CAPRAL LIMITED — Interim / Quarterly Report 2022

Aug 17, 2022

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2022 Half Year Results Presentation

18 August 2022 Capral Limited (ASX:CAA) 15 Huntingwood Drive Huntingwood NSW 2148

Approved and authorised by Capral’s Board of Directors

OUR BUSINESS AT A GLANCE

AUSTRALIA’S LEADING SUPPLIER OF ALUMINIUM EXTRUSION AND ROLLED PRODUCTS

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#1 EXTRUSION MANUFACTURER

6 PLANTS

8 EXTRUSION PRESSES 65,000 TONNES OF ANNUAL EXTRUSION CAPACITY

#1 SUPPLIER OF INDUSTRIAL ALUMINIUM EXTRUSION

#1 DISTRIBUTOR OF ROLLED ALUMINIUM PRODUCTS

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#2 DISTRIBUTOR OF COMMERCIAL WINDOW AND DOOR SYSTEMS

8 DISTRIBUTION CENTRES 12 TRADE CENTRES

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KEY MARKETS: ANNUAL RESIDENTIAL TURNOVER COMMERCIAL CONSTRUCTION ~$680 INDUSTRIAL MILLION

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MARKET SHARE OVER ~26% 1,000 EMPLOYEES

2

AGENDA

1. 1H22 Highlights

2. 1H22 Financials

3. Strategy

4. Outlook & Guidance

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Tony Dragicevich, CEO & Managing Director

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1H22 PERFORMANCE HIGHLIGHTS

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RECORD FIRST HALF RESULT

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Sales Revenue 34% Underlying EBITDA [1&2] 28%
Volume on par with 1H21 at (excluding rent)
$349m
36,200 $31.6m
(1H21: $261m)
tonnes (1H21: $24.6m)
driven by record high LME
driven by improved sales mix & margin
41% Underlying EPS² 31%
Underlying EBIT [2] Interim Dividend
$1.05
$21.0m 20 cps
(1H21: $0.80)
(1H21: $14.9m) fully franked
NPAT $22.2m includes $3.5m ITB
(1H21: 20 cps)
(1H21: $15.7m)
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Strong balance sheet Strong volume, high operating leverage, with net cash 30 June improved sales mix and margin combined $34.9m to lift profitability to record first half levels

Excellent Safety Performance TRIFR[3] 5.5 (1H21: 6.3)

Important Note

• 1 EBITDA is defined as Earnings before Interest, Tax, Depreciation and Amortisation and, in accordance with AASB16, excludes rent payments $9.5m.

• 2 Underlying EBITDA, EBIT, and Earnings Per Share (EPS) are adjusted for significant items (LME Revaluation $0.3m and Income Tax Benefit $3.5m). 3 TRIFR is total reportable lost time and medically treated injuries per million work hours.

5

SALES VOLUME ON PAR WITH PRIOR PERIOD

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Channels to Market (volume)

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15%
27% 58%
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Extruded Aluminium (Direct from Mill) Extruded Aluminium (via DCs) Rolled Aluminium (via DCs)

Source: Capral DC’s: Capral Distribution Centres

Volume split by Product Group

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85%
Extrusion
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Diverse Industry Exposure

First half volume on par with 1H21

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11%
44%
45%
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Volume supported by:

• Buoyant housing market

• Infrastructure investment and commercial projects

Some Resellers and Solar Rail Distributors resumed importing as supply chain problems eased

Volume Seasonality

Tonnes (000s)

Industrial

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45
40
35
30
25
20
15
10
5
0
1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21 1H22
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Residential Building Commercial Construction

Residential building includes additions and alterations Industrial includes transport, marine and other manufacturing sectors

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15%
Rolled (Sheet
& Plate)
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Source: Capral

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RESIDENTIAL MARKET SLOWING BUT PIPELINE STRONG

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2022

Annual Dwelling Commencements ¹ (000’s)

Latest estimate ¹ 210,200 starts in 2022, down 8% on 2021

• Residential starts impacted by;

• • Higher interest rates
• • Removal of government incentives

• Detached dwellings down by 14%

• Multi-res up by 2%

• Much of the anticipated drop in starts is forecast to occur in the second half of 2022

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250
200
150
100
50
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (F)
Detached Housing Multi-Res Low Rise Multi-Res High Rise
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Capral’s volume mainly aligned with Detached and Low-Rise Dwellings (shaded green in graph)

¹Source: BIS Oxford Economics (May 2022)

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RECENT CAPRAL RESIDENTIAL & COMMERCIAL PROJECTS

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UTAS – Student Accommodation, TAS

Fabricator: Hobart Glass Products: Capral Commercial Window Systems

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TRN House, NSW Fabricator: Wintech Products: Capral Commercial Curtain Wall

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Henley Beach Residence, SA

Fabricator: KR Installations Products: Schuco Windows and Doors

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Karringal Green Aged Care, WA Fabricator: Concept Windows Products: Capral Commercial Hinged Doors & Sliding Doors

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INDUSTRIAL SECTOR REMAINS STRONG

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Total Capral Industrial Volumes (Index 2012)

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160
140
120
100
80
60
40
20
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
LTM
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Source: Capral

Marine

Manufacturing & General Fabrication

Steady market conditions Commercial ferry builds slowed

Markets solid and share gains holding against imports

Solar

Wet weather conditions and increased imports reduced demand for local supply

Resellers

Volume to industrial distributors softened as imports resumed

Industrial Construction

Solid growth in infrastructure investment Growth in cladding sector as rectification activity starts

Transport

Strong conditions continued

Transport sector remains strong

• New truck builds posted record first half year

• • Government stimulus assisted sector recovery (instant asset write-off)

• Strong grain season and sector optimism supports ongoing high activity levels

New Truck and Van Builds (000’s)

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45
40
35
30
25
20
15
10
5
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
LTM
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Source: Truck Industry Council of Australia

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RECENT CAPRAL INDUSTRIAL PROJECTS

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Holmwood Higate Tanker, QLD

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Great Barrier Reef Pontoon – English Engineering, North QLD

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Willinga Park Equestrian Centre, NSW South Coast Capral Aluminium Seating System

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MONA Museum Catamaran – Richardson Devine Marine, TAS

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FIRST HALF FINANCIALS Tertius Campbell, CFO

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RECORD FIRST HALF EARNINGS

• First half volume marginally higher than prior period

• Sales Revenue increased 34% on 1H21, driven predominantly by higher metal prices (LME)

• Underlying EBITDA up by 28% on 1H21, primarily due to improved sales mix and margin

• Depreciation on owned assets increased mainly due to acquisition of Smithfield plant

• Operational Finance Cost is primarily driven by line fees and LC costs for imported products

• $3.5m additional Income Tax Benefit recognised during 1H22 (1H21:$2.0)

• Significant Items consist of $0.3m net LME revaluation gain (1H21:$1.5m)

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5.4 1.7 21.0
(1.4)
0.4
14.9
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Sales Volume ('000 tonnes)  Sales Revenue  Underlying EBITDA¹  Depreciation/Amortisation  - Owned Assets - Right of Use Assets Underlying EBIT¹ Significant Items EBIT Finance Cost  - Operational Funding - Right of Use Leases Net Profit Before Tax Income Tax Benefit  Net Profit After Tax LME Revaluation Significant Items  Underlying Earnings Per Share ($) Statutory Earnings Per Share ($)	1H22 1H21 36.2 35.9 $m $m 349.0 261.2 31.6 24.6 (3.7) (3.1) (6.9) (6.6) 21.0 14.9 0.3 1.5 21.3 16.4 (0.5) (0.6) (2.2) (2.2) 18.7 13.7 3.5 2.0 22.2 15.7 0.3 1.5 0.3 1.5 1.05 0.80 1.27 0.93

¹See Important Note (page 5).

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SOUND FINANCIAL POSITION THAT PROVIDES CAPACITY FOR DIVIDENDS AND GROWTH INVESTMENT

BALANCE SHEET	JUN 22	DEC 21
Current Assets	$m	$m
Inventory 	174.4	130.5
Trade Receivables 	119.9	96.3
Cash and Equivalents 	55.4	50.1
Other	4.1	0.7
	353.8	277.7
Current Liabilities
Trade Payables	(183.6)	(139.0)
Lease Liabilities 	(14.9)	(15.8)
Borrowings	(20.5)	-
Provisions and Other	(18.3)	(19.1)
	(237.3)	(173.9)
Net Current Assets	116.5	103.8
Non Current Assets 	146.2	147.6
Non Current Lease Liabilities 	(81.5)	(87.7)
Non Current Provisions	(7.0)	(6.5)
Net Assets	174.2	157.2
Working Capital Ratio 	11.5	10.7
Net Tangible Asset Value	152.2	138.0
NTA per share	$8.54	$8.03
Franking Credits	9.6	13.3
Accumulated Unrecognised Tax Losses 	159.6	196.3

• Inventory (raw material and finished goods) increased due to; rebuild from low levels at start of year, record high metal prices (LME), and higher goods in transit

• Increased receivables due to higher sales price (LME), metrics remain excellent with DSO at 46 days (1H21:44 days)

• $90m multi-option debt facility with ANZ Bank, expiring April 2023 with sufficient headroom to fund working capital and trade instruments (LC’s). Net cash of $34.9m is after accounting for short term trade loans of $20.5m

• Lease Liabilities (current and non-current) of $96.4m, primarily property leases as defined by AASB16, net impact is a reduction in Net Assets of $27.7m due to timing of lease terms

• Non-Current Assets include $68.7m “right of use” leased assets as defined by AASB16

• Working Capital ratio (Sales Revenue/Average Working Capital) at 11.5 is below historical levels of 12.5 – 13.5

• A further $3.5m Deferred Tax Asset was recognised to reflect increased utilisation of tax losses in future periods

Metrics remain strong and well within bank covenants providing flexibility to manage uncertainty

• Leverage ratio¹ reduced to 2 times Underlying EBITDA (1H21:2.2)

• Gearing² increased from 25.4% to 26.6% driven by debt funded increase in working capital

• Underlying EBITDA Interest cover³ maintained at around 40 times

• ¹ Leverage ratio is Net Debt/Underlying EBITDA

• ² Gearing is Net Bank Debt/Net Bank Debt & Equity

• ³ The calculation of interest cover used for bank covenant purposes may differ from calculations drawn directly from the financial statements

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STRONG CASH EARNINGS OFFSET BY HIGHER WORKING CAPITAL REQUIREMENTS DUE TO RECORD HIGH METAL COSTS (LME)

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Continued strong focus on cash management. Cash conversion ratio lower due to increase in working capital but will improve as working capital levels normalise

• Working Capital increase driven by increased debtors and inventory due to rising sales prices and record high metal costs (LME)

• Operational interest charge broadly in line with prior period

• Maintenance, Environmental and Safety capex ~$4m pa in line with plan. Major projects underway; Huntingwood Paintline and Penrith Press rebuild

• Acquisition of extrusion plant in Smithfield, NSW in 1H21

• Dividend paid was net of a 30% up take of the Dividend Reinvestment Plan (DRP)

• Bank Guarantees primarily used in respect of property leases

• Trade Instruments mainly letters of credit (drawn and open) in relation to imported product

• Trade/Other loans represent debt facility usage to fund working capital needs, maximum usage during 1H22 $20.5m (1H21: Nil)

CASH FLOW	1H22	1H21
	$m	$m
EBITDA1	31.9	26.2
Working Capital 	(28.0)	(11.8)
Finance Cost 	(2.9)	(2.6)
Operating Cash Flow	1.0	11.8
Capital Expenditure 	(4.7)	(3.8)
Acquisition/Investment 	-	(10.3)
Rent Principal payments	(7.4)	(7.9)
Free Cash Flow	(11.1)	(10.2)
Proceeds from borrowings 	20.5 0.4 (6.0)	-
Other		-
Dividends Paid 		(5.4)
Increase/(Decrease) in Net Cash	3.8	(15.6)
BANK FACILITY USAGE	1H22	1H21
	$m	$m
Bank Guarantees 	4.4	3.8
Trade Instruments 	51.5	36.2
Trade/Other loans 	20.5	-
NET CASH POSITION	1H22	1H21
Cash Balance in funds	34.9	33.8

1 See Important Note (page 5)

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STRATEGY AND OUTLOOK Tony Dragicevich, CEO & Managing Director

BUILD on our strengths

OPTIMISE what we do

GROW for the future

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IMPROVE PRODUCTIVITY AND COMPETIVENESS, RETAIN MARKET SHARE GAINS

Distribution

Manufacturing

• Release Capral’s new window & door product range and systems software

• Continue process improvement programmes at all extrusion plants

• Range enhanced by purchase of assets & rights to the EDGE high thermal performance window systems (<$1m)

• Maintenance capital spend to ensure ongoing plant reliability and efficiency

• Progressively upgrade shopfloor control systems to a common platform

• Installation of paintline in our NSW distribution centre on track for 4Q22

• Upgrade of the Penrith extrusion plant starts 4Q22

• Long term goal is to grow Capral’s direct distribution channel

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Sales

• On-going technology investment to improve sales effectiveness including; customer interfaces (EDI), CRM, and digital marketing (EDM)

• Upgrades to website and e-store are progressing

• Seeking opportunities to expand regional trade centre footprint

MARKET DEVELOPMENT

Solar

Regain and grow share in the $60m+ solar rail market

Defence

Capral is an approved supplier to major defence contracts

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Cladding

Work with cladding system suppliers to address new fire standards and recladding opportunities

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Imports and Anti-Dumping

Retain market share gains Continue fight for fair trade Appeal the July 2022 decision to discontinue measures on Malaysia and Vietnam Initiate variable measures review on Chinese imports in Q322

16

ON A PATH TO A BETTER TOMORROW

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OUR ROADMAP

• Active sustainability committee.

• Net Zero by 2050 (Scope 1 and 2 emissions)

• Drive sustainability best practice throughout business

• Underpinned by a commitment to the United Nations Sustainability Development Goals

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Identify and implement strategies and processes to minimise the use of energy and develop sources of renewable energy

Reduce how much waste is going to landfill by reuse, repurpose, and recycle

Identify and introduce ways to minimise the use of paper and ensure any paper used is from sustainable sources

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Source from ethical suppliers providing sustainable, nontoxic, biodegradable and recycled products

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FIRST HALF HIGHLIGHTS

• Scrap recycling agreement with Tomago aluminium smelter, an Australian first

• $1.2m investment in solar renewal energy at Campbellfield, VIC ~20% of site energy consumption

• Replaced 400 high bay warehouse lights at Bremer Park, QLD with LED’s reducing lighting energy consumption by 45%

• Joined the Aluminium Stewardship Initiative (ASI)

• Joined MECLA (Materials Embodied Carbon Leader Alliance) to assist in guiding the Built Environment towards using more sustainable aluminium in projects

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ALUMINIUM PRICE AT RECORD HIGHS

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Aluminium Price (LME & Premiums)

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Metal Cost ($A/kg)
5.00


4.00
3.00
2.00
1.00
0.00
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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 17 17 17 17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21 21 22 22

• MJP regional premium increased 78% during FY21

Significant increase in Billet premium in 2022

• Average LME increased 30% during FY21 to $A3,195t (Dec20 $A2,660t, Dec21 $A3,770t) due to high global demand

LME increased sharply during 1H22 to a record high of $US3,664/t (~$A4,800/t month avg) in March due to speculation of an embargo on Russian aluminium. This did not eventuate and LME has since declined sharply, and further moderate declines are forecast during 2H22

LME Premiums

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OUTLOOK AND EARNINGS GUIDANCE

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• Capral’s operations continue to be impacted by COVID and Flu related absenteeism

• Residential building is forecast[2] to soften during 2[nd] half of 2022

• Other key markets, Commercial and Industrial, are expected to remain at relatively high levels

• Reseller volumes falling as import supply chains normalise

• LME peaked at record levels in 2Q22, has recently returned to December 2021 levels, and is forecast³ to fall moderately during the second half of 2022

• Inflationary cost pressures starting to impact, especially; energy, packaging and freight

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• Absent any unforeseen events, FY22 guidance is maintained with Underlying EBITDA¹ expected to be in the range of $53m-$57m, and Underlying EBIT¹ in the range of $32m-$36m

• On this basis, Capral would be in a position to continue the payment of a fully franked final dividend

• ¹ See Important Note (page 5)

• ² Source: BIS Oxford Economics May 2022 forecast

• ³ Source: Harbor Aluminium Intelligence Unit

This presentation includes forward-looking estimates that are subject to risks, uncertainties and assumptions outside of Capral's control and should be viewed accordingly

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QUESTIONS

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STRATEGIC NATIONAL FOOTPRINT CAPRAL HAS A NATIONAL FOOTPRINT WITH A PRESENCE IN EVERY STATE AND CAPRAL HAS A NATIONAL FOOTPRINT WITH A PRESENCE IN EVERY STATE AND EXTRUSION PLANTS NEAR FIVE MAINLAND CAPITAL CITIES EXTRUSION PLANTS NEAR FIVE MAINLAND CAPITAL CITIES

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RDC – Regional Distribution Centre AC – Aluminium Centre

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Distribution Centres 4 Bremer Park Manufacturing Plant
Queensland 20 ► Capacity 30k tonnes
1 ► Cairns AC Darwin ► 4 presses (1 moth balled)
2 ► Townsville RDC / AC 1 ► 1 paint line
3 ► Sunshine Coast (Kunda Park) ► Co-located with distribution centre
4 AC Townsville 2 ► Recent investments: automated
5 ► Bremer Park RDC product handling and packing
6 ► Brisbane (Springwood) AC 3 ► Site restructure 2019
► Gold Coast (Burleigh Heads) AC Brisbane 4
7 New South Wales 5
9 ► Newcastle AC 6 8 Penrith Manufacturing Plant
10 ► Huntingwood RDC 19 18 ► Capacity 8k tonnes
► Rockdale AC 17 Perth 7 ► 1 press
12 Victoria Adelaide 8
13 ► Lynbrook AC 16 14 Sydney 11 9
14 ► Campbellfield RDC / AC 16 Canning Vale Manufacturing Plant Melbourne 10 11 Smithfield Manufacturing Plant
► Laverton AC ► Capacity 7k tonnes 14 13 12 ► Capacity 9k tonnes
16 South Australia ► 1 press ► 1 press
Hobart
► Kilburn RDC
► 1 paint line
17 Western Australia ► Recent investments: new paint line, 21 12 Campbellfield Manufacturing Plant
18 ► Canning Vale RDC warehouse extension and site consolidation ► Capacity 9k tonnes
19 ► Welshpool AC ► Co-located with distribution centre ► 1 industrial press
► Wangara AC ► 1 paint line (RDC)
20 Northern Territory 15 Angaston Manufacturing Plant ► Co-located with distribution centre
► Darwin RDC
► Capacity 9k tonnes
21 Tasmania ► 1 press Manufacturing plant Distribution centre
► Hobart RDC
► 1 paint line
Manufacturing plant with Corporate head office
distribution centre (Huntingwood, NSW)
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