (Quality Management) standards across all sites.

Environment

We continue to act responsibly by managing energy consumption, water usage and the use of raw materials for packaging and thereby minimising the environmental impacts of our

MEASURE/ YEAR	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015
LTI	23	18	15	7	16	12	4	3	6	7
MTI	51	42	26	24	27	20	17	11	7	16
LTI Frequency	8.1	6.6	6.4	3.7	8.3	7.1	2.5	2.0	3.7	4.0
LTI/MTI Frequency	25.9	22	17.5	16.3	22.8	19.0	13.2	9.2	7.9	13.3
LTI Severity	233.6	228	162.1	99.2	273	183.8	82.8	61.8	74.8	51.0

Frequency = no. of injuries per million work hours

Severity = no. of days lost per million hours worked

operations. Our approach combines assessing compliance with legislative requirements and reviewing industry best practice, to encourage improved environmental performance. Our plant, equipment and processes are assessed regularly and measures are taken where improvements can be achieved. A continued focus remains on the disposal of waste and we recycle where possible. In 2015, no breaches of environmental regulations were reported and all environmental reporting obligations were met as required.

All manufacturing sites continue to be certified to ISO14001 (Environmental Management) standards. We aim to secure ISO14001 accreditation for all operations in 2016.

Capral has a relatively modest carbon footprint and is not included in the top 500 site emitters. Our main emissions come from natural gas and electricity. Capral is committed to meeting its obligations under the National Greenhouse Energy Reporting Act.

Community

Capral contributes in a variety of ways to the communities where its facilities are located including the provision of a range of skilled and unskilled employment opportunities, the positive economic impact on other local businesses and involvement in community based groups including education institutions.

Commitment to Training

Capral has continued to demonstrate a training commitment to its employees and the local community, with initiatives such as the Bremer Park (QLD) Traineeship Program targeted to assist school leavers. The program consists of Trainees completing a Certificate III in business, on-the-job training in areas such as Accounts Payable / Receivable and general office administration. Upon completion, trainees have obtained a formal qualification and gained valuable experience to assist them in the employment market. The program has been successful with Capral providing fulltime employment to a recent Trainee graduate. Capral is committed to this program and providing an avenue for the development of youth in the local community. A similar program will be implemented in other areas of the Capral business in 2016.

Community Recognition

Capral received community recognition in 2015 with the following notable events:

» White Ribbon Day – Capral's Bremer Park and Penrith sites stopped work and participated in White Ribbon Day events in November 2015. Capral launched a new Domestic Violence Policy and more than 200 workers donned 'Stop Domestic Violence' t-shirts and took pledges to stop domestic violence. Official dignitaries including White Ribbon Day Ambassadors, local Mayors/Councillors,

Australian Workers Union officials and media were in attendance. Capral's Managing Director, Tony Dragicevich, also attended and appeared on local radio and television news broadcasts that day in support of this cause.

» World Mental Health Day – Capral sites (nationally) stopped work on 9 October 2015 and held morning/ afternoon teas to observe Mental Health Day and launch Capral's new Mental Health and Wellbeing Policy.

Community Assistance

Capral and its employees continue to get involved in community initiatives and, in 2015, these included the following:

• » Capral and its employees raised money for an employee who lost their home in the SA bush fires.
• » Bremer Park employees supported the following causes:
• › Cancer Council, with annual participation in the Bridge to Brisbane fun run;
• › Bravehearts, raising funds through a morning tea to support the education and protection of Australian children from sexual assault; and
• › Ipswich Rosie's Friends on the Street, raising funds for displaced community members.
• » Campbellfield site sponsored Disability Support and Recreation by providing funds which assisted activities such as 'Youth Sports Day' and 'Kids Christmas Appeal'.
• » Rockdale Aluminium Centre sponsored the Lioness Club for 'Circus Quirkus', assisting disabled children to attend a magic show and also provided sponsorship to a local football club via seating for their home ground.
• » Kunda Park Aluminium Centre sponsored the Starlight Foundation, making a donation on behalf of their largest customer.
• » Gold Coast Aluminium Centre sponsored a local soccer club via ground signage and also sponsored a Junior Lifesaving Club by purchasing a shade shelter for carnivals and events.
• » Townsville Aluminium Centre sponsored the Lions Club Disadvantaged Children's Charity and the Children's Oncology Fight Night Charity.
• » Capral sponsored a hole at a customer's annual charity golf day for Tristan Knowles Foundation that supports Kids with Cancer.

Directors' Report

Your directors present their report on the consolidated entity consisting of Capral Limited (Capral) and the entities it controlled at the end of, or during, the financial year ended 31 December 2015 (Financial Year).

Directors

The following persons were directors of Capral during the Financial Year and up to the date of this report:

NAME	PERIOD OFFICE HELD
RL Wood-Ward	6 November 2008 – Date of this report
AM Dragicevich	15 April 2013 – Date of this report
PJ Jobe	24 April 2009 – Date of this report
IB Blair	23 May 2006 – Date of this report
GF Pettigrew	18 June 2010 – Date of this report

Details of directors, their qualifications, experience, special responsibilities (including committee memberships) and directorships of other listed companies held in the last three years before end of the Financial Year are set out on pages 6 and 7.

Principal activities

During the Financial Year, the principal continuing activities of the consolidated entity consisted of the manufacturing, marketing and distribution of fabricated and semi-fabricated aluminium related products.

Dividends

No dividends or distributions have been declared or paid for the Financial Year.

Review of operations and financial position

A review of operations and financial position of the consolidated entity are referred to in the Managing Director's Operations and Financial Review on pages 4 and 5.

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the consolidated entity during the year.

Matters subsequent to the end of the Financial Year

No matter or circumstance has arisen since the end of the Financial Year that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations or the consolidated entity's state of affairs in future financial years.

Likely developments, business strategies, prospects and risks

Information on likely developments, business strategies, prospects and risks are detailed in the Managing Director's Operations and Financial Review on pages 4 and 5. Whilst Capral continues to meet its continuous disclosure obligations, this report omits information where it would be likely to result in unreasonable prejudice to Capral. This includes information that is commercially sensitive, is confidential or could provide a third party with a commercial advantage (such as internal budgets and forecasts).

Other information for members to make an informed assessment

Other than information set out in this report, there is no information that members would reasonably require to make an informed assessment of the operations, financial position, business strategies and prospects for future financial years of the consolidated entity.

Company Secretary

Mr R Rolfe - General Counsel & Company Secretary, LLB (Hon) (University of Leicester, UK)

Mr Rolfe was appointed as General Counsel of Capral on 12 June 2006 and to the position of Company Secretary on 23 June 2006.

Mr Rolfe was admitted as a Solicitor of the Supreme Court of England and Wales in 1998 and New South Wales in 2002. Prior to joining Capral, Mr Rolfe was a senior corporate lawyer at Qantas Airways Limited from July 2002.

Directors' meetings

The numbers of directors' meetings (including meetings of committees) held, and the number of meetings attended, by each director during the Financial Year, are as follows:

DIRECTOR		BOARD		AUDIT COMMITTEE		REMUNERATION & NOMINATION COMMITTEE
	HELD	ATTENDED	HELD	ATTENDED	HELD	ATTENDED
RL Wood-Ward	8	6	4	4	2	1
AM Dragicevich	8	8	4	41	2	21
PJ Jobe	8	6	4	3	2	2
IB Blair	8	7	4	3	2	2
GF Pettigrew	8	8	4	4	2	2

1 Attended meeting(s) in an ex-officio capacity

Directors' interests and benefits

Ordinary Shares

Details of holdings of ordinary shares in Capral for the directors (including former directors who held office during the Financial Year) at the beginning and end of the Financial Year and at the date of this report are as follows:

			ORDINARY SHARES FULLY PAID IN THE COMPANY
NAME	POSITION	BALANCE AT 1.1.2015	BALANCE AT 31.12.2015	BALANCE AT DATE OF THIS REPORT
RL Wood-Ward	Director and Chairman of the Board	–	–	–
AM Dragicevich	Managing Director	4,500,000	5,800,0001	5,800,000
PJ Jobe	Director	7,100,500	7,100,500	7,100,500
IB Blair	Director	227,348	227,348	227,348
GF Pettigrew	Director	–	-	–

1 Acquired 1,100,000 shares on vesting of performance rights and acquired 200,000 shares on market

In addition to the interests shown above, indirect interests in Capral shares held by the Managing Director, Mr Dragicevich, and the previous Managing Director, Mr Jobe, are as follows:

MR AM DRAGICEVICH	BALANCE AT	BALANCE AT	BALANCE AT DATE
NATURE OF OTHER INTERESTS	1.1.2015	31.12.2015	OF THIS REPORT
Performance rights	3,000,000	3,500,0001	2,083,2502

1 900,000 performance rights lapsed on 31 January 2015, 1,100,000 performance rights vested on 4 March 2015 and 2.5 million performance rights were issued on 16 April 2015

2 1,416,750 performance rights lapsed on 15 January 2016

MR PJ JOBE	BALANCE AT	BALANCE AT	BALANCE AT DATE
NATURE OF OTHER INTERESTS	1.1.2015	31.12.2015	OF THIS REPORT
Options at \$0.50	4,300,000	4,300,000	4,300,000

Unissued shares or interests under option

At the date of this report, there are 13,250,143 (2014: 14,072,167) unissued shares or interests under option. Refer to sections 1 to 3 of the Remuneration Report.

No shares have been issued during or since the end of the Financial Year as a result of an exercise of an option.

13 DIRECTORS' REPORT

Remuneration Report (Audited)

This report sets out Capral's remuneration of its directors and executives. It also details the actual remuneration of its key management personnel (including the directors) during the Financial Year.

Section 1: The Remuneration Framework

(a) Key Principles

Capral's remuneration framework and practices are based on the principles that remuneration is performance driven, aligns with shareholder interests, provides market competitive remuneration that attracts qualified and experienced candidates, and retains and motivates employees.

The variable components of remuneration (short and long term) are driven by challenging targets focused on both external and internal measures of financial and nonfinancial performance. Details of performances measures are set out in sections 1(g) and 1(h) below. Executive remuneration is aligned with shareholder interests via an emphasis on variable (incentive) remuneration, the award of which is linked to performance benchmarks that support business strategies and future success. A significant proportion of executive remuneration is at-risk. Details of the link between performance and remuneration is set out in section 4.

(b) Role of Remuneration & Nomination Committee

The Remuneration & Nomination Committee is responsible for reviewing and making recommendations to the Board of Directors (the Board) on remuneration policies for Capral including, in particular, those governing the directors (including the Managing Director) and executive managers. The Committee operates in accordance with its Charter that was reviewed and updated during the year.

Remuneration (including short and long term incentives) of the Managing Director and certain executive managers is reviewed at least annually by the Remuneration & Nomination Committee and recommendations are put to the Board for its approval. Short and long term incentives are linked to performance criteria. The Board can exercise its discretion in relation to approving bonuses and incentives. Changes must be justified by reference to measurable performance criteria and having regard to Capral's overall financial performance and other special circumstances.

The Remuneration & Nomination Committee may seek independent advice as appropriate in setting the structure and levels of remuneration based on the principle that the elements of remuneration should be set at an appropriate level having regard to market practice for roles of similar scope and skill. No remuneration recommendations have been made by remuneration consultants in relation to the Financial Year. Capral has reviewed generally available market information regarding remuneration, as outlined further below.

(c) Performance Planning and Review

Capral has a Performance Planning and Review (PPR) process to evaluate and discuss performance and development plans at least annually with salaried employees. This PPR process covers:

• » An agreement of objectives for the year ahead and the setting of key performance measures against which the achievement of those objectives will be assessed. These are set by reference to financial targets and key business strategies.
• » A review of performance against the previously agreed objectives for the period under review.
• » Employee comment and feedback.
• » Short and long term training and development needs and career aspirations.

The PPR process ensures that there is better understanding of Capral's objectives thereby increasing the likelihood of their achievement. It also enables managers to evaluate and develop employee skills and performance and identify future development needs.

(d) Non-executive Directors

The structure of Capral's non-executive director remuneration is distinct from that applicable to the Managing Director and other senior executives.

Remuneration of non-executive directors is established at a level that enables Capral to attract and retain high quality directors at a reasonable cost. Remuneration of non-executive directors and their terms of office are governed by Capral's constitution and not by contract.

Remuneration of non-executive directors is allocated out of the pool of funds, the limit of which is approved by shareholders in general meeting; the fee pool limit is currently \$500,000 per annum, as approved at the 1999 annual general meeting. Each non-executive director is entitled to the payment of an annual fee in cash and superannuation contributions for their services. Additional fees are not paid for sitting on Board committees, however the extra responsibility of the Chairman of the Board and committees is recognised by the payment of a higher fee. The fees for the non-executive directors are regularly reviewed having regard to generally available market information and are currently considered to be similar to those paid at comparable listed companies. Non-executive directors do not receive any shares, options or other securities as part of their remuneration however they are eligible to participate in Capral's equity incentive plans, although none currently participate. There are no schemes for retirement benefits (other than statutory superannuation payments).

(e) Senior Management Remuneration

The remuneration policy for the Managing Director and executives seeks to attract and retain people with the required capabilities to lead Capral in the achievement of business objectives and focus on delivering financial and non-financial measures.

Remuneration is reviewed annually and approved changes applied from 1 March.

The Remuneration & Nomination Committee reviews the remuneration arrangements of the Managing Director, his direct reports and certain other executive managers. The Managing Director reviews the remuneration arrangements of the other members of senior management, based on the recommendations of his direct reports.

For the Managing Director and other senior management, remuneration consists of a fixed annual salary and superannuation (refer to section 1(f) below) plus at-risk components comprised of a short term incentive plan (STIP) (refer to section 1(g) below) and a long term incentive plan (LTIP) (refer to section 1(h) below).

The proportions of fixed and at-risk remuneration are established for the Managing Director and other senior management relative to their position in Capral. As a general guide, at-risk remuneration is 50% for the Managing Director, 20–25% for executive management and 10–20% for other senior managers, for the achievement of 'target' goals.

(f) Fixed remuneration

The level of the total employment cost (being base salary plus superannuation) (TEC) is determined having regard to job responsibilities, skills, experience and performance. Salaries are reviewed annually, with any changes applied from 1 March. Fixed remuneration of executives is generally targeted at market median.

The fixed remuneration of the Managing Director was determined by the Board in 2012 having regard to other ASX listed companies in building product related industries, his particular skills and previous remuneration, experience and capability to lead Capral in delivering financial targets and executing key business strategies. It represented a significant reduction to the previous Managing Director's remuneration. It forms part of his executive employment contract and is subject to annual review. His fixed remuneration has not been increased since joining Capral.

The Board has reviewed generally available market information regarding fixed remuneration of the key management personnel for 15 ASX listed companies in either building product related industries or with comparable revenues and market capitalisation. The Board considers that the fixed remuneration of Capral's key management personnel is generally in line with this group.

The fixed remuneration of Capral's other key management personnel has remained unchanged since 1 March 2013.

(g) Short Term Incentives

Capral's short term incentive schemes are designed to encourage participants to assist Capral in achieving continuous improvement by aligning their interests with those of Capral and its stakeholders and rewarding them when key performance measures are achieved.

For the Financial Year, there were three short term incentive programs:

• (1) Short Term Incentive Plan (STIP): The Managing Director and senior employees have the opportunity to earn a cash incentive, based on a specified percentage of TEC dependent on each individual's level of responsibility. The actual incentive earned is based on the achievement of financial and non-financial objectives.
• (2) Bonus scheme: Other salaried employees can earn fixed payments, as approved by the Managing Director, for achieving key performance measures set by their managers and outlined in the employee's individual PPR.
• (3) Sales incentives: Sales employees participate in quarterly sales incentive programs in relation to revenue, gross margin and debtor days targets.

STIP is weighted 70% to financial objectives and 30% non-financial objectives. A summary of STIP is set out in the table below:

Frequency	Awards determined annually with payment made in the March following the end of the performance year.
Financial Measures	» Trading EBITDA for Capral and (for relevant General/ Divisional Managers) Business Units (35%). Key financial threshold measure as reflects underlying earnings after excluding external economic factors such as global aluminium prices and foreign exchange rates
	» Net Profit Before Tax for Capral (10%). Aligned to ability to pay dividends
	» Operating Cash Flow for Capral (15%). Selected to ensure effectiveness of cash management
	» % Working Capital to Annualised Sales for Capral and (for relevant General/ Divisional Managers) Business Units (10%). Selected to ensure effectiveness of capital management.
Non-financial Measures	Specific individual objectives are set to reflect measurable (where possible) strategic initiatives and profit improvement objectives, and also include a minimum of 5% for Safety improvement. There are usually around 5–6 key individual objectives which are set for each participant and are aligned to Capral's strategic plans and budget; they include performance to customers, sales targets/ growth, productivity and operational improvements, key projects and cost improvements. The weightings are generally 5% however may be higher or lower depending on importance to company performance.
Assessment of performance	Performance against financial measures is assessed after the end of each financial year based on Capral's financial results. The performance against non-financial measures is assessed as part of the PPR process.
against measures	The Managing Director, in consultation with senior managers, is responsible for recommending to the Board the amount of STIP, if any, to be paid.
	All payments are subject to Capral achieving its minimum annual Trading EBITDA target. Stretch payments are not made where target financial metrics are not met.
Discretionary override	The Board retains absolute discretion regarding payments having regard to Capral's overall financial position and other special circumstances that have arisen during the course of the year (ie acquisitions or clawback). The intent however is to minimise the exercise of discretionary adjustments to the planned outcomes set at the start of the year. Any material adjustments would be disclosed.
Service condition	The Managing Director is eligible to receive a pro-rata payment where his employment is terminated other than for cause. Other employees who leave Capral part way through a performance period are not eligible for a payment for that period.
	Employees who start employment part way through the period may be eligible for a pro-rata payment, provided that their probation period has been successfully completed by the end of the year.
Clawback of awards	In the event of fraud, misstatement or misrepresentation of the financials, the Board has the ability to exercise its discretion to withhold some or all of a payment before it is made. In 2015, clawback provisions were included in the plan rules specifically allowing the Board to recover some or all of payments already made in such circumstances.
Deferral	There is no deferred cash/ equity component. The Board considers this is appropriate in the context of the relatively low amounts paid under STIP awards, Capral's current remuneration framework and the cyclical nature of the business.
Plan review	The STIP design is reviewed at least annually by the Remuneration & Nomination Committee, and approved by the Board. The Managing Director, in consultation with senior managers, is responsible for recommending to the Board the STIP financial targets. The non-financial objectives are approved by the Managing Director. The Managing Director's non-financial targets are established in consultation with the Managing Director and approved by the Board.

The Managing Director and key management personnel are eligible for the following awards of STIP relative to TEC:

		% OF TEC
POSITION	MINIMUM	TARGET	STRETCH
Managing Director	25%	50%	100%
CFO/GM Operations	12.5%	25%	50%
Co Sec	10%	20%	40%

Where objectives can be financially measured, 'Minimum' is generally set around 15% below Board approved Budget, however it must exceed prior year performance. 'Target' is generally set around Board approved Budget and 'Stretch' is generally set 30% above Budget.

The Board has reviewed generally available market information regarding short term incentive schemes of the key management personnel for 15 ASX listed companies in either building product related industries or with comparable revenues and market capitalisation. The Board considers that Capral's short term incentive scheme is generally in line with this group, with STIP relative to TEC below the group's median.

(h) Long Term Incentives

Capral's long term incentives (LTIP) are designed to strengthen the alignment of the interests of senior managers with shareholders and support a culture of share ownership and shareholder wealth. It also aims to provide competitive remuneration for the retention of specifically targeted members of senior management.

LTIP – Managing Director

Prior to his appointment as Managing Director, Mr Dragicevich was granted 2,000,000 performance rights under LTIP in 2013. He was granted a further 2,000,000 performance rights following shareholder approval in April 2014. During the Financial Year, an additional 2,500,000 performance rights were granted to Mr Dragicevich following shareholder approval in April 2015.

Frequency	Awards determined annually.
Type of award	Performance rights subject to service requirements and vesting criteria. If the conditions are met, shares will be issued around the vesting date.
Amount	2013 award: 2,000,000 rights granted in March 2013 as part of employment contract.
of award	Eligible to receive additional annual issues of up to 50% of the value of TEC, subject to shareholder approval.
	2014 award: 2,000,000 rights granted in April 2014 following shareholder approval.
	2015 award: 2,500,000 rights granted in April 2015 following shareholder approval.
Performance	2013 and 2014 awards: 1 year performance period.
period and vesting dates	2013 award: 1,000,000 rights (Tranche 1) had a vesting date of 4 March 2014 and 1,000,000 rights (Tranche 2) had a vesting date of 4 March 2015. The testing dates were 31 December 2013 (for Tranche 1) and 31 December 2014 (for Tranche 2).
	2014 award: 1,000,000 rights (Tranche 1) had a vesting date of 1 March 2015 and 1,000,000 rights (Tranche 2) have a vesting date of 1 March 2016. The testing date was 31 December 2014 (for Tranche 1) and 31 December 2015 (for Tranche 2).
	2015 award: 3 year performance period with 31 December testing dates. Vesting date of 1 March 2018.

A summary of the Managing Director's LTIP is set out below:

Performance conditions	Performance rights are subject to Mr Dragicevich remaining employed by Capral at the vesting date and the achievement of the following performance conditions:
	2013 award: 80% of the rights were subject to minimum financial targets relating to Trading EBITDA, Net Profit Before Tax, Operating Cash Flow and % Working Capital to Annualised Sales set annually by the Board and 20% of the rights were subject to a TSR performance condition.
	2014 award: 70% of the rights were subject to a TSR performance condition and 30% of the rights were subject to a Basic Earnings Per Share (EPS) performance condition.
	2015 award: 50% of the rights are subject to a TSR performance condition and 50% of the rights are subject to an EPS performance condition.
	For the 2014 and 2015 awards, the EPS condition is calculated each year as follows: Net Profit Before Tax Target as specified by the Board for that year (adjusted for any extraordinary items approved by the Board) divided by number of securities on issue. The Net Profit Before Tax Target used for this condition is set at least at minimum Budget level. The Board may adjust EPS to exclude the effects of material business acquisitions/ divestments and certain one-off costs; any adjustments would be disclosed.
	For each award, the rights subject to the TSR condition are subject to Capral's performance as against the entities with ordinary shares and units (as the case may be) included in the S&P/ASX All Ordinaries Index as at 1 January in the year of grant but excluding those companies who are classified in the Global Industry Classification Standard sector number 40. The number of rights which may vest is set out in Table A below.
	For the 2013 and 2014 awards, the Board considered it appropriate to employ the performance measures over a 1 year period because:
	» the minimum financial/ EPS targets reward achievement of a Board approved Budget that generally requires growth against the prior year which is directly under the Managing Director's influence thus placing further focus on the key business drivers;
	» the outcomes may become distorted by building and commodity cycles that can vary materially over a longer term; and
	» the TSR rewards performance that meets or exceeds the market and thereby directly linked to shareholder value.
	For the 2015 award, the Managing Director falls under the same LTIP as the other executives which has a 3 year performance period – see below.
	The use of financial growth targets and TSR tests is consistent with market practice as it ensures alignment between comparative shareholder return and remuneration of executives. The peer group is considered as appropriate given Capral's size and objectives. The financial growth target was implemented in the initial 2013 award and the EPS condition in the 2014 award. These measures are considered as appropriate as they each assess the success of Capral in achieving earnings growth. Having regard to generally available market information, the Board decided to vary the weighting between TSR and EPS for the 2015 award, to 50/50.
Assessment of performance	2013 and 2014 awards: Performance against conditions is assessed at the end of each financial year (31 December testing date).
against measures	2015 award: Performance against the EPS condition is assessed at the end of each financial year (31 December testing date). If the condition is met in a given year, the rights will convert to shares at the end of the 3 year vesting period and will be issued to the Managing Director provided that he continues to be employed by Capral at the vesting date. If the condition is not met in a given year, those rights will lapse.
	Performance against the TSR condition is assessed at the end of the 3 year period (31 December testing date)
	There is no re-testing.
	Vested rights convert on the relevant vesting date a one-for-one basis to ordinary shares. Unvested rights lapse.

Treatment of awards on cessation of employment	If employment is terminated by Capral, other than for cause, unvested rights will immediately vest.
Treatment of awards on change of control	The Board has discretion to allow awards to vest on a change of control. In exercising this discretion, the Board is not bound to award all shares and would generally consider applying pro-rata assessments for current awards.
Dividend/ participation rights	There is no entitlement to dividends on performance rights during the vesting period or to participate in respect of issues of shares to shareholders.
Clawback of awards	In the event of fraud, misstatement or misrepresentation of the financials, the Board has the ability to exercise its discretion to forfeit some or all of the award prior to the issue of shares. In 2015, clawback provisions were included in the plan rules specifically allowing the Board to recover some or all of the award already made in such circumstances.
Plan review	The LTIP design is reviewed at least annually by the Remuneration & Nomination Committee, and approved by the Board.

LTIP – Other Executives

On the recommendation of the Managing Director to the Remuneration & Nomination Committee, selected senior executives participate in LTIP. A summary of LTIP for those senior executives is set out below:

Frequency	Awards determined annually.
Type of award	Performance rights subject to service requirements and vesting criteria. If the conditions are met, shares will be issued around the vesting date.
Amount of award	As a matter of practice, the aggregate amount of each annual award is less than 1% of issued capital. There is no specified % of the value of TEC for individual awards in executive employment contracts. The value of individual awards is generally less than 30% of TEC.
Performance period and vesting dates	3 years with 31 December testing dates. 2012 award: vesting date of 1 March 2015 2013 award: vesting date of 1 March 2016 2014 award: vesting date of 1 March 2017 2015 award: vesting date of 1 March 2018

Performance conditions	Performance rights granted under LTIP during 2012, 2013, 2014 and the Financial Year are subject to the participant remaining employed by Capral at the vesting date and the achievement of the following performance conditions:
	» 60% (for the 2012, 2013 and 2014 awards) or 50% (for the 2015 award) of rights are subject to an EPS performance condition; these were granted in 3 equal tranches, and will be tested on 31 December each year over a 3 year period. The EPS condition is calculated each year as follows: Net Profit Before Tax Target as specified by the Board for that year (adjusted for any extraordinary items approved by the Board) divided by number of securities on issue. The Net Profit Before Tax Target used for this condition is set at least at minimum Budget level. The Board may adjust EPS to exclude the effects of material business acquisitions/ divestments and certain one-off costs; any adjustments would be disclosed.
	» 40% (for the 2012, 2013 and 2014 awards) or 50% (for the 2015 award) of rights are subject to a TSR performance condition as against the entities with ordinary shares and units (as the case may be) included in the S&P/ASX All Ordinaries Index as at 1 January in the year of grant but excluding those companies who are classified in the Global Industry Classification Standard sector number 40. The number of rights which may vest is set out in Table A below.
	The Board considered it appropriate to set the EPS condition over a 1 year period because:
	» it rewards Management for achievement of a Board approved Budget that generally requires growth against the prior year which is directly under management's influence, thus placing further focus on the key business drivers;
	» the outcomes may become distorted by building and commodity cycles that can vary materially over a longer term;
	» where the Net Profit Before Tax target in a given year is not achieved, Management is not rewarded.
	The use of EPS and TSR tests is consistent with market practice as it ensures alignment between compara tive shareholder return and remuneration of executives. TSR has been a feature of LTIP since 2006. The peer group is considered as appropriate given Capral's size and objectives. EPS condition was implemented in the plan in 2011 and has been consistently applied for all grants. The measure is considered as appropriate as it assesses the success of Capral in achieving earnings growth. Having regard to generally available market information, the Board decided to vary the weighting between TSR and EPS for the 2015 award, to 50/50.
Assessment of performance against measures	Performance against the EPS condition is assessed at the end of each financial year (31 December testing date). If the condition is met in a given year, the rights will convert to shares at the end of the 3 year vesting period and will be issued to participants provided that they continue to be employed by Capral at the vesting date. If the condition is not met in a given year, those rights will lapse.
	Performance against the TSR condition is assessed at the end of the 3 year period (31 December testing date).
	There is no re-testing.
	Vested rights convert on the relevant vesting date a one-for-one basis to ordinary shares. Unvested rights lapse.
Treatment of awards on cessation of employment	If employment ceases all unvested rights will immediately lapse. However, if the cessation relates to the redundancy or permanent disability/ death of the employee or other reason determined by the Board then the Board has absolute discretion to determine that some or all of the rights vest.
Treatment of awards on change of control	The Board has discretion to allow awards to vest on a change of control. In exercising this discretion, the Board is not bound to award all shares and would generally consider applying pro-rata assessments for current awards.
Dividend/ participation rights	There is no entitlement to dividends on performance rights during the vesting period or to participate in respect of issues of shares to shareholders.

Clawback of awards	In the event of fraud, misstatement or misrepresentation of the financials, the Board has the ability to exercise its discretion to forfeit some or all of the award prior to the issue of shares. In 2015, clawback provisions were included in the plan rules specifically allowing the Board to recover some or all of the award already made in such circumstances.
Plan review	The LTIP design is reviewed at least annually by the Remuneration & Nomination Committee, and approved by the Board. The Managing Director makes recommendations to the Remuneration & Nomination Committee regarding the proposed LTIP award participants and the amount of the entitlements.

Vesting of rights subject to the TSR performance condition at each testing date is determined in accordance with Table A below:

TABLE A
PERCENTILE OF TSR	% RIGHTS VESTING
Less than 50th	None
50th	50
More than 50th less than 75th	Between 50 and 100 (pro rata)
More than 75th	100

The Board has reviewed generally available market information regarding long term incentive schemes of the key management personnel (including the Managing Director) for 15 ASX listed companies in either building product related industries or with comparable revenues and market capitalisation. The Board considers that Capral's long term incentive scheme is generally in line with this group.

(i) Anti-Hedging Policy

Capral's personnel are not permitted to enter into transactions with securities (or any derivative thereof) which limit the economic risk of any unvested entitlements awarded under any Capral equity-based remuneration scheme currently in operation or which will be offered by Capral in the future. As part of Capral's due diligence undertaken at the time of the financial results, participants in any Capral equity plan are required to confirm that they have not entered into any such prohibited transactions.

Section 2: Actual Remuneration of key management personnel

During the Financial Year there were a number of remuneration outcomes. The expensed remuneration is set out in detail in the remuneration table below however in summary the key outcomes were as follows:

(a) Remuneration

A pay freeze was put in place for the second year in a row affecting around 10% of the salaried staff, including the executives, having regard to prevailing market conditions. Total expensed remuneration for the key management personnel (including the directors) overall decreased as compared to the prior year due to this pay freeze.

(b) STIP

STIP payments are below the prior year.

(c) LTIP

• » 2,500,000 performance rights were granted to the Managing Director in April 2015 following shareholder approval (2014: 2,000,000) and 4,500,000 rights were granted under the 2015 LTIP award to executives (2014: 4,650,000) in March 2015.
• » 800,000 performance rights granted to the Managing Director under Tranche 2 of the 2013 LTIP award met the financial targets performance condition and 300,000 performance rights granted to the Managing Director under Tranche 1 of the 2014 LTIP award met the EPS performance condition. These rights consequently vested and converted into 1,100,000 Capral shares on a 1 for 1 basis in March 2015.
• » 581,829 rights granted to executives under the 2012 LTIP award, met the EPS performance condition and consequently, vested and converted into Capral shares on a 1 for 1 basis in March 2015.
• » These 1,681,829 shares were purchased on market at an average price of \$0.15.

Performance rights granted to the Managing Director and executives under 2013, 2014 and 2015 LTIP awards were tested after the year end with the outcomes detailed in section 3 below.

For the financial year ended 31 December 2016, Capral intends to:

• » increase the fixed remuneration of executives for the first time in 3 years by an average of about 2.5%. However, there will be no increase to the Managing Director's fixed remuneration for the third year in a row; and
• » grant further performance rights under the LTIP to the Managing Director (subject to shareholder approval) and selected executives.

d) Remuneration Table - key management personnel

The following table sets out the remuneration of the key management personnel (including the directors) during the Financial Year and the 2014 financial year.

The key management personnel of the consolidated entity are the non-executive directors, Managing Director, Chief Financial Officer, General Manager Operations and Company Secretary. These people have the authority and responsibility for planning, directing and controlling the day-to-day activities of Capral.

				SHORT–TERM EMPLOYEE BENEFITS
NAME	YEAR	TITLE	SALARY AND FEES	BONUS3	NON MONETARY BENEFITS
			\$	\$	\$

Directors

	2015	Managing Director	665,000	215,600	–
AM Dragicevich	2014	Managing Director	670,000	292,600	–
	2015	Chairman	120,000	–	–
RL Wood–Ward	2014	Chairman	120,000	–	–
	2015	Non–executive director	55,000	–	–
PJ Jobe	2014	Non–executive director	55,000	–	–
	2015	Non–executive director	70,000	–	–
IB Blair	2014	Non–executive director	70,000	–	–
	2015	Non–executive director	65,667	–	–
GF Pettigrew1	2014	Non–executive director	55,000	–	–
AM Eisen2	2014	Non–executive director	49,923	–	–

Executives

	2015	Chief Financial Officer	330,000	57,000	–
T Campbell*	2014	Chief Financial Officer	332,500	70,000	–
	2015	GM Operations	308,508	57,000	–
R Michael*	2014	GM Operations	313,508	65,000	–
	2015	Gen. Counsel/ Co. Sec.	263,954	38,000	–
R Rolfe*	2014	Gen. Counsel/ Co. Sec	264,721	46,000	–
		Total 2015	1,878,129	367,600	–
		Total 2014	1,930,652	473,600	–

1 Mr Pettigrew became the Remuneration & Nomination Committee Chairman effective 16 April 2015 and his fees were increased to \$70,000 (plus superannuation) per annum.

2 Mr Eisen resigned as a director on 27 November 2014.

3 All bonus amounts are on an accrual basis.

4 Termination benefits include leave accrued and payments made in lieu of notice at the end of employment with Capral.

5 All LTIP performance rights listed are securities that have not yet vested. In relation to the performance rights of the key management personnel refer to Note 36 of the financial statements.

* Capral's key management personnel (other than directors).

POST EMPLOYMENT BENEFITS	OTHER LONG TERM BENEFITS	TERMINATION BENEFITS4	SHARE–BASED PAYMENTS	TOTAL	TOTAL PERFORMANCE RELATED
SUPERANNUATION			PERFORMANCE RIGHTS5
\$	\$	\$	\$	\$	%

665,000 215,600 –	35,000	–	–	196,450	1,112,050	37
670,000 292,600 –	30,000	–	–	258,290	1,250,890	44
120,000 – –	11,400	–	–	–	131,400	–
120,000 – –	11,400	–	–	–	131,400	–
Non–executive director 55,000 – –	5,225	–	–	–	60,225	–
55,000 – –	5,225	–	–	–	60,225	–
Non–executive director 70,000 – –	6,650	–	–	–	76,650	–
70,000 – –	6,650	–	–	–	76,650	–
Non–executive director 65,667 – –	6,238	–	–	–	71,905	–
55,000 – –	5,225	–	–	–	60,225	–
49,923 – –	4,743	–	–	–	54,666	–

30,000	–	–	70,614	487,614	26
27,500	–	–	58,563	488,563	26
35,000	–	–	68,267	468,775	27
30,000	–	–	49,772	458,280	25
19,046	–	–	38,809	359,809	21
18,279	–	–	30,040	359,040	21
148,559	–	–	374,140	2,768,428
139,022	–	–	396,665	2,939,939

Section 3: Performance rights, Options and bonuses provided as compensation

Performance rights – Managing Director

During the Financial Year and the financial year ended 31 December 2014, performance rights were granted as equity compensation benefits under the LTIP, to the Managing Director as disclosed as at balance date below. The performance rights were granted at no cost to him.

2,500,000 performance rights were granted to the Managing Director in April 2015 following shareholder approval. These rights have a vesting date of March 2018. Tranche 1 of the EPS condition was tested as at 31 December 2015. Capral did not achieve the 2015 EPS condition and consequently 416,750 of these rights lapsed in January 2016.

2,000,000 performance rights were granted to the Managing Director in April 2014 following shareholder approval. 1,000,000 of these rights had a vesting date of 1 March 2015 (Tranche 1) and 1,000,000 of these rights have a vesting date of 1 March 2016 (Tranche 2). Tranche 1 was tested as at 31 December 2014. Capral's relative TSR performance over 2014 was in the 33rd percentile and consequently 70% of the rights subject to the TSR condition (700,000 rights) lapsed in January 2015. Capral achieved the 2014 EPS condition and consequently 30% of the rights subject to that condition (300,000 rights) vested and converted into Capral shares on a 1 for 1 basis as at 1 March 2015. Tranche 2 (the final tranche of this award) was tested as at 31 December 2015. Capral's relative TSR performance over 2015 was in the 47 percentile and consequently 70% of the rights subject to the TSR condition (700,000 rights) lapsed in January 2016. Capral did not achieve the 2015 EPS condition and consequently, 30% of the rights subject to that condition (300,000 rights) lapsed in January 2016.

2,000,000 performance rights were granted to the Managing Director in March 2013. Tranche 1 was tested as at 31 December 2013. 800,000 performance rights vested and converted into Capral shares on a 1 for 1 basis as at 4 March 2014. The balance of Tranche 1 (200,000 rights) lapsed at the end of 2013. Tranche 2 (the final tranche of this award) was tested as at 31 December 2014. Capral's relative TSR performance over 2014 was in the 33rd percentile and consequently 20% of the rights subject to the TSR condition (200,000 rights) lapsed in January 2015. Capral achieved the 2014 minimum financial condition and consequently, 80% of the rights subject to that condition (800,000 rights) vested and converted into Capral shares on a 1 for 1 basis as at 4 March 2015.

			FAIR VALUE PER RIGHT AT GRANT
TRANCHE	GRANT NO.	GRANT DATE	DATE (\$)	TEST DATE	LAPSED NO.	VESTED NO.

2015 Offer

A Dragicevich		16/04/2015
Tranche 1 – EPS 16.67%	416,750		\$0.16	31/12/2015	–	–
Tranche 2 – EPS 16.67%	416,750		\$0.16	31/12/2016	–	–
Tranche 3 – EPS 16.66%	416,500		\$0.16	31/12/2017	–	–
Tranche 4 – TSR 50%	1,250,000		\$0.132	31/12/2017	–	–
Total 2015 Offer	2,500,000				–	–

2014 Offer

A Dragicevich		16/04/2014
Tranche 1 – EPS 30%	300,000	\$0.155	31/12/2014	–	300,000
Tranche 1 – TSR 70%	700,000	\$0.094	31/12/2014	(700,000)	–
Tranche 2 – EPS 30%	300,000	\$0.155	31/12/2015	–	–
Tranche 2 – TSR 70%	700,000	\$0.106	31/12/2015	–	–
Total 2014 Offer	2,000,000			(700,000)	300,000

TRANCHE	GRANT NO.	GRANT DATE	FAIR VALUE PER RIGHT AT GRANT DATE (\$)	TEST DATE	LAPSED NO.	VESTED NO.
---------	-----------	------------	--------------------------------------------------	-----------	------------	------------

2013 Offer

800,000
800,000
1,600,000

Performance rights – other key management personnel

During the Financial Year and the financial year ended 31 December 2014, performance rights were granted as equity compensation benefits under the LTIP, to certain key management personnel as disclosed as at balance date below. The performance rights were granted at no cost to the participants.

4,500,000 performance rights were granted under the 2015 LTIP award to executives in March 2015. Tranche 1 of the EPS condition was tested as at 31 December 2015. Capral did not achieve the 2015 EPS condition and consequently 650,130 of these rights lapsed in January 2016.

In relation to the 2014 LTIP award, 20% of the rights subject to the annual EPS condition (Tranche 1) (672,587 rights) had already been tested on 31 December 2014 and the condition had been achieved. These rights will vest and convert into Capral shares on a 1 for 1 basis as at 1 March 2017, provided that the participants remain employed by Capral at that date. Tranche 2 of the EPS condition was tested as at 31 December 2015. Capral did not achieve the 2015 EPS condition and consequently 760,000 of these rights lapsed in January 2016.

In relation to the 2013 LTIP award, 20% of the rights subject to the annual EPS condition (Tranche 1) (707,457 rights) had lapsed on 31 December 2013 and 20% of the rights subject to the annual EPS condition (Tranche 2) (880,000 rights) had already been tested on 31 December 2014 and the condition had been achieved. These Tranche 2 rights will vest and convert into Capral shares on a 1 for 1 basis as at 1 March 2016. Tranche 3 of the EPS condition (20% of the rights) and the TSR condition (40% of the rights) (the final tranches of this award) were tested as at 31 December 2015. Capral's relative TSR performance over the period from January 2013 to December 2015 was in the 36.65 percentile and consequently the rights subject to the TSR condition (1,154,046 rights) lapsed in January 2016. Capral did not achieve the 2015 EPS condition and consequently 577,021 of these rights lapsed in January 2016.

In relation to the 2012 LTIP award, 80% of the rights lapsed by January 2015. Capral achieved the 2014 EPS condition and consequently the rights subject to that condition (581,829 rights) vested and converted into Capral shares on a 1 for 1 basis as at 1 March 2015.

TRANCHE GRANT NO. GRANT DATE	FAIR VALUE PER RIGHT AT GRANT DATE (\$)	TEST DATE	LAPSED NO.	VESTED NO.
------------------------------------	--------------------------------------------------	-----------	------------	------------

2015 Offer

T Campbell	500,000	06/03/2015
Tranche 1 – EPS 16.67%	83,350		\$0.16	31/12/2015	–	–
Tranche 2 – EPS 16.67%	83,350		\$0.16	31/12/2016	–	–
Tranche 3 – EPS 16.66%	83,300		\$0.16	31/12/2017	–	–
Tranche 4 – TSR 50%	250,000		\$0.132	31/12/2017	–	–
R Michael	500,000	06/03/2015
Tranche 1 – EPS 16.67%	83,350		\$0.16	31/12/2015	–	–
Tranche 2 – EPS 16.67%	83,350		\$0.16	31/12/2016	–	–
Tranche 3 – EPS 16.66%	83,300		\$0.16	31/12/2017	–	–
Tranche 4 – TSR 50%	250,000		\$0.132	31/12/2017	–	–
R Rolfe	300,000	06/03/2015
Tranche 1 – EPS 16.67%	50,010		\$0.16	31/12/2015	–	–
Tranche 2 – EPS 16.67%	50,010		\$0.16	31/12/2016	–	–
Tranche 3 – EPS 16.66%	49,980		\$0.16	31/12/2017	–	–
Tranche 4 – TSR 50%	150,000		\$0.132	31/12/2017	–	–
Total 2015	1,300,000				–	–

2014 Offer

T Campbell		500,000	07/03/2014
	Tranche 1 – EPS 20%	100,000		\$0.150	31/12/2014	–	–
	Tranche 2 – EPS 20%	100,000		\$0.150	31/12/2015	–	–
	Tranche 3 – EPS 20%	100,000		\$0.150	31/12/2016	–	–
	Tranche 4 – TSR 40%	200,000		\$0.107	31/12/2016	–	–
R Michael		500,000	07/03/2014
	Tranche 1 – EPS 20%	100,000		\$0.150	31/12/2014	–	–
	Tranche 2 – EPS 20%	100,000		\$0.150	31/12/2015	–	–
	Tranche 3 – EPS 20%	100,000		\$0.150	31/12/2016	–	–
	Tranche 4 – TSR 40%	200,000		\$0.107	31/12/2016	–	–
R Rolfe		300,000	07/03/2014
	Tranche 1 – EPS 20%	60,000		\$0.150	31/12/2014	–	–
	Tranche 2 – EPS 20%	60,000		\$0.150	31/12/2015	–	–
	Tranche 3 – EPS 20%	60,000		\$0.150	31/12/2016	–	–
	Tranche 4 – TSR 40%	120,000		\$0.107	31/12/2016	–	–
Total 2014		1,300,000				–	–

	TRANCHE	GRANT NO.	GRANT DATE	FAIR VALUE PER RIGHT AT GRANT DATE (\$)	TEST DATE	LAPSED NO.	VESTED NO.
2013 Offer
T Campbell		484,303	08/03/2013			(96,861)	–
	Tranche 1 – EPS 20%	96,861		\$0.235	31/12/2013	(96,861)	–
	Tranche 2 – EPS 20%	96,861		\$0.235	31/12/2014	–	–
	Tranche 3 – EPS 20%	96,860		\$0.235	31/12/2015	–	–
	Tranche 4 – TSR 40%	193,721		\$0.171	31/12/2015	–	–
R Michael		456,628	08/03/2013			(91,326)	–
	Tranche 1 – EPS 20%	91,326		\$0.235	31/12/2013	(91,326)	–
	Tranche 2 – EPS 20%	91,326		\$0.235	31/12/2014	–	–
	Tranche 3 – EPS 20%	91,325		\$0.235	31/12/2015	–	–
	Tranche 4 – TSR 40%	182,651		\$0.171	31/12/2015	–	–
R Rolfe		229,007	08/03/2013			(45,801)	–
	Tranche 1 – EPS 20%	45,801		\$0.235	31/12/2013	(45,801)	–
	Tranche 2 – EPS 20%	45,801		\$0.235	31/12/2014	–	–
	Tranche 3 – EPS 20%	45,802		\$0.235	31/12/2015	–	–
	Tranche 4 – TSR 40%	91,603		\$0.171	31/12/2015	–	–
Total 2013		1,169,938				(233,988)	–

2012 Offer

T Campbell		451,303	14/03/2012			(361,043)	90,260
	Tranche 1 – EPS 20% Tranche 2 – EPS 20% Tranche 3 – EPS 20% Tranche 4 – TSR 40%	90,261 90,261 90,260 180,521		\$0.17 \$0.17 \$0.17 \$0.11	31/12/2012 31/12/2013 31/12/2014 31/12/2014	(90,261) (90,261) – (180,521)	– – 90,260 –
R Michael		255,472	14/03/2012			(204,377)	51,095
	Tranche 1 – EPS 20% Tranche 2 – EPS 20% Tranche 3 – EPS 20% Tranche 4 – TSR 40%	51,094 51,094 51,095 102,189		\$0.17 \$0.17 \$0.17 \$0.11	31/12/2012 31/12/2013 31/12/2014 31/12/2014	(51,094) (51,094) – (102,189)	– – 51,095 –
D Munro1		414,039	14/03/2012			(414,039)	–
	Tranche 1 – EPS 20% Tranche 2 – EPS 20% Tranche 3 – EPS 20% Tranche – TSR 40%	82,808 82,808 82,808 165,615		\$0.17 \$0.17 \$0.17 \$0.11	31/12/2012 31/12/2013 31/12/2014 31/12/2014	(82,808) (82,808) (82,808) (165,615)	– – – –
R Rolfe		221,760	14/03/2012			(177,408)	44,352
	Tranche 1 – EPS 20% Tranche 2 – EPS 20% Tranche 3 – EPS 20% Tranche 4 – TSR 40%	44,352 44,352 44,352 88,704		\$0.17 \$0.17 \$0.17 \$0.11	31/12/2012 31/12/2013 31/12/2014 31/12/2014	(44,352) (44,352) – (88,704)	– – 44,352 –
Total 2012		1,342,574				(1,156,867)	185,707

1 Mr Munro left employment on 9 November 2012.

Options

No options were issued under the LTIP during the Financial Year and the financial year ended 31 December 2014. 20,000,000 options granted to the previous Managing Director, Mr Jobe, expired on 16 October 2014. The total number of options granted to Mr Jobe and outstanding as at the end of the Financial Year is 4,300,000 (2014: 4,300,000). These expire in April 2016.

All of the 2,231,863 outstanding options issued under the 2010 LTIP award expired on 16 October 2014.

During the Financial Year and the financial year ended 31 December 2014, STIP bonus payments were made to the Managing Director and key management personnel. The Managing Director's STIP payments for 2014 and 2015 equated to 42% and 31% (respectively) of his TEC (below the 'target' level detailed in section 1 above) and the Board considers it appropriate having regard to the achievement of certain key financial measures as well as critical non-financial measures regarding customers, anti-dumping activities and other strategic plans. The other key management personnel's STIP payments for 2014 and 2015 were less than 20% of TEC (below the 'target' level detailed in section 1 above).

The percentages of bonus paid and forfeited (as a result of not meeting the performance criteria at 'target' level) during the Financial Year and the financial year ended 31 December 2014 are disclosed below:

2015	% OF BONUS PAID	% OF BONUS FORFEITED	% OF COMPENSATION FOR THE YEAR CONSISTING OF STIP BONUS1
Executives
A Dragicevich	61.6	38.4	23.5
T Campbell	63.3	36.7	13.7
R Michael	66.4	33.6	14.2
R Rolfe	67.1	32.9	11.8

2015 financial year bonuses are payable in the 2016 financial year.

2014	% OF BONUS PAID	% OF BONUS FORFEITED	% OF COMPENSATION FOR THE YEAR CONSISTING OF STIP BONUS1
Executives
A Dragicevich	83.6	16.4	29.5
T Campbell	77.8	22.2	16.3
R Michael	75.7	24.3	15.9
R Rolfe	81.3	18.7	14.0

2014 financial year bonuses were paid in the 2015 financial year.

Note:

1 Total compensation used for calculating % purposes excludes share based payments and termination benefits.

Shareholdings of Key Management Personnel – fully paid ordinary shares of the Company Details of the holdings of Capral's ordinary shares of key management personnel during the Financial Year are as follows:

2015	HELD AT START OF YEAR	GRANTED AS COMPENSATION	RECEIVED ON VESTING OF PERFORMANCE RIGHTS/ EXERCISE OF OPTIONS	OTHER CHANGES DURING THE YEAR	HELD AT END OF YEAR
Directors
RL Wood–Ward	–	–	–	–	–
AM Dragicevich1	4,500,000	–	1,100,0001	200,0002	5,800,000
PJ Jobe	7,100,500	–	–	–	7,100,500
IB Blair	227,348	–	–	–	227,348
GF Pettigrew	–	–	–	–	–
Executives
T Campbell	112,733	–	90,2601	–	202,993
R Michael	–	–	51,0951	–	51,095
R Rolfe	133,384	–	44,3521	–	177,736
	12,073,965	–	1,285,707	200,000	13,559,672

1 Acquired on vesting of performance rights in March 2015

2 Acquired on market in accordance with the Capral Securities Trading Policy

Section 4: Relationship between remuneration and company performance

There is a link between company performance and executive reward. For the Financial Year and the previous 4 financial years, Capral has made STIP payments based upon the achievement of performance (financial and non-financial) measures.

Whilst continuing to ensure that Capral attracts and retains qualified, experienced and motivated employees in accordance with the remuneration policy by remunerating employees at a competitive level, Capral has fixed the salary levels of its executives over the last 2 years and placed more emphasis on at-risk remuneration in order to align remuneration of the employees to the performance of Capral and encourage shareholder wealth.

During the Financial Year and the previous four financial years (2011–2014), Capral's financial performance was as follows:

YEAR ENDED 31 DEC	2015	2014	2013	2012	2011
Net Profit/(Loss) \$'000	(2,511)	2,650	(51,707)*	(10,766)	(7,997)
Dividend – cents per share	–	–	–	–	–
Basic earnings / (loss) – cents per share	(0.5)	0.6	(12.5)	(2.8)	(2.1)
Share price (closing) \$	0.10	0.11	0.155	0.215	0.175
Trading EBITDA \$'000^	13,028	9,226	4,131	3,952	9,682
Operating Cash Flow \$'000	7,295	7,676	470	9,522	8,843
% Working Capital to Annualised Sales	16.24	17.97	15.13	13.99	14.2

^* Includes \$41.5 million impairment charge

In the Financial Year, Capral's Trading EBITDA improved on 2014 and the minimum target was achieved. The % Working Capital to Annualised Sales minimum target was also achieved however the other financial targets set by the Board (Net Profit Before Tax and Operating Cash Flow) were not met. Accordingly, the 2015 STIP payments are below those paid in 2014 in line with financial performance. There is a clear link between financial performance and the level of STIP awarded.

In the Financial Year, STIP payments approved by the Board for non-financial measures were around minimum levels. The following provides examples of key non-financial measures (that are not commercially sensitive) used to assess executive performance:

PERFORMANCE AREA	MEASURE	OUTCOME
Safety	Reduction in lost time/ medically treated injury frequency rate	Rate increased. Targets not met.
	Hours lost from injuries	Hours lost significantly reduced. Stretch target met
	AS4801 accreditation	Re-certification achieved in 2015
Customers	Customer service	At least minimum levels achieved for customer service measures (such as delivery performance and customer returns)
	Volume retention/ growth	Sales areas met some of the specific volume and margin related targets
Production	Operational efficiency	Manufacturing plants met most of their operational efficiency targets
Leadership	Leadership development programs	Manufacturing plants achieved their specific leadership objectives
People	AL & LSL balance reduction	Leave balance reduction initiatives were generally achieved at the minimum level
Anti-dumping	Pursue anti-dumping campaign	Anti-circumvention and review case outcomes favourable
Costs	Cost reduction initiatives	Specific cost and expense reduction initiatives were achieved at least at the minimum level

^{^} Trading EBITDA (non-IFRS measure) is Statutory EBITDA adjusted for items that management assess as unrelated to the underlying performance of the business and allows for a more relevant comparison between financial periods

LTIP is linked to Capral's performance as the value of the performance rights awarded depends on Capral's share price, and whether the awards vest relate to earnings growth and Capral's relative TSR performance against market peer group. There is a link between Capral's performance and the vesting of rights under LTIP awards. In this regard:

» In 2014:

• » Capral's relative TSR performance over the period from January 2012 to December 2014 and for the 2013 and 2014 financial years achieved the 41st, 33rd and 33rd percentiles respectively and fell below the 50th percentile. Consequently, the rights subject to the TSR condition that were awarded in 2012 to executives and to the Managing Director under Tranche 2 of the 2013 award and Tranche 1 of the 2014 award, have lapsed.
• » Given earnings growth in 2014, the EPS result for 2014 was 0.6 cents per share and therefore the EPS condition for Tranche 3 of the 2012 award, Tranche 2 of the 2013 award, Tranche 1 of the 2014 award and Tranche 1 of the Managing Director's 2014 award, were met. Consequently, the rights subject to Tranche 3 of the 2012 award and Tranche 1 of the CEO's 2014 award vested and converted into Capral shares during the Financial Year. The rights subject to Tranche 2 of the 2013 award and Tranche 1 of the 2014 award that met the EPS condition remain subject to the time vesting condition for the particular award.
• » Capral achieved its minimum financial goals in 2014 and consequently the Managing Director's rights that were subject to this condition vested and converted into Capral shares during the Financial Year.
• » In 2015:
• » Capral's relative TSR performance over the period from January 2013 to December 2015 and for the 2015 financial year achieved the 36.65 and 47 percentiles respectively, being below the 50th percentile. Consequently, the rights subject to the TSR condition that were awarded in 2013 to executives and to the Managing Director under Tranche 2 of his 2014 award have lapsed.
• » Given the net loss in 2015, the EPS condition for Tranche 3 of the 2013 award, Tranche 2 of the 2014 award, Tranche 1 of the 2015 award and Tranche 2 of the Managing Director's 2014 award were not met. Consequently, these rights have lapsed.

Section 5: Summary of Key Employment Contracts

Details of the key contract terms for the Managing Director and other key management personnel as at the end of the Financial Year are as follows:

CONTRACT DETAILS	A DRAGICEVICH	T CAMPBELL	R MICHAEL	R ROLFE
Expiry date	No fixed end date	No fixed end date	No fixed end date	No fixed end date
Notice of termination by Capral	6 months	6 months	6 months	16 weeks
Notice of termination by employee	6 months	6 months	6 months	16 weeks
Termination payments (in lieu of notice)	6 months salary plus accrued but unpaid STIP (pro rata for incomplete financial year). In addition, unvested LTIP rights will immediately vest if employment is term inated by Capral other than for cause.	6 months salary. STIP entitlement for incomplete financial years is subject to Board discretion	6 months salary. STIP entitlement for incomplete financial years is subject to Board discretion	16 weeks salary. STIP entitlement for incomplete financial years is subject to Board discretion

End of Remuneration Report

Environmental regulations

Manufacturing licences and consents required by laws and regulations are held by the consolidated entity at each relevant site as advised by consulting with relevant environmental authorities. All applications for and renewals of licences have been granted and all consents have been given by all relevant authorities.

Directors' and officers' indemnities and insurance

Under Capral's constitution, Capral is required to indemnify, to the extent permitted by law, each director and secretary of Capral against any liability incurred by that person as an officer of Capral. The directors listed on pages 6 and 7 and the secretary listed on page 11 have the benefit of this indemnity. During the Financial Year, Capral paid a premium for directors' and officers' liability insurance policies which cover current and former directors, company secretaries and officers of the consolidated entity. Details of the nature of the liabilities covered and the amount of the premium paid in respect of the directors' and officers' insurance policies are not disclosed, as such disclosure is prohibited under the terms of the contracts.

Indemnities to auditors

In respect of non-audit services provided in relation to reviews of consulting and compliance advice during the Financial Year, Deloitte Touche Tohmatsu, Capral's auditor, has the benefit of an indemnity (including in respect of legal costs) for any third party claim in connection with the use, distribution or reliance on their work (except to the extent caused by the wilful misconduct or fraud of Deloitte Touche Tohmatsu, or where it has agreed that the third party may rely on the work or it may be used in a public document).

Proceedings on behalf of Capral

No person has applied to the Court under section 237 of the Corporations Act for leave to bring proceedings on behalf of Capral, or to intervene in any proceedings to which Capral is party, for the purpose of taking responsibility on behalf of Capral for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of Capral with leave of the Court under section 237 of the Corporations Act.

Non-audit services

Capral may decide to employ the auditor on assignments additional to their statutory audit services where the auditor's expertise and experience with the consolidated entity are important.

The Board has considered this position and in accordance with the advice received from the Audit Committee, it is satisfied that the provision of these services during the Financial Year by the auditor is compatible with, and did not compromise, the general standard of auditor independence imposed by the Corporations Act for the following reasons:

• (1) the non-audit services provided do not involve reviewing or auditing the auditor's own work and have not involved partners or staff acting in a management or decision-making capacity for Capral or in the processing or originating of transactions;
• (2) all non-audit services and the related fees have been reviewed by the Audit Committee to ensure complete transparency and that they do not affect the integrity and objectivity of Deloitte Touche Tohmatsu; and
• (3) the declaration required by section 307C of the Corporations Act 2001 confirming independence has been received from Deloitte Touche Tohmatsu.

Details of the amounts paid or payable to Capral's auditor (Deloitte Touche Tohmatsu) for audit and non-audit services provided during the Financial Year are set out in Note 32 of the financial statements.

Auditor's independence declaration

The auditors' independence declaration as required under section 307C of the Corporations Act is set out on page 33.

Rounding of amounts

Capral is a company of the kind referred to in Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the Directors' Report and the Financial Report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of directors made pursuant to section 298(2) of the Corporations Act 2001.

On behalf of the directors

Chairman Managing Director

RL Wood-Ward AM Dragicevich

Sydney 19 February 2016

33 Auditor's Independence Declaration

Auditor's Independence Declaration

The Board of Directors Capral Limited Level 4 60 Philip Street Parramatta NSW 2150

Dear Board Members

Capral Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Capral Limited.

As lead audit partner for the audit of the financial statements of Capral Limited for the financial year ended 31 December 2015, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit
• (ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

David Black Partner Chartered Accountants Parramatta, 19 February 2016

Consolidated Statement of Profit or Loss and other Comprehensive Income

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

		2015	2014
Continuing operations	NOTE	\$'000	\$'000
Sales revenue		378,830	352,043
Scrap and other revenue		23,818	22,676
Revenue	3	402,648	374,719
Other income	3	165	342
Changes in inventories of finished goods and work in progress		(8,511)	12,107
Raw materials and consumables used		(237,014)	(222,234)
Employee benefits expense	2	(83,117)	(82,655)
Depreciation and amortisation expense	2	(6,424)	(7,165)
Finance costs	2	(1,200)	(1,217)
Freight expense		(10,334)	(11,231)
Occupancy costs	2	(16,750)	(17,718)
Repairs and maintenance expense		(6,627)	(6,287)
Restructuring costs	2	(736)	(569)
Other expenses		(34,611)	(35,442)
(Loss)/profit before tax		(2,511)	2,650
Income tax	4	–	–
(Loss)/profit for the year		(2,511)	2,650
Other comprehensive income Items that will not be reclassified subsequently to profit or loss
Gain on revaluation of properties		–	–
Other comprehensive income for the year		–	–
Total comprehensive (loss)/profit for the year		(2,511)	2,650
Basic and Diluted (loss)/earnings per share (cents per share)	24	(0.5)	0.6

The weighted average number of ordinary shares on issue used in the calculation of basic and diluted (loss)/earnings per share was 474,675,361 (2014: 474,444,014).

The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

AS AT 31 DECEMBER 2015

		2015	2014
	NOTE	\$'000	\$'000
ASSETS
Current assets
Cash and cash equivalents	7	20,143	16,502
Trade and other receivables	8	60,533	58,320
Inventories	9	67,838	82,272
Other financial assets	30 (c)	71	1,352
Prepayments	10	2,232	1,952
Total current assets		150,817	160,398
Non-current assets
Other receivables	8	84	74
Deferred tax assets	11	2,857	2,857
Property, plant and equipment	14	39,712	42,547
Other intangible assets	15	163	195
Total non-current assets		42,816	45,673
Total assets		193,633	206,071
LIABILITIES
Current liabilities
Trade and other payables	17	66,270	76,484
Borrowings	18	48	48
Provisions	19	11,708	11,091
Deferred income	20	107	214
Total current liabilities		78,133	87,837
Non-current liabilities
Provisions	19	4,807	5,366
Total non-current liabilities		4,807	5,366
Total liabilities		82,940	93,203
Net assets		110,693	112,868
EQUITY
Issued capital	21	425,744	425,744
Reserves	22 (a)	9,729	9,393
Accumulated losses	22 (b)	(324,780)	(322,269)
Total equity		110,693	112,868

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

		2015	2014
	NOTE	\$'000	\$'000
Cash flows from operating activities
Receipts from customers		440,700	411,798
Payments to suppliers and employees		(432,252)	(402,989)
		8,448	8,809
Interest and other costs of finance paid		(1,153)	(1,133)
Net cash provided by operating activities	34(ii)	7,295	7,676
Cash flows from investing activities
Payments for property, plant and equipment		(3,729)	(3,151)
Payments for software assets		(42)	(62)
Deferred consideration paid for purchase of a business		–	(2,850)
Interest received		42	40
Proceeds from sale of property, plant and equipment		75	219
Net cash flows used in investing activities		(3,654)	(5,804)
Net increase in cash and cash equivalents		3,641	1,872
Cash and cash equivalents at the beginning of the financial year		16,502	14,630
Cash and cash equivalents at the end of the financial year	34(i)	20,143	16,502

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

FOR THE YEAR ENDED 31 DECEMBER 2015

	FULLY PAID ORDINARY SHARES	EQUITY-SETTLED COMPENSATION RESERVE	ASSET REVALUATION RESERVE	ACCUMULATED LOSSES	TOTAL
	\$'000	\$'000	\$'000	\$'000	\$'000
Balance as at 1 January 2014	425,430	8,789	221	(324,919)	109,521
Profit for the year	–	–	–	2,650	2,650
Total comprehensive income for the year	–	–	–	2,650	2,650
Share-based payments expense	–	715	–	–	715
Share conversion from vested rights	314	(332)	–	–	(18)
Balance as at 31 December 2014	425,744	9,172	221	(322,269)	112,868
Balance as at 1 January 2015	425,744	9,172	221	(322,269)	112,868
Loss for the year	–	–	–	(2,511)	(2,511)
Total comprehensive loss for the year	–	–	–	(2,511)	(2,511)
Share-based payments expense	–	591	–	–	591
Shares acquired for conver sion of vested rights	–	(255)	–	–	(255)
Balance as at 31 December 2015	425,744	9,508	221	(324,780)	110,693

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Notes to the Financial Statements

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

1a. General Information

Capral Limited (the Company) is a public listed company incorporated and operating in Australia. The Company's shares are quoted on the Australian Securities Exchange (ASX Code: CAA).

The Company's registered office and its principal place of business is as follows:

Registered office & principal place of business

71 Ashburn Road Bundamba QLD 4304 Tel: (07) 3816 7000

The principal continuing activities of the consolidated entity consist of the manufacturing, marketing and distribution of fabricated and semi-fabricated aluminium related products.

1b. Adoption of new and revised Accounting Standards

In the current year, the Group has adopted all the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of new and revised Standards and Interpretations has resulted in changes to the Group's accounting policies, but did not have material impact on the Group's financial statements.

With the exception of AASB 15, initial application of the following Standards and Interpretations is not expected to have any material impact to the financial report of the consolidated entity and the Company. The impact, if any, of the adoption of AASB 15 is currently being assessed.

STANDARD	EFFECTIVE FOR ANNUAL REPORTING PERIODS BEGINNING ON OR AFTER	EXPECTED TO BE INITIALLY APPLIED IN THE FINANCIAL YEAR ENDING
AASB 9 'Financial Instruments', and the relevant amending standards	1 January 2018	31 December 2018
AASB 2014-4 'Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation'	1 January 2016	31 December 2016
AASB 15 'Revenue from Contracts with Customers' and the relevant amending standards	1 January 2018	31 December 2018
AASB 2015-1 'Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle'	1 January 2016	31 December 2016
AASB 2015-2 'Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101'	1 January 2016	31 December 2016
AASB 2015-3 'Amendments to Australian Accounting Standards arising from Withdrawal of AASB 1031 Materiality'	1 July 2015	31 December 2016
AASB 2015-9 'Amendments to Australian Accounting Standards – Scope and Application Paragraphs'	1 January 2016	31 December 2016

At the date of authorisation of the financial statements, the following IASB Standards and IFRIC Interpretations were also on issue but not yet effective, although Australian equivalent Standards and interpretations have not yet been issued:

STANDARD	EFFECTIVE FOR ANNUAL REPORTING PERIODS BEGINNING ON OR AFTER	EXPECTED TO BE INITIALLY APPLIED IN THE FINANCIAL YEAR ENDING
IFRS 16 'Leases'	1 January 2019	31 December 2019
Amendments to IAS 12 'Income Taxes', Recognition of Deferred Tax Assets for Unrealised Losses	1 January 2017	31 December 2017
Amendment to IAS 7 'Statement of Cash Flows'	1 January 2017	31 December 2017

1c. Significant accounting policies

Statement of Compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law.

The financial report includes the financial statements of the Company and the financial statements of the Group. For the purpose of preparing the consolidated financial statements, the Company is a for-profit entity.

Accounting Standards include Australian equivalents to International Financial Reporting Standards ('A-IFRS'). Compliance with A-IFRS ensures that the financial statements and notes of the Group comply with International Financial Reporting Standards ('IFRS').

The financial statements were authorised for issue by the directors on 19 February 2016.

Basis of Preparation

The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The Company is of a kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, issued by the Australian Securities and Investments Commission, relating to the "rounding off" of

amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar as indicated.

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

(a) Basis of Consolidation

The financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (and its subsidiaries) (referred to as 'the Group' in these financial statements).

Control is based on whether an investor has:

• » power over the investee
• » exposure, or rights, to variable returns from its involvement with the investee; and
• » the ability to use its power over the investee to affect the amount of the returns.

The results of the subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

1c. Significant accounting policies (continued)

(b) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(c) Business Combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant Standards. Changes in the fair value of contingent consideration classified as equity are not recognised.

The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3(2008) are recognised at their fair value at the acquisition date, except that:

• » deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with AASB 112 Income Taxes and AASB 119 Employee Benefits respectively;
• » liabilities or equity instruments related to the replacement by the Group of an acquiree's share based payment awards are measured in accordance with AASB 2 Sharebased Payment; and
• » assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Noncurrent Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

(d) Cash and Cash Equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value and have

a maturity of three months or less at the date of acquisition. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

(e) Derivative Financial Instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including foreign exchange forward contracts.

Further details of derivative financial instruments are disclosed in Note 30 to the financial statements. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date.

The resulting gain or loss is recognised in profit or loss immediately. The fair value of hedging derivatives is classified as a non-current asset or a non-current liability if the remaining maturity of the hedge relationship is more than 12 months, and as a current asset or current liability if the remaining maturity of the hedge relationship is less than 12 months. The Group's derivatives do not qualify for hedge accounting, and are not designated into an effective hedge relationship and are classified as a current asset and current liability.

Embedded Derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the financial instrument, and the financial instruments are measured at fair value with changes in fair value recognised in profit or loss.

(f) Employee Benefits

(i) Salaries, wages and leave benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, including non-monetary benefits, annual leave and long service leave, when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognised in respect of short term employee are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of long term employee benefits are measured at the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.

(ii) Share-based payments

Equity-settled share-based payments with employees are measured at the fair value of the equity instrument at the grant date.

The fair value of the performance rights is estimated at grant date using a Monte-Carlo Simulation analysis taking into account the terms and conditions upon which the securities are granted.

The fair value of the options is estimated at grant date using a binomial tree model taking into account the terms and conditions upon which the securities are granted.

The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equitysettled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.

Further details on how the fair value of equity-settled share-based transactions have been determined can be found in Note 36.

(iii) Defined contribution plan

Contributions to defined contribution superannuation plans are expensed when incurred.

(g) Financial Assets

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through the profit or loss which are initially measured at fair value. Subsequent to initial recognition, investments in subsidiaries are measured at cost in the Company's financial statements. Other financial assets are classified into the following specified categories: Financial assets 'at fair value through profit or loss', 'held-to-maturity investments', 'available-for-sale' financial assets, and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis for debt instruments other than financial assets 'at fair value through profit or loss'.

Financial assets at fair value through profit or loss Financial assets are classified as financial assets at fair value

through profit or loss where the financial asset:

• (i) has been acquired principally for the purpose of selling in the near future;
• (ii) is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit taking; or

(iii) is a derivative that is not designated and effective as a hedging instrument.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in the profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 30.

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for the amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

1c. Significant accounting policies (continued)

(h) Financial Instruments Issued by the Group

Debt and equity instruments

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in the profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner described in Note 30.

Compound instruments

The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar nonconvertible instrument.

This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or upon the instruments reaching maturity. The equity component initially brought to account is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects and is not subsequently remeasured.

Financial guarantee contract liabilities

Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount recognised as a provision and the amount initially recognised less cumulative amortisation.

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at fair value through profit or loss' or other financial liabilities.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner described in Note 30.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. Refer note 1c (g).

(i) Foreign Currency

In preparing the financial statements, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences which relate to assets under construction for future productive use, which are included in the cost of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings.

(j) Goodwill

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the Group's interest in the fair value of the acquiree's identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Goodwill is not amortised but is reviewed for impairment at least annually.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

(k) Government Grants

Government grants are assistance by the Government in the form of transfers of resources to the Group in return for past or future compliance with certain conditions relating to the operating activities of the entity.

Government grants include Government assistance where there are no conditions specifically relating to the operating activities of the Group other than the requirement to operate in certain regions or industry sectors.

Government grants are not recognised until there is a reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received. Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire long-term assets are either recognised as deferred income in the statement of financial position and recognised as income on a systematic and rational basis over the useful lives of the related assets or are applied directly to the long term assets as a reduction in the cost of the assets. Other Government grants are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate on a systematic basis.

(l) Impairment of Other Tangible and Intangible Assets excluding goodwill

At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which that asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (CGU) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (CGU) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (CGU) in prior years. A reversal of an impairment loss is recognised in the profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

(m) Income Tax

The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The Company and its wholly-owned Australian entities have implemented the tax consolidation legislation.

The current and deferred tax amounts for the tax-consolidated group are allocated to the members of the tax-consolidated group (including the Company as the head entity) using the 'separate taxpayer within group' approach, with deferred taxes being allocated by reference to the carrying amounts in the financial statements of each member entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits arising from this allocation process are then accounted for as immediately assumed by the head entity, as under Australian taxation law the head entity has the legal obligation (or right) to these amounts.

(n) Intangible Assets

Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair value can be measured reliably.

Patents, trademarks and licences

Patents, trademarks and licences are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis over their estimated useful lives, which vary from 5 to 16 years.

The estimated useful life and amortisation method is reviewed at the end of each annual reporting period, with any changes being recognised as a change in accounting estimate.

Software

Software assets including system development costs have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost over the assets estimated useful lives, which vary from 3 to 5 years.

1c. Significant accounting policies (continued)

(o) Inventories

Inventories representing aluminium log, other supplies and finished goods are valued at the lower of cost and net realisable value.

Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary to make the sale.

Aluminium log is valued at moving average of direct purchase cost. Cost of rolled product has been determined principally on moving average of direct purchase costs. Costs for finished and partly finished includes moving average metal cost, direct labour, and appropriate proportion of fixed and variable factory overhead.

(p) Leased Assets

The Group as lessee:

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases.

Operating lease payments are recognised as an expense on a straight-line basis over the lease team, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

(q) Property, Plant and Equipment

Land and buildings are measured at fair value less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Fair value is determined on the basis of a periodic, independent valuation by external valuation experts, based on discounted cash flows or capitalisation of net income, as appropriate.

Periodic reviews are conducted every three to five years. The fair values are recognised in the financial statements of the Group, and are reviewed at the end of each reporting period to ensure that the carrying value of land and buildings is not materially different from their fair values. Any revaluation increase arising on revaluation of land and buildings are

credited to the asset revaluation reserve except to the extent that the increase reverses a revaluation decrease for the same asset previously recognised as an expense in profit or loss, in which case the increase is credited to the profit and loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of land and buildings is charged as an expense in profit or loss to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset.

Depreciation on revalued buildings is charged to profit or loss. On the subsequent sale or retirement of revalued property, the attributable revaluation surplus remaining in the revaluation reserve, net of any related taxes, is transferred directly to retained earnings.

Plant and equipment, and leasehold improvements are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item.

In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight-line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value.

Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is shorter, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective basis.

(r) Provisions

Provisions are recognised when the Group has a present, legal or constructive obligation as a result of past events, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that the reimbursement will be received and the amount of the receivable can be measured reliably.

45 NOTES TO THE FINANCIAL STATEMENTS

Onerous contracts

Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Restructurings

A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it.

The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.

Provision for restoration and rehabilitation (provision for made good on leased assets)

A provision for restoration and rehabilitation (provision for make good on leased assets) is recognised when there is a present obligation as a result of production activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of removing the facilities and restoring the affecting areas.

(s) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Sales revenue comprises sales of goods and services at net invoice values less returns, trade allowances and applicable rebates.

Sale of goods

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

• (i) the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
• (ii) the Group retains neither continuing managerial involvement to the degree normally associated with ownership nor effective control over the goods sold;
• (iii) the amount of revenue can be measured reliably;
• (iv) it is probable that the economic benefits associated with the transaction will flow to the entity; and
• (v) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Royalties

Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement.

Royalties determined on a time basis are recognised on a straightline basis over the period of the agreement. Royalty arrangements that are based on production, sales and other measures are recognised by reference to the underlying agreement.

Rental income

The Group's policy for recognition of revenue from operating leases is described in note 1c (p).

Interest revenue

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

(t) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST) except:

• (i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
• (ii) for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority, is classified as operating cash flows.

(u) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit/ (loss) attributable to equity holders of the Group, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

1d. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group's accounting policies, which are described in note 1, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

Impairment of non-current assets

Determining whether non-current assets are impaired requires an estimation of the value in use of the single cash-generating unit to which non-current assets has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

Details of the impairment calculation is provided in Note 14.

Critical judgements in applying the Company's accounting policies

The following are the critical judgements (apart from those involving estimations which are dealt with above), that management has made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Inventories

Note 9 sets out the categories of inventory carried. The net realisable value of inventories is the estimated selling price in the ordinary course of business less estimated costs to sell which approximates fair value less cost to sell. The key assumptions require the use of management judgement and are reviewed annually.

These key assumptions are the variables affecting the estimated costs to sell and the expected selling price. Any reassessment of cost to sell or selling price in a particular year will affect the cost of goods sold.

Employee benefits

Key assumptions used in the calculation of leave benefit provisions at balance date:

• (i) future on-cost rates;
• (ii) experience of employee departures and period of service; and
• (iii) future increase in wages and salaries.

Useful lives of property, plant and equipment The Group reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period. During the financial year, the directors determined that there were no revisions to the useful lives of property, plant and equipment.

1e. Comparative information

Where necessary, comparative amounts have been reclassified and repositioned for consistency with current period disclosures.

	CONSOLIDATED
2 Profit for the year	2015 \$'000	2014 \$'000
(a) Other expenses
(Loss)/profit before tax includes the following specific net expenses:
Cost of sales of goods Inventory:	319,908	292,449
Write-down of inventory to net realisable value	694	232
Reversal of write-down of inventory	(1,744)	(1,058)
Amortisation of other intellectual property	47	70
Amortisation of software	148	182
Total amortisation	195	252
Depreciation:
Buildings Leasehold improvements	134 193	130 912
Plant and equipment	5,902	5,871
Total depreciation	6,229	6,913
Total depreciation and amortisation	6,424	7,165
Operating lease rental expenses
Sublease income received	(1,719)	(1,570)
Minimum lease payments	18,469	19,288
	16,750	17,718
Other charges against assets
Impairment of trade receivables	161	701
Employee benefit expense
Post employment benefits:
– defined contribution plans Equity-settled share-based payments	5,975 591	5,957 715
Termination benefits	110	35
Other employee benefits	76,441	75,948
	83,117	82,655
Restructuring costs
Termination benefits	211	–
Asset write down Other site closure costs	157 368	– –
Onerous lease contracts	–	569
	736	569
Finance costs
Interest and finance charges paid/payable
– Other persons	1,200	1,217
Net finance costs are comprised of:
Interest on bank overdrafts and loans	1,200	1,217
Total interest expense	1,200	1,217
b) Gains and Losses
Net loss on foreign exchange	(182)	(737)
Net loss on disposal of property, plant and equipment	(139)	(503)

	CONSOLIDATED
3 Revenue and other income	2015 \$'000	2014 \$'000
Revenue from continuing operations
Sales revenue – sale of goods	378,830	352,043
Other revenue
Scrap revenue	23,776	22,636
Interest – other	42	40
Total other revenue	23,818	22,676
Other income
Royalties	165	184
Government grants and dividends	–	158
	165	342
4 Income tax expense
(a) Reconciliation of income tax benefit to prima facie tax (benefit)/expense
(Loss)/profit from continuing operations before income tax expense	(2,511)	2,650
Income tax calculated @ 30% (2014:30%)	(753)	795
Tax effect of non-assessable / non-deductible items:
Effect of items that are temporary differences for which (decrease)/increase in deferred tax assets have not been recognised	(1,879)	(1,120)
Effect of items that are not deductible or taxable in determining taxable profit	230	259
Effect of tax losses not recognised as deferred tax assets	2,402	66
Income tax benefit	–	–
(b) Tax losses
Accumulated unused gross tax losses for which no deferred tax asset has been recognised	297,598	289,590
Potential tax benefit @ 30% (2014:30%)	89,280	86,877

All unused tax losses were incurred by Australian entities.

5 Changes in accounting estimates

There were no significant changes in accounting estimates during the Financial Year (2014: none).

6 Segment information

The information reported to the Group's chief operating decision maker for the purposes of resource allocation and assessment of performance is focused on the type of goods supplied, being aluminium products. As such, in 2014 and 2015, the Group operated in one reportable segment under AASB 8.

Major Products and Services

The Group produces a wide range of extruded aluminium products and systems. It distributes those manufactured products in addition to a small amount of bought-in products through two distribution channels.

The Group supplies to three market segments through each of its distribution channels:

• » Residential supply of aluminium and other components for windows and doors, showers and wardrobes and security products,
• » Commercial supply of aluminium and other components for windows and doors, internal fit outs and other commercial building related products, and
• » Industrial supply of aluminium extrusions and rolled products for industrial uses.

Management does not report on the revenues from external customers for each of the market segments.

Geographic Information

The Group operates in one geographical area, Australia.

Information About Major Customers

There are no individual major customers who contributed more than 10% of the Group's revenue in either the Financial Year or the year 2014.

	CONSOLIDATED
7 Current assets – cash and cash equivalents	2015 \$'000	2014 \$'000
Cash at bank and cash in hand	20,143	16,502

The ANZ receipt account of \$14,343,000 (2014: \$11,416,000) is restricted cash as the amount in this account can only be used to repay debt. Access to cash held in the ANZ receipt account is via a request to draw down amounts from the GE revolver facility account.

8 Current assets – trade and other receivables

Trade receivables – at amortised cost	61,022	58,736
Allowance for doubtful debts (i)	(812)	(991)
	60,210	57,745
Other receivables – at amortised cost	407	649
	60,617	58,394
Disclosed in the financial statements as:
Current trade and other receivables	60,533	58,320
Non-current other receivables	84	74
	60,617	58,394

The average credit period on sales of goods is approximately 54 days (2014: 57 days). No interest is charged on trade receivables.

8 Current assets – trade and other receivables (continued)

During both the Financial Year and 2014 the provision has been based on a percentage of the total debt for customers who are subject to formal payment plans or legal action and 1.75% of the 90 day and over balances. The provision for doubtful debts is reviewed each month and necessary adjustments made to the provision. The provision is based on estimated irrecoverable amounts from the sale of goods, determined by reference to past experience and knowledge of customers. Allowances are made for known doubtful debts at the time of appointment of administrators, liquidators or other formal insolvency events.

Included in the Group's trade receivables are debtors with balances in 61 days and over of \$0.761 million (2014: \$1.775 million), refer note 30(h). No further amount has been provided for as the Group believes that this past due balance is still considered recoverable. In relation to some of the balances the Group holds personal property securities registrations and/or personal guarantees and/or trade indemnity insurance for 90% of the amount outstanding (after applying the deductible). The average age of these receivables is 72 days (2014: 73 days). Aging past due but not impaired was calculated based on agreed customers individual terms.

Aging past due but not impaired:

	CONSOLIDATED
	2015 \$'000	2014 \$'000
1–30 days past due	8,577	10,020
31–60 days past due	1,315	1,432
61+ days past due	119	1,095
Total	10,011	12,547

Included in the allowance for doubtful debts are individually impaired trade receivables with a balance of \$0.643 million (2014: \$0.681 million). The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expected proceeds.

1–30 days past due	–	1
31–60 days past due	1	–
61+ days past due	642	680
Total	643	681

(i) Movement in the allowance for doubtful debts.

Balance at beginning of the financial year	(991)	(402)
Amounts written off during the financial year	340	112
Increase in allowance recognised in profit or loss	(161)	(701)
Balance at end of the financial year	(812)	(991)

In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The Group and Company do not have any significant exposure to any individual customer or counterparty.

Major concentrations of credit risk are in the construction, transport, consumer durable and electrical industries in Australia. Furthermore, the Company has credit insurance cover which requires ongoing management of credit accounts with monthly reports provided to the Insurer. Accordingly, there is no further credit provision required in excess of the allowance for doubtful debts.

	CONSOLIDATED
9 Current assets – inventories	2015 \$'000	2014 \$'000
Raw materials and stores	10,715	16,667
Work in progress	2,062	2,158
Finished goods	55,061	63,447
	67,838	82,272

All inventories are expected to be recovered within 12 months.

10 Current assets – prepayments
Prepayments	2,232	1,952
11 Deferred tax assets
Deferred tax assets	2,857	2,857

The Group has recognised deferred tax assets of \$2,857,000 (2014: \$2,857,000) (the Company \$2,650,000 – 2014: \$2,650,000) based upon the forecasted operational performance and the recovery of these prior year losses in the short term is more than probable.

12 Non-current assets – investments

Details of subsidiaries

The financial statements incorporate the assets, liabilities and results of the following subsidiaries:

		EQUITY HOLDING
ENTITY NAME	2015 %	2014 COUNTRY OF % INCORPORATION
Aluminium Extrusion & Distribution Pty Limited1	100	100	Australia
Austex Dies Pty Limited	100	100	Australia

1 Subsidiary has been granted relief from the necessity to prepare financial reports in accordance with Class Order 98/1418 issued by ASIC. The Company and Aluminium Extrusion & Distribution Pty Limited have entered into a deed of cross guarantee (Deed). Refer to note 28.

13 Related parties

Parent entities The ultimate parent entity within the Group is Capral Limited.

Equity interests in controlled entities Interests in controlled entities are set out in Note 12.

Transactions with key management personnel

Refer to Note 36 in relation to securities granted and forfeited during the Financial Year under the Long Term Incentive Plan that include rights granted and shares issued, to Capral's Managing Director, Chief Financial Officer, General Manager (Operations) and Company Secretary (who are key management personnel).

Details of the compensation of, and transactions with, each Director of the Company and key management personnel of the Group are set out in the Directors' Report and in particular, the Remuneration Report.

Mr Phil Jobe (a non-executive director) entered into a consultancy agreement with Capral for an initial term of 12 months, commencing on 15 April 2013, to provide services in relation to Capral's anti-dumping activities with a fixed monthly consulting fee of \$20,000 plus GST. This contract was extended until 31 December 2014, however, the monthly fees ceased after April 2014.

Transactions with other related parties

In 2015 as the parent entity in the consolidated entity, the Company has a non-interest bearing loan of \$2,200,000 (2014: \$1,100,000) advanced from a controlled entity, Austex Dies Pty Limited. The loan is payable on demand. The Company has entered into the following transactions with controlled entities:

• » Rental expense of \$440,000 (2014: \$484,000) Aluminium Extrusion & Distribution Pty Limited
• » Purchase of dies of \$4,268,000 (2014: \$3,910,000) Austex Dies Pty Limited

These transactions were conducted on arm's length commercial terms and conditions at market rates.

	CONSOLIDATED
14 Property, plant and equipment	2015 \$'000	2014 \$'000
Freehold land
At valuation	1,200	1,200
Accumulated depreciation	–	–
Net book amount	1,200	1,200
Buildings
At valuation	2,922	2,887
Accumulated depreciation	(399)	(265)
Net book amount	2,523	2,622
Leasehold improvements
At cost	10,635	10,751
Accumulated depreciation	(7,505)	(7,157)
Accumulated impairment	(1,441)	(2,069)
Net book amount	1,689	1,525
Total land and buildings	5,412	5,347
Plant, machinery and equipment
At cost	214,852	213,702
Accumulated depreciation	(146,501)	(137,034)
Accumulated impairment losses	(37,118)	(40,923)
Net book amount	31,233	35,745
Construction work in progress at cost	3,067	1,455
Net plant, machinery and equipment	34,300	37,200
Total property, plant and equipment – net book value	39,712	42,547

The following useful lives are used in the calculation of depreciation:

Buildings	20–33 Years
Leasehold improvements	5–25 Years
Plant and equipment	3–25 Years

(i) Valuations of land and building:

An independent valuation of the Group's land and buildings was performed as at 31 December 2012 using Capitalisation and Direct Comparison approaches to determine the fair value of the land and buildings. The valuations, which conform to International Valuation Standards, were determined by reference to recent market transactions on arm's length terms at the time. The fair value of the Land and Buildings is \$1,200,000 and \$2,700,000 respectively.

14 Property, plant and equipment (continued)

(ii) Carrying amounts that would have been recognised if land and buildings were stated at cost:

	CONSOLIDATED
	2015 \$'000	2014 \$'000
Freehold land
At cost	1,750	1,750
Accumulated depreciation	–	–
Net book amount	1,750	1,750
Buildings
At cost	3,578	3,542
Accumulated depreciation	(323)	(457)
Net book amount	3,255	3,085

Reconciliations

Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and prior financial year are set out below:

Consolidated	FREEHOLD LAND AT FAIR VALUE \$'000	BUILDINGS AT FAIR VALUE \$'000	LEASEHOLD IMPROVE MENTS AT COST \$'000	PLANT AND EQUIPMENT AT COST \$'000	IN COURSE OF CONSTRUC TION AT COST \$'000	TOTAL \$'000
2015
Opening net book amount	1,200	2,622	1,525	35,745	1,455	42,547
Additions	–	32	80	1,720	1,897	3,729
Disposals	–	–	(197)	(17)	–	(214)
Transfers	–	3	474	(313)	(285)	(121)
Depreciation charge (Note 2(a))	–	(134)	(193)	(5,902)	–	(6,229)
Net book amount at 31 December 2015	1,200	2,523	1,689	31,233	3,067	39,712
2014
Opening net book amount	1,200	2,713	2,256	39,509	1,411	47,089
Additions	–	40	183	1,656	1,272	3,151
Disposals	–	(1)	(2)	(719)	–	(722)
Transfers	–	–	–	1,170	(1,228)	(58)
Depreciation charge (Note 2(a))	–	(130)	(912)	(5,871)	–	(6,913)
Net book amount at 31 December 2014	1,200	2,622	1,525	35,745	1,455	42,547

Impairment of non-current assets

At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which that asset belongs. Management views the Group as representing one CGU.

If there is an indication of impairment, the recoverable amount of property, plant & equipment and intangible assets will be determined by reference to a value in use discounted cash flow valuation of the Group, utilising financial forecasts and projections.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. Cash flows that may result from prior period tax losses are not taken into account. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (CGU) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.

The result of Impairment assessment as at 31 December 2015

As a result of the non-current assets recoverable amount assessment performed, Capral has determined that no impairment writedown or write-back of non-current assets as at 31 December 2015 was necessary (2014: \$Nil).

The key assumptions used in preparing the value in use cash flow valuation as at 31 December 2015 are as follows: The table below shows key assumptions in the value in use calculation as at 31 December 2015 and value of the input to which the key assumption must change in isolation for the estimated recoverable amount to be equal to its carrying value.

	INPUT TO THE MODEL	BREAKEVEN INPUT
WACC (Post-tax)	11.66%	11.85%
Average volumes increase 2017-20 p.a.	1.00%	0.93%
Terminal growth rate	2.04%	1.43%
Sales price growth	80% of CPI	78.4% of CPI

The valuation is based on forecast and projected cash flows for a 5 year period commencing January 2016 with a terminal value being applied at the end of this period. The cash flow assumptions are based on management approved forecast for the period from January 2016 to December 2016. Beyond this date cash flow projections until 31 December 2020 are based on projected volume growth and expected improvements in EBITDA per tonne (refer below). Sales volumes are projected to grow at 1% per annum from 2017-20 (2014: 2.04% per annum) based on Capral's average historic volume growth rate from 2011–2015. After 2020 sales revenue is expected to grow at 2.04% (2014: 2.04%) per annum, and this growth rate corresponds with the average long-term growth rate based on external economic sources.

A discount rate of 11.66% (2014: 11.73%), representing the Company's post-tax weighted average cost of capital has been applied to the cash flow projections. The pre-tax discount rate equivalent to the post-tax discount rate used for the value in use calculation is 15.95% (2014: 16.48%).

Volumes

In determining assumptions in relation to sales volumes into the commercial and residential/domestic market, Capral have based these on reputable third party long term economic forecast reports with reference to historical performance and seasonal trends. Using these long term growth rates, projections estimate the sales volumes at around 63,000 tonnes at the end of the 5 year period.

14 Property, plant and equipment (continued)

Margins

In setting price and margin assumptions, historical performance trends and the impact of previous price increases were reviewed in assessing the timing and quantum of future price increases.

Recent history in relation to direct costs and the impact of higher volumes on manufacturing variances were assessed in setting assumptions on absorbed conversion costs.

In forecasting the margin, Management has considered the production capacity of Capral compared to current volumes and concluded that increase in production volumes to satisfy demand expected by independent market predictions can be attained by predominately increasing variable cost with very limited additional fixed cost expenditure. This is reflected in the resultant average EBITDA per tonne increase of 2.17% per annum from 2017 to 2020.

Working Capital and Capital Expenditure

These assumptions were set in light of strategic initiatives and approved capital expenditure, with working capital flexed in relation to the assumed production capacity for volumes throughout the forecast period and historical performance and considering revisions to trading terms with key suppliers and customers.

Economic Factors

Assumptions including Gross Domestic Production (GDP), the Consumer Price Index (CPI), expected wage and salary increases, foreign exchange and the future impact of aluminium prices have been made with reference to third party economic forecasts and the Company's strategic plans and budgets.

Prior Period Tax Losses

Cash flows that may result from prior period tax losses are not taken into account in determining the recoverable amount of assets.

Impact of possible changes to key assumptions

Management performed a number of sensitivity analysis on key assumptions to determine the impact the change of a single assumption input would have on the carrying amounts of its tangible and intangible assets. The sensitivities below have been chosen as Management consider that in isolation they are reasonably possible given the nature of the Capral business and the market in which it operates. In each scenario, all other assumptions remained unchanged, and excludes any compensating adjustments that Management may be able to make to other inputs to counteract the impact.

SENSITIVITY	INPUT TO THE MODEL	IMPACT REVERSAL OF PREVIOUS IMPAIRMENT / (IMPAIRMENT)
WACC (Post-tax)	12.5%	(\$5,319,000)
WACC (Post-tax)	11.5%	\$3,161,000
Average volumes increase 2017-20 p.a.	2.04%	\$29,227,000
Average volumes increase 2017-20 p.a.	0%	(\$24,021,000)
Terminal growth rate	1%	(\$1,089,000)
Sales price growth	100% of CPI	\$23,039,000
Sales price growth	60% of CPI	(\$19,345,000)
EBITDA per Tonne	2015 Level	(\$18,197,000)

In a combined scenario sensitivity analysis, if price increases achieved were 60% of CPI, volume increases by 0% over the 2017–20 period and the terminal growth rate was 1% then this would result in an impairment of \$43,204,000.

In the event that the value-in-use model indicates an impairment the impairment may be reduced where tangible asset values on a fair value less cost to sell basis exceed the value in use.

SOFTWARE \$'000

TOTAL \$'000

OTHER INTELLECTUAL PROPERTY \$'000

Cost	15,941	23,538	39,479
Accumulated amortisation	(8,370)	(20,914)	(29,284)
Accumulated impairment losses	(7,562)	(2,470)	(10,032)
Net book value	9	154	163
2014
Cost	15,915	23,401	39,316
Accumulated amortisation	(8,323)	(20,766)	(29,089)
Accumulated impairment losses	(7,562)	(2,470)	(10,032)
Net book value	30	165	195
Reconciliations

Reconciliations of the carrying amounts of each class of intangibles at the beginning and end of the current Financial Year are set out below:

Consolidated

15 Intangibles

Consolidated

2015

2015 Opening net book amount 30 165 195 42 Additions – 42 – Disposals – – Transfers 26 95 121 Amortisation (47) (148) (195) 163 Net book amount at 31 December 2015 9 154 2014 Opening net book amount 100 227 327 Additions – 62 62 – Disposals – – Transfers – 58 58 Amortisation (70) (182) (252) 195 Net book amount at 31 December 2014 30 165

16 Assets pledged as security

In accordance with the security arrangements of liabilities disclosed in Note 25 below, all assets of the Group have been pledged as security. The holder of the security does not have the right to sell or repledge the assets other than in the event of default under the principal finance agreement where the security is enforced.

	CONSOLIDATED
17 Current liabilities – payables	2015 \$'000	2014 \$'000
Trade payables (i)	54,354	64,826
Goods and services tax payable	1,577	980
Other payables (ii)	10,339	10,678
	66,270	76,484

(i) The average credit period on purchases is 65 days from the end of the month (2014:60 days). No interest is charged on the trade payables. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

(ii) Included an accrual for onerous lease contracts of \$569,000 arising as part of a restructuring of the business during the 2014 financial year.

18 Borrowings
Unsecured – at amortised cost
Current
Loans from other entities	48	48
	48	48
19 Provisions
Current
Employee benefits4	10,456	10,293
Make good on leased assets1	577	228
Other2	675	570
	11,708	11,091
Non-current
Employee benefits4	1,594	1,918
Make good on leased assets1	1,725	2,019
Other3	1,488	1,429
	4,807	5,366

1 Provision for make good on leased assets comprises obligations relating to site closure and other costs associated with operating lease rental properties.

2 Other current provisions include provisions for customer claims including metal returns net of scrap and pricing adjustments.

3 Other non-current provisions include amounts relating to the straight-lining of fixed rate increases in rental payments.

4 The current provision for employee benefits includes \$780,000 of annual leave entitlements accrued but not expected to be taken within 12 months (2014: \$925,000).

		CONSOLIDATED
	MAKE GOOD ON LEASED ASSETS \$'000	OTHER \$'000	TOTAL \$'000
Movements in carrying amounts
Carrying value at the beginning of the financial year	2,247	1,999	4,246
Additional amounts provided	55	164	219
Carrying value at the end of the financial year	2,302	2,163	4,465

		CONSOLIDATED
20 Deferred income – current			2015 \$'000	2014 \$'000
Deferred income – other			107	214
			107	214
21 Issued capital	2015 No. '000	2014 No. '000	2015 \$'000	2014 \$'000
(a) Share capital
Ordinary shares: fully paid	474,685	474,685	425,744	425,744

Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to the share capital from 1 July 1998. Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a par value.

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

(b) Movement in ordinary share capital

DATE	DETAILS	NUMBER OF SHARES	ISSUE PRICE	\$'000
January 2014	Balance at the beginning of the financial year	473,258,255	–	425,430
March 2014	Issue of shares on conversion from performance rights	1,426,322	–	314
December 2014	Balance at the end of the financial year	474,684,577	–	425,744
January 2015	Balance at the beginning of the financial year	474,684,577	–	425,744
December 2015	Balance at the end of the financial year	474,684,577	–	425,744

	CONSOLIDATED
22 Reserves and accumulated losses	2015 \$'000	2014 \$'000
Asset revaluation reserve	221	221
Equity-settled compensation reserve	9,508	9,172
Accumulated losses	9,729 (324,780)	9,393 (322,269)
	(315,051)	(312,876)
22 (a) Movements in reserves were: Equity-settled compensation reserve
Balance at the beginning of the financial year	9,172	8,789
Vested rights converted to shares On market purchase of shares in respect of performance rights issue	– (255)	(332) –
Expense recognised	591	715
Balance at the end of the financial year	9,508	9,172
Asset revaluation reserve
Balance at the beginning of the financial year	221	221
Revaluation increase	–	–
Balance at the end of the financial year	221	221
22 (b) Accumulated losses
Balance at the beginning of the financial year	(322,269)	(324,919)
Net profit/(loss) attributable to members of Capral	(2,511)	2,650
Balance at the end of the financial year	(324,780)	(322,269)
Dividends 23 Ordinary shares: Nil (2014:Nil)	–	–
Franking credits Franking credits available for subsequent financial years based on a tax rate of 30% (2014:30%)	27,105	27,105
24 (Loss)/profit per share	2015 cents per share	2014 cents per share
Basic and diluted (loss)/earnings per share	(0.5)	0.6

Loss used in the calculation of basic and diluted loss per share for 2015 was \$2,511,000 (2014: profit \$2,650,000). The weighted average numbers of ordinary shares on issue used in the calculation of basic and diluted earnings per share were 474,675,361 and 488,043,735 respectively (2014: 474,444,014 and 485,723,469 respectively).

There are 13,508,092 performance rights (2014: 12,325,338 rights) and 4,300,000 options (2014: 4,300,000 options), with the potential to dilute future earnings at the end of the Financial Year. As at balance date, these potential and contingently issuable shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares for the purposes of diluted (loss)/earnings per share.

	CONSOLIDATED
25 Stand by arrangement and credit facilities	2015 \$'000	2014 \$'000
Secured bank loan facilities maturing in 2017.
Amount used	–	–
Amount unused	60,000	90,000
Total available facilities	60,000	90,000

The Company renewed existing arrangements with GE Commercial Corporation (Australia) Pty Ltd (GE), with a facility of up to \$90,000,000 on 1 July 2014. The term of this facility ends on 30 June 2017. The facility is fully secured and consisted of the following:

• 1. A \$60,000,000 revolver facility for a term of 3 years. The revolver facility is a receivables purchase facility whereby the consolidated entity has agreed to sell its receivables to the financier, in return for funding, based on the level of the receivables balance in the revolving account available to be drawn, contingent on the consolidated entity meeting its obligations set out in the facility agreement.
• 1. Up to \$30,000,000 term loan facility for a term of 3 years.

The Company cancelled the \$30,000,000 term loan facility with GE on 30 April 2015.

The GE revolver facility balance was offset with GE controlled cash at 31 December 2014 and 31 December 2015.

26 Commitments for expenditure – capital

Commitments for the acquisition of plant and equipment contracted for at the reporting date but not recognised as liabilities payable: Within one year	1,112	639
27 Commitments for expenditure – operating leases
Commitments for minimum lease payments in relation to non-cancellable operating leases for office and plant premises are payable as follows:
Within one year	19,695	18,224
Later than one year but not later than five years	47,804	48,197
Later than five years	29,776	36,606
	97,275	103,027

Operating leases relate to office and plant premises with lease terms of between 2 to 20 years, with options to extend for a further 3 to 10 years. The Group does not have an option to purchase the leased asset at the expiry of the lease period.

Non-cancellable operating lease receivable
Within one year	1,666	1,532
Later than one year but not later than five years	4,582	5,403
Later than five years	–	–
	6,248	6,935

Operating lease receivables relate to the sublease of office and plant premises with an original lease term of 5 years, with an option to extend for a further term of around 5 years.

28 Deed of Cross Guarantee

Pursuant to ASIC Class Order 98/1418, the wholly owned subsidiary, Aluminium Extrusion and Distribution Pty Limited (AED) is relieved from the Corporations Act 2001 requirement for the preparation, audit and lodgement of financial reports.

It is a condition of that class order that the Company and AED enter into a Deed of Cross Guarantee (Deed). Under the Deed the Company guarantees the payment of all debts of AED in full, in the event of a winding up. AED in turn has guaranteed the payment of the debts of the Company in full in the event that it is wound up.

For the 2015 and 2014 financial years, the closed group represents the Company and its wholly owned Australian subsidiaries (except for Austex Dies Pty Limited).

	CLOSED GROUP
	2015 \$'000	2014 \$'000
Statement of profit or loss and comprehensive income
Revenue	401,514	373,670
Other income	161	331
Changes in inventories of finished goods and work in progress	(8,511)	12,107
Raw materials and consumables used	(239,981)	(224,933)
Employee benefits expense	(80,947)	(80,582)
Depreciation and amortisation expense	(6,201)	(6,953)
Finance costs	(1,200)	(1,217)
Freight expense	(10,252)	(11,123)
Occupancy costs	(16,491)	(17,493)
Repairs and maintenance expense	(6,413)	(6,122)
Restructuring costs	(736)	(569)
Other expenses	(34,309)	(35,074)
(Loss)/profit before income tax	(3,366)	2,042
Income tax (expense)/benefit	–	–
(Loss)/profit for the year	(3,366)	2,042
Other comprehensive (loss)/profit for the year (net of tax)
Revaluation increase	–	–
Total comprehensive (loss)/profit for the year	(3,366)	2,042
Summary of movements in accumulated losses
Accumulated losses at the beginning of the year	(323,807)	(325,849)
(Loss)/profit for the year	(3,366)	2,042
Accumulated losses at the end of the year	(327,173)	(323,807)

	CLOSED GROUP
	2015 \$'000	2014 \$'000
Statement of financial position
Current assets
Cash and cash equivalents	19,621	15,951
Trade and other receivables	60,130	58,075
Inventories	67,790	82,222
Other financial assets	71	1,352
Prepayments	2,506	2,149
Total current assets	150,118	159,749
Non current assets
Other receivables	84	74
Deferred tax assets	2,650	2,650
Investment in subsidiary	1,100	1,100
Property, plant and equipment	39,518	42,135
Other intangible assets	163	195
Total non current assets	43,515	46,154
Total assets	193,633	205,903
LIABILITIES
Current liabilities
Trade and other payables	69,019	78,174
Borrowings	48	48
Provisions	11,352	10,771
Deferred income	107	214
Total current liabilities	80,526	89,207
Non current liabilities
Provisions	4,807	5,366
Total non current liabilities	4,807	5,366
Total liabilities	85,333	94,573
NET ASSETS	108,300	111,330
EQUITY
Issued capital	425,744	425,744
Reserves	9,729	9,393
Accumulated losses	(327,173)	(323,807)
TOTAL EQUITY	108,300	111,330

29 Fair value measurement

Some of the Group's assets and liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these assets and liabilities are determined (in particular, valuation technique(s) and input(s) used).

	FAIR VALUE AS AT				SIGNIFICANT	RELATIONSHIP
ASSETS / LIABILITIES	31/12/15	31/12/14	FAIR VALUE HIERARCHY	VALUATION TECHNIQUE(S) AND KEY INPUT(S)	UNOBSERVABLE INPUT(S)	OF UNOBSERV ABLE INPUT(S)
Foreign currency forward contracts (see note 30(f))	Assets – nil Liabilities – \$406,0001	Assets – \$1,234,0001 Liabilities – nil	Level 2	Discounted cash flow. Future cash flows are estimated based on forward exchange rate (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risks of various counterparties.	n/a	n/a
Land and buildings	Land – \$1,200,000 Buildings – \$2,523,000	Land – \$1,200,000 Buildings – \$2,622,000	Level 3	Capitalisation and Direct Comparison approaches.	Comparable market net rental and comparable market sales transactions.	The higher/(lower) the comparable market net rental amount and the higher/(lower) the comparable market sales transactions, the higher the fair value.

1 presented under Trade and Other Payables (2014: presented under Other Financial Assets)

30 Financial instruments

(a) Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The Group's overall strategy remains unchanged from 2014.

The capital structure of the Group consists of debt, as disclosed in Note 25, cash and cash equivalents, and equity holders of the parent, comprising issued capital, reserves and accumulated losses, as disclosed in Notes 7, 21 and 22 respectively. The Directors review the capital structure on a regular basis, and at least annually. As a part of this review the Directors consider the cost of capital and the risks associated with each class of capital. Based on the determinations of the Directors, the Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt.

The Group prepares monthly management accounts, comprising Balance Sheet, Profit and Loss Statement and Cash Flow Statement updates for the current financial year and the current year forecast. The forecast is used to monitor the Group's capital structure and future capital requirements, taking into account future capital requirements and market conditions.

The Group complied with its borrowing financial covenants under its current facility detailed in Note 25 as at 31 December 2015 as follows:

COVENANTS 2015	ACTUAL	LIMIT/COVENANT	HEADROOM
Net Tangible Worth (\$'000)	107,925	Greater than 45,000	62,925
Capital Expenditure to Dec 15 (\$'000)	3,700	Less than 4,400	700
Fixed Charge Coverage Ratio (ratio)	10.11	Greater than 1.1:1	9.01

The Group complied with its borrowing financial covenants under its facility detailed in Note 25 as at 31 December 2014 as follows:

COVENANTS 2014	ACTUAL	LIMIT/COVENANT	HEADROOM
Net Tangible Worth (\$'000)	108,907	Greater than 45,000	63,907
Capital Expenditure to Dec 14 (\$'000)	2,534	Less than 6,600	4,066
Fixed Charge Coverage Ratio (ratio)	4.03	Greater than 1.1:1	2.93

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1(c).

(c) Categories of financial instruments

	CONSOLIDATED
	2015 \$'000	2014 \$'000
Financial Assets
Loans and receivables (including cash and cash equivalents)	80,760	74,896
Other financial assets1	71	1,352
Financial Liabilities Amortised cost	66,318	76,532

1 capitalised borrowing costs \$71,000 (2014: mark-to-market revaluation of foreign currency forward contracts \$1,234,000 and capitalised borrowing costs \$118,000).

(d) Financial risk management objectives

The Group's treasury function monitors and manages the financial risks relating to the operations of the Group through internal risk reports. These risks include market risk (including currency risk, interest rate risk and equity price risk), credit risk and liquidity risk. These risks are analysed below.

(e) Market risk

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates (refer note 30(f)) and interest rates (refer note 30(g)). From time to time, the Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign currency risk, including foreign exchange forward contracts to hedge the exchange rate risk arising on the purchase of aluminium log and rolled product from overseas in US dollars.

At a Group and Company level, market risk exposures are measured using a sensitivity analysis. There has been no material change to the Group's exposure to market risks or the manner in which it manages and measures the risk during the Financial Year.

(f) Foreign currency risk management

The Group undertakes certain transactions in foreign currencies, resulting in exposures to exchange rate fluctuations. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts. It is the policy of the Group to enter into forward foreign exchange contracts from time to time to manage any material risk associated with anticipated foreign currency sales and purchase transactions.

30 Financial instruments (continued)

The carrying amount of the Group's and Company's foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows:

	CONSOLIDATED
	2015 \$'000	2014 \$'000
GBP (trade payables)	–	(1)
USD (trade payables)	(13,845)	(21,201)
JPY (trade payables)	(42)	–
EURO (trade receivables)	96	126
USD (trade receivables)	1,219	1,539

Foreign currency sensitivity

The Group is exposed to Euros, JPY and USD (2014: Euros, GBP and USD).

In order to mitigate foreign currency risk at reporting date, the Group entered into foreign exchange forward contracts. The Group's exposure to foreign exchange rate fluctuations was primarily limited to trade payables and trade receivables outstanding at reporting date denominated in currencies other than Australian dollar (AUD). The total value of trade payables denominated in currencies other than the AUD at reporting date was \$13,887,000 (2014: \$21,202,000). The total value of trade receivables denominated in currencies other than the AUD at reporting date was \$1,315,000 (2014: \$1,665,000).

The following table details the Group's sensitivity to a 10% increase and decrease in the AUD against the relevant foreign currency. 10% represents management's assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only foreign currency denominated monetary items outstanding at 31 December 2015 and 31 December 2014 and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number indicates an increase in profit.

	CONSOLIDATED
	2015 \$'000	2014 \$'000
Profit or loss (after tax)
– AUD strengthens by 10%	1,257	1,954
– AUD weakens by 10%	(1,257)	(1,954)

Forward foreign exchange contracts

It is the policy of the Group to enter into forward foreign exchange contracts to cover specific material foreign currency payments and receipts.

The following table details the forward foreign currency (FC) contracts outstanding at the end of the reporting period:

	FOREIGN CURRENCY		FAIR VALUE
OUTSTANDING CONTRACTS	31/12/15 FC\$'000	31/12/14 FC\$'000	31/12/15 \$'000 Gain/(Loss)	31/12/14 \$'000 Gain/(Loss)
Buy EURO	135	358	(17)	2
Buy USD	28,179	20,357	(389)	1,232

(g) Interest rate risk management

The Group interest rate risk arises from borrowings, cash and derivatives.

The Group is exposed to interest rate risk as the Group borrows funds at floating interest rates. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring optimal hedging strategies are applied, by either positioning the balance sheet or protecting interest expense through different interest rate cycles. The Group's exposure to interest rate risk at the reporting date was considered insignificant and as a result the Group did not enter into interest rate options.

The Group's exposures to interest rates on financial assets and financial liabilities are detailed below.

Interest rate sensitivity

The sensitivity analysis below shows the effect on profit or loss after tax for the Financial Year if there is a change in interest rates with all other variables held constant. This is determined by applying the change in interest rates to both derivative and nonderivative instruments at the reporting date that have an exposure to interest rate changes. A 50 basis point (0.5%) increase and a 50 basis point (0.5%) decrease represents management's assessment of the possible change in interest rates (2014: 50bp or 0.5% increase and 50bp or 0.5% decrease). A positive number indicates an increase in profit.

		CONSOLIDATED
	2015 \$'000	2014 \$'000
Profit or loss (after tax)
Impact of a 50bp (2014: 50bp) increase in AUD interest rates – Cash and cash equivalents	71	58
– Floating rate debt	–	–
Impact of a 50bp (2014: 50bp) decrease in AUD interest rates
– Cash and cash equivalents	(71)	(58)
– Floating rate debt	–	–

(h) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has exposures to credit risk on cash and cash equivalents, receivables and derivative financial assets. The credit risk on financial assets of the Group which have been recognised on the statement of financial position, other than investments in shares, is generally the carrying amount, net of any allowances for doubtful debts.

The Group does not have any significant exposure to any individual customer or counterparty. Major concentrations of credit risk are in the construction, transport, consumer durable and electrical industries in Australia. The Company has credit insurance cover which requires ongoing management of credit accounts with monthly reports provided to the Insurer. Experienced credit management and associated internal policies ensure constant monitoring of the credit risk for the Company.

There is no concentration of credit risk with respect to receivables as the Group has a large number of customers.

The ageing of trade receivables is detailed below:

Current	50,368	45,508
1–30 days	8,577	10,021
31–60 days	1,316	1,432
60+ days	761	1,775
	61,022	58,736

30 Financial instruments (continued)

(i) Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, who ensure there is an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate banking facilities and reserve borrowing facilities, complying with covenants, monitoring forecast and actual cash flows, and matching the maturity profiles of financial assets and liabilities. Included in Note 25 is a list of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk.

Liquidity and interest risk tables

Financial assets are made up of cash of \$20,143,000 (2014: \$16,502,000) and trade and other receivables of \$60,617,000 (2014: \$58,394,000). Cash is liquid and trade and other receivables are expected to be realised on average within 54 days (2014: 57 days). Cash balances earn 0.9% interest per annum (2014: 1.4%). Trade and other receivables are interest-free.

The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities. The table has been prepared based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. The contractual maturity is a fair representation of management's expectations of actual repayments.

	WEIGHTED AVERAGE EFFECTIVE INTEREST RATE %	LESS THAN 1 YEAR \$'000	1–3 YEARS \$'000	3–5 YEARS \$'000	GREATER THAN 5 YEARS \$'000
Consolidated
2015
Trade and other payables	–	66,270	–	–	–
Floating rate debt	4.29%	–	–	–	–
		66,270	–	–	–
2014
Trade and other payables	–	76,484	–	–	–
Floating rate debt	4.71%	–	–	–	–
		76,484	–	–	–

(j) Fair value of financial instruments

The fair values of financial assets, financial liabilities and derivative instruments are determined as follows:

(i) the fair value of financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on the discounted cash flow analysis using prices from observable market data; and

(ii) the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available, the discounted cash flow analysis is employed using observable market data for non-option derivatives. For option derivatives, option pricing models are used with key inputs sourced from observable market data.

The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values.

31 Contingent liabilities

Claims and possible claims, indeterminable in amount, have arisen in the ordinary course of business against entities in the consolidated entity. The Company has fully provided for all known and determinable claims. Based on legal advice obtained, the Directors believe that any resulting liability will not materially affect the financial position of the consolidated entity.

The Company's bankers have granted guarantees in respect of rental obligations on lease commitments, use of utilities infrastructure, international trade facilities and corporate credit cards. At 31 December 2015 these guarantees totalled \$18,857,683 (2014: \$16,327,934).

	CONSOLIDATED
32 Remuneration of auditors	2015 \$	2014 \$
During the year the auditor of the parent entity and its related practices earned the following remuneration:
Auditor of the parent entity
Audit or review of financial reports of the entity or any entity in the consolidated entity	288,400	374,300
Other non-audit services
– tax compliance	59,819	57,328
Total remuneration	348,219	431,628

It is the Group's policy to employ the Company's auditors, Deloitte Touche Tohmatsu, on assignments additional to their statutory duties where their expertise and experience is considered invaluable to the assignment.

33 Events after reporting date

No matter or circumstance has arisen since the end of the Financial Year that has significantly affected, or may significantly affect the Group's operations, the results of those operations or the Group's state of affairs in future financial years.

34 Notes to the cash flow statement

(i) Reconciliation of cash and cash equivalents

	CONSOLIDATED
	2015 \$'000	2014 \$'000
Reconciliation of cash and cash equivalents For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank and short term deposits at call net of bank overdrafts. Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:
Cash at bank and on hand	20,143	16,502
	20,143	16,502

34 Notes to the cash flow statement (continued)

(ii) Reconciliation of loss/(profit) for the year to net cash flows from operating activities

	CONSOLIDATED
	2015 \$'000	2014 \$'000
(Loss)/profit for the year	(2,511)	2,650
Non-cash items:
Depreciation and amortisation of non-current assets	6,424	7,165
Loss on sale of property, plant and equipment	139	503
Share-based payments expense	591	715
Interest expense accrued but not paid	47	84
Interest income reclassified to investing activities	(42)	(40)
Change in assets and liabilities:
Increase in current receivables	(2,213)	(393)
Decrease/(increase) in financial assets	1,234	(1,069)
Decrease/(increase) in inventories	14,434	(17,281)
(Increase)/decrease in prepayments	(280)	133
Increase in non-current receivables	(10)	(64)
(Decrease)/increase in trade and other payables	(10,469)	16,938
(Decrease)/increase in employee benefit provisions	(161)	638
Increase/(decrease) in other provisions	219	(2,015)
Decrease in deferred income	(107)	(288)
Net cash provided by operating activities	7,295	7,676

(iii) Details of finance facilities are included in note 25 to the financial statements.

(iv) Non-cash financing activities

There were no non-cash financing activities during the Financial Year or the 2014 year.

	CONSOLIDATED
35 Parent entity disclosures	2015 \$'000	2014 \$'000
Financial Position
Assets
Current assets – third parties	151,218	160,963
Non-current assets	39,119	41,316
Total assets	190,337	202,279
Liabilities
Current liabilities – third parties	78,147	87,696
Current liabilities – controlled entities	2,608	2,168
Non-current liabilities – controlled entities	2,200	1,100
Non-current liabilities – third parties	4,451	5,354
Total liabilities	87,406	96,318
Equity
Issued capital	425,744	425,744
Accumulated losses	(332,321)	(328,955)
Reserves
Equity-settled compensation reserve	9,508	9,172
Total Equity	102,931	105,961
Financial Performance
(Loss)/profit for the year	(3,366)	2,042
Other comprehensive income	–	–
Total comprehensive (loss)/profit	(3,366)	2,042
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
Deed of cross guarantee – refer Note 28	–	–
Contingent liabilities of the parent entity
Refer note 31
Commitments for the acquisition of property, plant and equipment by the parent entity
Commitments for the acquisition of property, plant and equipment by the parent entity
Within one year	1,112	639

36 Share-based payments

Performance Share Rights

Executive and Senior Management

Refer to section 2 of the Remuneration Report for details of rights issued under the Long Term Incentive Plan.

The following share-based payment arrangements were in existence during the current reporting period:

PERFORMANCE RIGHT SERIES (LTIP)	NUMBER AS AT 31 DEC 15	GRANT DATE	LAST TESTING DATE	EXERCISE PRICE \$	FAIR VALUE AT GRANT DATE \$
Issued 8 March 20131	1,154,046	08/03/2013	31/12/2015	–	0.17
Issued 8 March 20131	577,025	08/03/2013	31/12/2015	–	0.24
Issued 8 March 20131	577,021	08/03/2013	31/12/2015	–	0.24
Issued 7 March 20142	1,520,000	07/03/2014	31/12/2016	–	0.11
Issued 7 March 20142	760,000	07/03/2014	31/12/2016	–	0.15
Issued 7 March 20142	760,000	07/03/2014	31/12/2016	–	0.15
Issued 7 March 20142	760,000	07/03/2014	31/12/2016	–	0.15
Issued 6 March 20153	1,950,000	06/03/2015	31/12/2017	–	0.13
Issued 6 March 20153	650,132	06/03/2015	31/12/2017	–	0.16
Issued 6 March 20153	650,132	06/03/2015	31/12/2017	–	0.16
Issued 6 March 20153	649,736	06/03/2015	31/12/2017	–	0.16

1 In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2013 have an average vesting date of 1 March 2016.

2 In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2014 have an average vesting date of 1 March 2017.

3 In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2015 have an average vesting date of 1 March 2018.

The following share-based payment arrangements were in existence during the comparative reporting period:

NUMBER AS AT 31 DEC 14	GRANT DATE	LAST TESTING DATE	EXERCISE PRICE \$	FAIR VALUE AT GRANT DATE \$
1,230,348	14/03/2012	31/12/2014	–	0.11
615,173	14/03/2012	31/12/2014	–	0.17
1,414,907	08/03/2013	31/12/2015	–	0.17
707,457	08/03/2013	31/12/2015	–	0.24
707,453	08/03/2013	31/12/2015	–	0.24
1,860,000	07/03/2014	31/12/2016	–	0.11
930,000	07/03/2014	31/12/2016	–	0.15
930,000	07/03/2014	31/12/2016	–	0.15
930,000	07/03/2014	31/12/2016	–	0.15

1 In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2012 have an average vesting date of 1 March 2015.

2 In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2013 have an average vesting date of 1 March 2016.

3 In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2014 have an average vesting date of 1 March 2017.

	PERFORMANCE RIGHTS (LTIP)
INPUTS INTO THE MODEL	06 March 2015	07 March 2014	08 March 2013	14 March 2012
Grant date	6/03/2015	7/03/2014	8/03/2013	14/03/2012
Dividend yield	0%	0%	0%	0%
Risk free yield	1.82%	2.93%	2.93%	3.65%
Expected volatility	55%	55%	60%	50%
Last testing date	31/12/2017	31/12/2016	31/12/2015	31/12/2014
Exercise price	n.a	n.a	n.a	n.a
Share price at grant date	\$0.16	\$0.15	\$0.235	\$0.17
Performance right life	3 years	3 years	3 years	3 years

Current Managing Director

During the Financial Year, 2,500,000 rights were issued to Mr A Dragicevich. 800,000 rights granted to Mr A Dragicevich in March 2013 and 300,000 rights granted to Mr A Dragicevich in April 2014 vested and converted to Capral's ordinary shares in March 2015 on a 1 for 1 basis.

During the comparative financial year, 2,000,000 rights were issued to Mr A. Dragicevich. 800,000 rights granted to Mr A Dragicevich in March 2013 vested and converted to Capral's ordinary shares on 4 March 2014 on a 1-for-1 basis.

The following rights were in existence during the current reporting period, subject to the achievement of performance conditions and have been independently valued as follows:

SHARE RIGHTS	NUMBER AS AT 31 DEC 15	GRANT DATE	LAST TESTING DATE	EXERCISE PRICE \$	FAIR VALUE AT GRANT DATE \$
Issued 16 April 20141	700,000	16/04/2014	31/12/2015	–	\$0.106
Issued 16 April 20141	300,000	16/04/2014	31/12/2015	–	\$0.155
Issued 16 April 20152	1,250,000	16/04/2015	31/12/2017	–	\$0.132
Issued 16 April 20152	416,750	16/04/2015	31/12/2017	–	\$0.160
Issued 16 April 20152	416,750	16/04/2015	31/12/2017	–	\$0.160
Issued 16 April 20152	416,500	16/04/2015	31/12/2017	–	\$0.160

1 In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2014 have an average vesting date of 1 March 2016.

2 In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2015 have an average vesting date of 1 March 2018.

36 Share-based payments (continued)

The following rights were in existence during the comparative reporting period, subject to the achievement of performance conditions and have been independently valued as follows:

SHARE RIGHTS	NUMBER AS AT 31 DEC 14	GRANT DATE	LAST TESTING DATE	EXERCISE PRICE \$	FAIR VALUE AT GRANT DATE \$
Issued 04 March 20131	800,000	04/03/2013	31/12/2014	–	\$0.133
Issued 04 March 20131	200,000	04/03/2013	31/12/2014	–	\$0.220
Issued 16 April 20142	700,000	16/04/2014	31/12/2014	–	\$0.094
Issued 16 April 20142	300,000	16/04/2014	31/12/2014	–	\$0.155
Issued 16 April 20143	700,000	16/04/2014	31/12/2015	–	\$0.106
Issued 16 April 20143	300,000	16/04/2014	31/12/2015	–	\$0.155

1 In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2013 have an average vesting date of 4 March 2015.

2 In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2014 have an average vesting date of 1 March 2015.

3 In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2014 have an average vesting date of 1 March 2016.

INPUTS INTO THE MODEL	16 APRIL 2015	16 APRIL 2014
Grant date	16/4/2015	16/4/2014
Dividend yield	0%	0%
Risk free yield	1.82%	n.a
Risk free yield – Tranche 1	n.a	2.59%
Risk free yield – Tranche 2	n.a	2.79%
Expected volatility	55%	55%
Last testing date	31/12/2017	n.a
Last testing date – Tranche 1	n.a	31/12/2014
Last testing date – Tranche 2	n.a	31/12/2015
Exercise price	n.a	n.a
Share price at grant date	\$0.160	\$0.155
Performance right life	3 years	n.a
Performance right life – Tranche 1	n.a	1 year
Performance right life – Tranche 2	n.a	1 year

Options

Executive and Senior Management

No options to acquire ordinary shares were granted under LTIP in the Financial Year or 2014. All of the 2,231,863 options issued under 2010 LTIP award expired on 16 October 2014. No options remain unexercised at the end of the Financial Year and the previous financial year.

Managing Director

During 2015, no options were issued to the Managing Director (2014: nil).

In the 2009 financial year, Capral granted to the previous Managing Director, Mr Phil Jobe, 24,300,000 options (post consolidation) to acquire Capral shares. 20,000,000 of these options expired on 16 October 2014. The remaining 4,300,000 options were in existence at the end of the Financial Year and previous financial year, as detailed below:

OPTIONS (PREVIOUS MANAGING DIRECTOR)	NUMBER (Post Consolidation)	GRANT DATE	EXPIRY DATE	EXERCISE PRICE \$ (Post Consolidation)	FAIR VALUE AT GRANT DATE \$ (Post Consolidation)
Issued 24 April 20091	1,433,333	24/04/2009	20/04/2016	0.50	0.52
Issued 24 April 20091	1,433,333	24/04/2009	20/04/2016	0.50	0.54
Issued 24 April 20091	1,433,334	24/04/2009	20/04/2016	0.50	0.54

1 In accordance with the terms of the Managing Director's employment contract, options issued during the financial year ended 31 December 2009 have vesting dates between 20 April 2009 and 20 April 2012.

Outlined below are the inputs to the model used for calculating the fair value of the equity-settled options granted to the previous Managing Director:

	OPTIONS (PREVIOUS MANAGING DIRECTOR) 24 APRIL 2009
INPUTS INTO THE MODEL	TRANCHE 1	TRANCHE 2	TRANCHE 3
Grant date	24/4/2009	24/4/2009	24/4/2009
Dividend yield	0%	0%	0%
Risk free yield	3.66%	3.87%	4.05%
Expected volatility	75%	70%	65%
Last exercise date	20/04/2016	20/04/2016	20/04/2016
Exercise Price	\$0.500	\$0.500	\$0.500
Share price at grant date (pre consolidation)	\$0.080	\$0.080	\$0.080
Share price at grant date (post consolidation)	\$0.800	\$0.800	\$0.800
Option life	7.0 years	7.0 years	7.0 years

Expected volatility reflects the assumption that historical volatility is indicative of future trends, which may not be the actual outcome.

The following tables reconcile the outstanding securities granted to the current and previous Managing Directors, and senior management at the beginning and end of the Financial Year:

	2015		2014
OPTIONS	NUMBER OF SHARE OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE \$	NUMBER OF SHARE OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE \$
Balance at the beginning of the financial year	4,300,000	0.417	26,531,863	0.381
Granted during the financial year	–	–	–	–
Forfeited during the financial year	–	–	–	–
Exercised during the financial year	–	–	–	–
Expired during the financial year	–	–	(22,231,863)	0.374
Balance at the end of the financial year	4,300,000	0.417	4,300,000	0.417
Exercisable at the end of the financial year	4,300,000	0.417	4,300,000	0.417

36 Share-based payments (continued)

	2015	2014
PERFORMANCE RIGHTS	NUMBER OF SHARE PERFORMANCE RIGHTS	NUMBER OF SHARE PERFORMANCE RIGHTS
Balance at the beginning of the financial year	12,325,338	7,730,361
Granted during the financial year	7,000,000	6,650,000
Forfeited during the financial year	(2,005,069)	–
Vested during the financial year	(1,681,829)	(1,508,122)
Lapsed during the financial year	(2,130,348)	(546,901)
Balance at the end of the financial year	13,508,092	12,325,338

(i) Exercised during the Financial Year

No options granted to the previous Managing Director, executives and senior management have been exercised during the Financial Year.

1,100,000 performance rights granted to the current Managing Director and 581,829 performance rights granted to senior management have vested, 2,130,348 performance rights have lapsed and 2,005,069 performance rights have forfeited during the Financial Year. Refer to section 2 of the Remuneration Report.

(ii) Balance at the end of the Financial Year

The options outstanding at the end of the Financial Year were 4,300,000 (2014: 4,300,000), with a weighted average remaining contractual life of 0.3 year (2014: 1 year).

The performance rights outstanding at the end of the Financial Year were 13,508,092 (2014: 12,325,338), with a weighted average remaining contractual life of 1.4 year (2014: 1 year).

37 Key management personnel compensation

(a) Compensation of Key Management Personnel

The aggregate compensation made to directors and other members of key management personnel of the Company and the Group is set out below:

	CONSOLIDATED
	2015 \$	2014 \$
Short-term benefits	2,245,729	2,404,252
Post-employment benefits	148,559	139,022
Other long-term benefits	–	–
Termination benefits	–	–
Share-based payments	374,140	396,665
	2,768,428	2,939,939

(b) Performance rights and options holdings of Key Management Personnel

The remuneration policy for the current and previous Managing Directors, and senior management is set out in section 1 of the Remuneration Report.

Details of the performance rights and options held by Key Management Personnel during the Financial Year are as follows:

2015 – PERFORMANCE SHARE RIGHTS	HELD AT START OF YEAR	GRANTED AS COMPENSATION	LAPSED	VESTED	HELD AT END OF YEAR
Directors
A Dragicevich	3,000,000	2,500,000	(900,000)	(1,100,000)	3,500,000
Executives
T Campbell	1,158,223	500,000	(180,521)	(90,260)	1,387,442
R Michael	1,018,586	500,000	(102,189)	(51,095)	1,365,302
R Rolfe	616,262	300,000	(88,704)	(44,352)	783,206
	5,793,071	3,800,000	(1,271,414)	(1,285,707)	7,035,950
2015 – OPTIONS	HELD AT START OF YEAR	GRANTED AS COMPENSATION	EXPIRED	EXERCISED	HELD AT END OF YEAR
Directors
P Jobe	4,300,000	–	–	–	4,300,000
	4,300,000	–	–	–	4,300,000

All of the options granted to Mr Jobe in the above table are exercisable and had vested as at 31 December 2014.

Details of the performance rights and options held by Key Management Personnel during the financial year ended 31 December 2014 were as follows:

2014 – PERFORMANCE SHARE RIGHTS	HELD AT START OF YEAR	GRANTED AS COMPENSATION	LAPSED	VESTED	HELD AT END OF YEAR
Directors
A Dragicevich	1,800,000	2,000,000	–	(800,000)	3,000,000
Executives
T Campbell	818,223	500,000	(47,267)	(112,733)	1,158,223
R Michael	518,586	500,000	–	–	1,018,586
R Rolfe	417,353	300,000	(58,047)	(43,044)	616,262
	3,554,162	3,300,000	(105,314)	(955,777)	5,793,071
	HELD AT START	GRANTED AS			HELD AT END
2014 – OPTIONS	OF YEAR	COMPENSATION	EXPIRED	EXERCISED	OF YEAR
Directors P Jobe	24,300,000	–	(20,000,000)	–	4,300,000
Executives
T Campbell	–	–	–	–	–
R Michael	165,000	–	(165,000)	–	–
M Haszard1	231,863	–	(231,863)	–	–
R Rolfe	120,000	–	(120,000)	–	–

1 Mr Haszard retired in March 2012

All of the options granted to Mr Jobe and other key management personnel issued under LTIP included in the above table are exercisable and had vested as at 31 December 2014.

Directors' Declaration

The directors declare that:

• (a) in the directors' opinion, there are reasonable grounds to believe that Capral will be able to pay its debts as and when they become due and payable;
• (b) in the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of Capral and the consolidated entity;
• (c) in the directors' opinion, the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board; and
• (d) the directors have been given declarations required by section 295A of the Corporations Act 2001.

At the date of this declaration, Capral is within the class of companies affected by ASIC Class Order 98/1418. The nature of the deed of cross guarantee is such that each company which is party to the deed, guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee.

In the directors' opinion there are reasonable grounds to believe that Capral and the companies to which the ASIC Class Order applies, as detailed in Note 28 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee.

Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations Act 2001.

On behalf of the directors

R.L. Wood-Ward A. Dragicevich

Sydney 19 February 2016

Chairman Managing Director

Independent Auditor's Report

Independent Auditor's Report to the Members of Capral Limited

Report on the Financial Report

We have audited the accompanying financial report of Capral Limited, which comprises the consolidated statement of financial position as at 31 December 2015, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of cash flows and the consolidated statement of changes in equity for the year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity, comprising the company and the entities it controlled at the year's end or from time to time during the financial year as set out on pages 34 to 77.

Directors' Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the consolidated financial statements comply with International Financial Reporting Standards.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the company's preparation of the financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Auditor's Independence Declaration

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Capral Limited, would be in the same terms if given to the directors as at the time of this auditor's report.

Opinion

In our opinion:

• (a) the financial report of Capral Limited is in accordance with the Corporations Act 2001, including:
• i. giving a true and fair view of the consolidated entity's financial position as at 31 December 2015 and of its performance for the year ended on that date; and
• ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
• (b) the consolidated financial statements also comply with International Financial Reporting Standards as disclosed in Note 1c.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 13 to 31 of the directors' report for the year ended 31 December 2015. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of Capral Limited for the year ended 31 December 2015, complies with section 300A of the Corporations Act 2001.

DELOITTE TOUCHE TOHMATSU

David Black Partner Chartered Accountants Parramatta, 19 February 2016

Member Details (In accordance with the Listing Rules:)

AS AT 29 FEBRUARY 2016

1. Twenty largest holders

Details of Capral's twenty largest shareholders were as follows:

NO.	NAME OF HOLDER	NO. OF SHARES HELD	ISSUED CAPITAL HELD (%)
1	RBC Investor Services Australia Nominees Pty Limited – Picredit	69,863,006	14.72
2	Citicorp Nominees Pty Limited	65,885,217	13.88
3	HSBC Custody Nominees (Australia) Limited	58,832,228	12.39
4	J P Morgan Nominees Australia Limited	50,575,194	10.65
5	National Nominees Limited	39,308,775	8.28
6	BNP Paribas Noms Pty Ltd – DRP	39,040,806	8.22
7	Citicorp Nominees Pty Limited – Colonial First State Inv Account	17,492,623	3.69
8	BNP Paribas Nominees Pty Ltd – Agency Lending DRP Account	11,894,242	2.51
9	Aust Executor Trustees Ltd – Lanyon Aust Value Fund	10,000,000	2.11
10	RBC Investor Services Australia Nominees Pty Limited – Bkcust Account	6,050,878	1.27
11	Aust Executor Trustees Ltd – Kentgrove Capital Fund	4,665,950	0.98
12	Mr Anthony Matthew Dragicevich	3,820,004	0.80
13	Luton Pty Ltd	3,398,905	0.72
14	Philip John Jobe	3,000,000	0.63
15	Morgans (QLD) Pty Ltd – Morgan Family (Q) S/Fund Account	2,750,000	0.58
16	Mr Gerald Francis Pauley & Mr Michael James Pauley – Pauley Super Fund Account	2,317,316	0.49
17	Mr John George Whiting & Mrs Diana Patricia Whiting – The Whiting Investment Account	2,067,500	0.44
18	Mr Herbert Gregory Greber	1,700,000	0.36
19	Mariva Investments Pty Ltd – Mariva Property Account	1,500,000	0.32
20	Chemical Trustee Limited	1,404,000	0.30
	Total	395,566,644	83.33

2. Substantial shareholders

Substantial shareholders as notified to Capral in accordance with the Corporations Act 2001:

NAME	NO. OF SHARES	% OF SHARES HELD	AS NOTIFIED ON
Allan Gray Australia	89,675,039	18.89	23/3/2015
Perpetual Limited	69,863,006	14.72	24/2/2016
IOOF Holdings Limited	54,880,762	11.56	11/6/2015
Commonwealth Bank of Australia	52,350,210	11.02	23/2/2016
Schroder Investment Management Australia	44,030,499	9.28	12/2/2016
Acorn Capital Limited	32,537,641	6.85	24/2/2016
Total	343,337,157	72.32

3. Number of holders

• (a) Quoted equity securities: there were 1,535 holders of ordinary shares.
• (b) Unquoted equity securities options: there were 4,300,000 unquoted options issued to Capral's previous Managing Director, Mr Phil Jobe.
• (c) Unquoted equity securities performance rights: there were 8,950,143 unquoted performance rights issued to 18 holders under the Capral Long Term Incentive Plan. There is 1 holder who holds 20% or more performance rights under this plan.

4. Voting rights

• (a) Voting rights attaching to the fully paid ordinary shares are, on a show of hands, one vote per person present as a member proxy, attorney, or representative thereof and on a poll, one vote per share for every member present in person or by proxy or by attorney or by representative.
• (b) Holders of options and performance rights do not have any voting rights on the equity securities held by them. Ordinary shares issued on exercise of options or vesting of performance rights will carry the same voting rights as all other fully paid ordinary shares of Capral.

5. Distribution of equity securities

(a) Quoted ordinary shares

RANGE OF SHARES	NUMBER OF HOLDERS
1–1,000	352
1,001–5,000	303
5,001–10,000	196
10,001–100,000	491
100,001 and over	193
Total	1,597

b) Unquoted options/ performance rights

Options issued to the previous Managing Director with various vesting and expiry dates and exercise prices:

RANGE OF OPTIONS	NUMBER OF HOLDERS
1–1,000	0
1,001–5,000	0
5,001–10,000	0
10,001–100,000	0
100,001 and over	1
Total	1

Performance rights granted under the Capral Long Term Incentive Plan (including to the Managing Director) with various vesting and expiry dates and a nil exercise price:

RANGE OF RIGHTS	NUMBER OF HOLDERS
1–1,000	0
1,001–5,000	0
5,001–10,000	0
10,001–100,000	2
100,001 and over	16
Total	18

6. Marketable parcels

The number of shareholders holding less than a marketable parcel* of shares is 657 holders.

(* Minimum parcel size of shares: 5,103)

7. On-market buy back

There is no current on-market buy back.

Corporate Directory

Capral's Registered Office and Principal Administration Office

71 Ashburn Road Bundamba QLD 4304

Telephone: +61 (0)7 3816 7000 Fax: +61 (0)7 3816 7111

Share Registry

Computershare Investor Services Pty Limited ABN 48 078 279 277

Level 2, 60 Carrington Street Sydney NSW 2000

Telephone: 1800 855 080 Fax: +61 (0)3 9473 2118

Auditor

Deloitte Touche Tohmatsu ABN 74 490 121 060

Eclipse Tower Level 19, 60 Station Street Parramatta NSW 2150

Securities Exchange Listing

Capral's shares are quoted on the Australian Securities Exchange (Code: CAA).

Company Secretary

Mr Richard Rolfe

Corporate Governance Statement

http://www.capral.com.au/

– under Corporate / Investors / Corporate Governance

Capral Limited

ABN 78 004 213 692 71 Ashburn Rd, Bundamba QLD 4304 T 07 3816 7000 | F 07 3816 7111 www.capral.com.au