1999 Annual Report - globaldocuments.morningstar.com

1999 Annual Report

Unwin Street, Granville NSW 2142, Australia. Telephone: +61 2 9682 0711 Facsimile: +61 2 9682 0777 Internet: www.capral-aluminium.com.au

Capral A

luminium

Limited A

nnual Report 1999

Corporate directoryCapral Aluminium Limited

(ACN 004 213 692 – Incorporated in the State of Victoria)

Registered OfficeUnwin Street, Granville NSW 2142,Australia. Telephone: +61 2 9682 0711 Facsimile: +61 2 9682 0777Internet: www.capral-aluminium.com.au

Auditors PricewaterhouseCoopers, Sydney, NSW.

Share RegistersSydney: Computershare Registry Services Pty. Limited, Level 3, 60 Carrington Street, Sydney,NSW 1115,Australia.Auckland: Capral Aluminium NZ Limited,Wiri Station Road, Manukau Auckland, New Zealand.The company’s shares are quoted on the Australian Stock Exchange and the New Zealand Stock Exchange.

Senior managementIan Edwards Managing Director

Chris Clement-Jones General Manager,Asia and Business Development

Trevor Coombe General Manager, Smelting

Martin Haszard General Manager, Extrusion

John Krenich Company Secretary

Bob Heiler Chief Financial Officer

Richard Michael General Manager, Foil

Tony Rae General Manager, Human Resources

John Spinaze General Manager, Sheet

Glen Thomas General Manager, Distribution

Bill Wright Chief Technical Officer

Financial calendar(dates subject to change)

15 February 2000 1999 results and final dividend announced

1 March 2000 Record date for 1999 final dividend and special dividend

21 March 2000 1999 final dividend and special dividend paid.

18 April 2000 Annual general meeting

15 August 2000 Half-year results and interim dividend announced

29 August 2000 Record date for 2000 interim dividend

19 September 2000 Interim dividend paid


6 March 2001 Record date for 2000 final dividend

27 March 2001 2000 final dividend paid.

Des

igne

d an

d pr

oduc

ed b

y LK

S

Performance 2From the Chairman and Managing Director 4

Smelter 8

Extrusion 10

Distribution 12

Rolling, Sheet and Foil 14

Environment and Safety 16Board of directors 18

Corporate governance statement 19Directors’ report 21

Financial statements 24Shareholders details 47

Group five year summary 48Corporate information 49

CAPRAL ALUMIN IUM 1

Capral Aluminium is committed to quality – both in the relationships we have

with our customers and in the standard of our service and products.

We are aware of the challenges and opportunities of operating in a competitive

global marketplace.

We are focused on developing value-added products for growing world markets,

through innovation and the application of new technologies.

Capral Aluminium aims to consistently set a standard of excellence.

1999 Annual ReportCapral Aluminium LimitedACN 004 213 692

Capral Aluminium

CAPRAL ALUMIN IUM2

performanceOperating profit for year $35 million.

Net profit for year $22.6 million up 64% from $13.8 million.

Total sales revenue of $743 million down 1% from $750 million.

Export revenue of $196 million down 5% from $206 million.

Ordinary dividends at 8 cents per share, fully franked.

Special dividends at 10 cents per share, fully franked.

Primary earnings reduced to $26.9 million from $39.4 million.

Metal price increased in second half to $2,322 from $1,975 in first half.

Primary earnings $24.3 million in second half.

Earnings from Fabrication reduced to $27.8 million from $32.6 million.

EXPORT REVENUE

1995 $212M1996 $166M1997 $200M1998 $206M1999 $196M

CASH FROM OPERATIONS

1995 $126M1996 $84M1997 $77M1998 $78M1999 $54M

NET PROFIT

1995 $60M1996 $29M1997 $40M1998 $14M1999 $23M

SALES REVENUE

1995 $829M1996 $796M1997 $743M1998 $750M1999 $743M

CAPRAL ALUMIN IUM 3

SMELTER 1999 1998

Total sales revenue* (A$m) 369 396EBIT (A$m) 27 39Average LME price (US$/tonne) 1,389 1,380Average A$:US$ exchange rate 0.6457 0.6290Average LME price (A$/tonne) 2,151 2,194Production (‘’000 tonnes)Smelter 147 152Recycling 23 21* Includes internal transfer

FABRICATION – Extrusion, Distribution and Rolling 1999 1998

Total sales revenue (A$m) 532 526EBIT (A$m) 28 33EBIT: revenue margin 5.3% 6.3%

DIVIDENDS

1995 $32M1996 $72M1997 $62M1998 $36M1999 $37M

NET DEBT TO EQUITY

1995 25%1996 21%1997 27%1998 24%1999 26%

ALUMINIUM PRICE – 3-MONTH LME – US$ per tonne

1995 $1,8331996 $1,5371997 $1,6191998 $1,3801999 $1,389

ALUMINIUM PRICE – 3-MONTH LME – A$ per tonne

1995 $2,4711996 $1,9641997 $2,1821998 $2,1941999 $2,151

CAPRAL ALUMIN IUM4

The last year has been very significant

for Capral Aluminium Limited with

the strategic announcement of an

intention to restructure the company

to maximise shareholder value.

Operationally a number of significant

developments were implemented to

increase competitiveness.

Trading conditions were

challenging with low metal prices

impacting Smelter earnings for the year.

There was a significant lift in profit as

metal prices firmed in the second half.

For the Fabrication businesses demand

was firm but margins were nevertheless

squeezed by strong competitive pressure

as the increasing metal prices were

passed through to the market with a

marked time lag.

Profit increased to $22.6 million

from $13.8 million in the previous year.

Profit before tax and abnormals in 1999

was $35 million, while in 1998 the

comparable result was $58 million.

The Board is pleased to have

declared a final dividend of 5 cents per

share, and a further special dividend of

5 cents per share, bringing the total

dividends for the year to 18 cents per

share, fully franked. These payments

reflect the continued strong financial

position of the company.

Overview of Operations

Earnings from the company’s smelting

operations of $26.9 million represent a

fall of $12.4 million on the result

achieved in the previous year. The

smelting operations were adversely

affected by low metal prices which

averaged A$2,151 per tonne for the

year. The metal price recovered in the

second half of the year and this resulted

in a much improved performance from

the Smelter in the six months to

31 December 1999.

Electricity is a major cost input

for aluminium smelters and the

competitiveness of the Kurri Kurri

Smelter continues to be affected by

relatively high energy costs. The Board

is of the view that the full benefits of a

deregulated national electricity market

are yet to take effect. For this reason, the

company has opted to enter into a short

term electricity supply agreement in

order to limit the company’s exposure

from the Chairman & Managing Director

CAPRAL ALUMIN IUM 5

to the current pricing regime and

to enable full advantage to be taken of

more effective competition in the

future. The current short term

agreement with Energy Australia

and Delta Electricity expires on

30 June 2000.

By contrast, the Board was pleased

to announce earlier this year that the

company had entered into a five year

agreement with Kaiser Aluminium and

Chemical Corporation for the supply of

alumina, the other key input for

aluminium smelting. To take effect on

1 January 2001, this agreement ensures

the supply of competitively priced

alumina to the Kurri Kurri Smelter

up to the end of 2005.

The implementation of Year 2000

compliant computer systems was a

significant issue. There were some

disruptions to customer service and

progress on cost reduction was delayed.

The company’s Extrusion and

Distribution businesses achieved an

improvement in sales, with revenue up

6% on the previous year.This result was

achieved despite strong competition

from imports and was based on a

continuing commitment to providing

enhanced value-added products for our

customers while also lowering costs.

Already a leading player in the

manufacture of extruded products

in Australia and New Zealand,

the company sees significant growth,

and customer service enhancement

opportunities, in the wider Asia-

Pacific region.

Recent improvements at our

Yennora extrusion facility in Sydney

have resulted in increased sales of high

precision extruded products in the

expanding automotive, electronic and

white goods industries in the region.

The technology licence agreement with

United States company Brazeway

announced earlier this year, coupled with

an associated $3 million investment at

Yennora, will enable a further

expansion of the company’s capabilities

in the manufacture of specialised

extruded products during the current

year. The acquisition of Fletcher’s

extrusion operation at Hamilton will

enable a rationalisation of under-

utilised assets in New Zealand.

Managing Director, Ian Edwards and Chairman, Jeremy Davis

CAPRAL ALUMIN IUM6

As previously reported, the

competitiveness of the company’s

Sheet and Foil businesses has declined

in recent years, due to factors of

age and scale, when compared

with international benchmarks.

Nevertheless, the Rolling business

remains marginally profitable and is an

important supplier of raw product

through the company’s existing

distribution channels.

As part of the Board’s continuing

evaluation of the company’s operating

assets, a decision was made late in the

year to close the petrol tanker

manufacturing and servicing business of

Capral subsidiary Hockney Pty

Limited. Those operations were non-

core assets and their performance was

considered inadequate to justify

retention by the company.

We are pleased to report that the

company’s environmental compliance

and workplace safety practices saw

further improvements in 1999. Full

compliance with greenhouse emissions

targets was achieved while the

performance on safety was the best on

record for the company.

Outlook

During the course of 1999, the Board

undertook a thorough review of the

company’s operations and strategic

direction.This review culminated in the

decision announced in November 1999

to proceed with a restructure of the

company’s operations. This restructure

involves the separation of the two major

businesses of Capral Aluminium –

smelting and the fabrication and

distribution businesses. The overriding

objective of the Board’s review is to

ensure that returns to shareholders are

maximised, while recognising that

changes in the trading environment no

longer make it necessary to maintain a

vertically integrated smelting and

fabrication business.

Since the announcement, the

company has received approaches from

a number of substantial industry

participants, expressing an interest in

acquiring the company’s smelting

operations. The Board was encouraged

by this response and in February this

year announced that it would pursue

from the Chairman & Managing Director

Notice of Annual General Meeting

The Annual General Meeting will be held on Tuesday 18 April 2000 commencing at 2.30pm at the Sheraton on the Park

Hotel, 161 Elizabeth Street, Sydney.The business to be presented at the meeting is set out in the separate Notice of Meeting

issued with a proxy form to shareholders with this report.

CAPRAL ALUMIN IUM 7

the possible sale of the Kurri Kurri

Smelter. Since that time, an Information

Memorandum has been prepared and

issued to qualified parties. Capital

management will be addressed as part of

the restructure process.

Any sale will be conditional upon

receiving the approval of shareholders.

In November last year when the Board

announced the proposed restructure, it

was envisaged that a proposal would be

ready to be put to shareholders for

approval at the Annual General Meeting

in April this year. However, given the

time required to conduct the sale

process, it is now expected that a final

sale proposal will be put to shareholders

at an Extraordinary General Meeting to

be held towards the middle of this year.

We intend to provide shareholders with

an update on progress with the

proposed restructure in April at the

Annual General Meeting.

As we contemplate the changes

ahead, the Board and management of

Capral Aluminium look forward to the

future with confidence. The initiatives

which are presently being implemented

will ensure that the full value of the

company is able to be realised for

the benefit of shareholders, while

positioning the ongoing business as an

innovative and competitive player

in high growth markets in the Asia

Pacific region.

Finally on behalf of the Board we

would like to thank all of our

employees for their hard work and

commitment in what has been a

very demanding year. Substantial

efforts applied to implementing new

processes to lift competitiveness were

much appreciated. The demonstrated

improvement in safety performance also

reflects well of the quality of the

company’s workforce across all divisions.

Jeremy Davis

Chairman

Ian Edwards

Managing Director

15 February 2000

“ Already a leading player in the manufacture of

extruded products in Australia and New Zealand,

the company sees significant growth, and

customer service enhancement opportunities,

in the wider Asia-Pacific region.”

CAPRAL ALUMIN IUM8

smelter

Earnings for the company’s Smelter

operations for the year of $26.9 million

were down on the $39.4 million

recorded in the previous year.This result

reflects a very difficult first half of the

year, during which Smelter earnings

were adversely affected by historically

low metal prices. However, a stronger

second half performance during which

the Smelter recorded earnings of

$24.3 million, reflected an improvement

in metal prices to A$2,322 per tonne

from A$1,975 per tonne in the first half

of the year.

Some major initiatives were

undertaken during the year, to enhance

the productivity of the Smelter.

Trevor Coombe

General Manager

Smelting

CAPRAL ALUMIN IUM 9

These include the introduction of

new process technology, workplace

restructur ing and better business

systems.

Our ongoing relationship with the

major European aluminium company,

VAW of Germany, continues to provide

benefits through the transfer of advanced

technology to the production process.

The first substantially changed pot,

based on VAW technology, became

operational in January 1999 and is

expected to double pot working life.To

support Smelter output pot turnaround

activities have recently been outsourced.

This should improve pot turnaround

times by 40%.

The VAW technology is being

applied to all pots in Potlines 2 and 3

with changes progressively introduced as

each pot reaches the end of its economic

life. At 31 December 1999 of the 240

pots 78 had been converted. Additional

Smelter output and lower unit costs will

result from these improvements, but the

expected benefits will not begin to flow

through significantly until 2001. VAW

also conducted a further and extensive

review of production processes last year

as a continuing basis for ongoing

technical improvements.

A new system was implemented

during the year as a means of more

effectively tracking internal costs.

Developed by our own employees, this

system will result in greater cost control

across the smelting business.

Protection of the environment

continues to be a priority for the

Smelter and 1999 was our best

year to date in terms of environmental

performance.

CAPRAL ALUMIN IUM10

Australia

The Extrusion Division had a

particularly challenging year with a

wide range of activities across the

business. Competition was strong,

particularly from imports, and margins

squeezed. Unit costs again declined.

A new computer system was

implemented across the business to

enhance customer service, productivity

and to ensure Year 2000 compliance.

Regrettably customer service

performance was affected during

installation; performance, however,

steadily improved during the second half

of the year. The demanding imple-

mentation coupled with an intensive

period of learning, while impacting on

1999, will be an investment for the

future. Although there has been some

delay in further reducing business costs,

management has a clear commitment to

achieve these savings.

Consistent with the enhanced

ability of the new system, the customer

service and national logistics teams were

centralised at the Minto extrusion

facility to improve efficiency and reduce

costs.With the increased functionality of

the new system, the Division is better

able to balance workloads across all

plants, thereby delivering benefits to

our customers in the form of short

lead times.

extrusion

Martin Haszard

General Manager

Extrusion

CAPRAL ALUMIN IUM 11

All die manufacturing was

consolidated into the Minto Die Shop

and upgraded with Computer Aided

Design (CAD) and Computer Aided

Manufacturing (CAM) capabilities.

Production capacity was also increased

through investment in new machining

equipment. Efficiency was further

improved with the closure of high cost

finishing plants, one at Eagle Farm in

Queensland and the other at Granville

in New South Wales,with the work sub-

contracted out to local suppliers.

Another highlight of 1999 was the

signing of a technology licence

agreement with Brazeway Inc of the

United States. This agreement will

enable Capral to expand and strengthen

its current market positions in Asia,

Australia and New Zealand, for

specialised extrusions in automotive

air conditioning and refrigeration

applications, and be part of a global

supply network. It is expected that

production will commence in the

fourth quarter of 2000 at the company’s

Yennora facility in Sydney, following the

completion of a $3 million capital

investment program.

New Zealand

The Extrusion business in New Zealand

continued to perform well with

satisfactory returns. Sales volumes

improved as a result of more favourable

economic conditions and increased

market share. Productivity gains were

made in both the extrusion production

and support functions.

Customer service to our NuLook

window franchise customers improved

due to better inventory management

and production planning systems. The

new Year 2000 compliant computer

system was successfully implemented

with minimal impact on customer

service performance.

CAPRAL ALUMIN IUM12

Distribution

The year was a good one for

Distribution. Earnings increased and

returns continued to be satisfactory.The

Division’s share of the aluminium

distribution market increased signific-

antly, with a positive effect on sales and

profitability.

In 1999 the Division launched

a new software product called

“Estimator”. This software allows

fabricators to provide estimates quickly

and accurately for Capral window and

door systems, and complements the

“Specifier” CD-ROM launched by

Capral in 1998. These two products

have been enthusiastically received by

distribution

Glen Thomas

General Manager

Distribution


customers, and position Capral well for

its future in this market.

The construction of two new trade

centres, one at Wetherill Park in Sydney

and another at Sunshine in Melbourne

resulted in further expansion of our

distribution network. A modern lower

cost warehouse was also opened in

Brisbane, coinciding with the closure of

Capral’s smaller warehouses at Eagle

Farm and Acacia Ridge.

The Division also continued its

activities in the distribution of stainless

steel. Results for this part of our business

were down for the first half of 1999, due

largely to depressed prices for stainless

steel. However a turnaround in prices

in the second half of the year, combined

with a selectively increased product

range, leaves us well positioned to

maximise the potential of this market in

the current year.

By continuing to improve customer

service, expanding our distribution

networks and by maintaining a focus

on operating cost minimisation, the

Division is confident of achieving

another good result in 2000.

CAPRAL ALUMIN IUM14

John Spinaze

General Manager

Sheet

Richard Michael

General Manager

Foil

rolling sheet & foil


The year was a difficult one for the

company’s Sheet and Foil businesses,

and returns were marginal and

disappointing.The year was again one of

strong competition with increasing

metal prices squeezing margins in the

second half. Sales for most products

remained strong.

The businesses continue to seek

growth opportunities in value-added

sales both domestically and in export

markets. An example of the ongoing

development of products is the

introduction of new laminate products

by the Foil Division resulting in several

new accounts, displacing mainly overseas

suppliers. In the Sheet Division the

roofing products are being restructured

to improve customer service and to take

advantage of Capral’s growing share of

this market.

A key focus for both businesses is

one of increasing customer service and

improving product quality. As part of

this commitment, the new computer

system was also implemented in the

Sheet Division. Although this caused

a temporary disruption to services

during its installation, the system is

now functional and already having a

positive impact.

The Foil Division has also achieved

substantial improvements in customer

and service productivity after one full

year using the new system and further

improvements are expected in 2000.

CAPRAL ALUMIN IUM16

Environment and Safety

We are pleased to report that Capral’s

overall performance in environment,

health and safety continued to improve

throughout 1999.

As a partner in the Greenhouse

Challenge Program, Capral has met

its commitments to the Federal

Government in reducing its greenhouse

gas emissions with an overall reduction

of 19% per tonne since 1990. In fact, the

results for 1999 are slightly better than

the emission target we set for ourselves

at the start of the program.

Emissions of other gases from the

Smelter were also reduced. Fluoride

emissions were the lowest they have

been in six years. No reportable

excedences of emission licence

conditions occurred.

Water consumption was reduced by

7% during 1999 and water pollutants

were reduced by 13%, due largely to a

rationalisation of activities in the

Extrusion Division. Recycled waste was

reduced by 17% due to an improvement

in our remelt processes resulting in the

generation of less dross waste.

The number of spent pot linings

from our Smelter increased slightly

throughout 1999 causing an increase in

the amount of hazardous waste

environment & safety

MEDICAL TREATMENT INJURY FREQUENCY RATE PER MILLION HOURS WORKED• EMPLOYEES AND CONTRACTORS

1995 72.71996 71.81997 51.21998 31.91999 23.7


produced.This trend is not expected to

continue, however, because we are

beginning to replace the existing pots

with the new VAW designed pots, which

have a longer operating life.

We also experienced a very slight

increase in the amount of non-

hazardous waste produced in 1999. We

are not satisfied with this result and as

a consequence we have included a

waste audit and a review of waste

management, as key items in our 2000

Environmental Improvement Plans.

Capral’s safety performance in 1999

was the best result that the company has

recorded to date. We achieved a 42%

reduction in the number of lost time

injuries (LTIs) and a 26% reduction in

the number of medical treatment

injuries (MTIs) across all divisions.

The company was fined during 1999

under two Workcover prosecutions, one

for an incident in 1994 and the other for

an incident in 1997. Each of these led to

even further improvements in our

already high standard of employee safety.

This overall pleasing result for

safety was due largely to significant

improvements in both the Extrusion

and Smelter Divisions, which achieved a

70% reduction in LTIs and a 60%

reduction in MTIs, respectively. The

New Zealand business and the

Extrusion plants at Canning Vale and

Hemmant, all recorded a LTI free year.

The Extrusion plant at Campbellfield

recorded its third consecutive year with

no LTIs.

LOST TIME INJURY FREQUENCY RATE PER MILLION HOURS WORKED• EMPLOYEES AND CONTRACTORS

1995 7.51996 13.11997 8.51998 6.51999 3.8

WATER CONSUMPTIONKILOLITRES OF WATER PER PRODUCTION TONNE

1997 2.611998 2.481999 2.31

WATER POLLUTANTSTONNES OF POLLUTANTS PER PRODUCTION TONNE

1997 0.000451998 0.000451999 0.00039

NON-HAZARDOUS WASTETONNES OF WASTE PER PRODUCTION TONNE

1997 0.02221998 0.01921999 0.0199

NON-HAZARDOUS WASTETONNES OF WASTE PER PRODUCTION TONNE

1997 0.06631998 0.06621999 0.0760

RECYCLED WASTETONNES OF WASTE PER PRODUCTION TONNE

1997 0.07481998 0.07281999 0.0600

PRIMARY SMELTING GREENHOUSE EMISSIONSTONNES OF CO2 EQUIVALENT PER TONNE OF PRIMARY METAL PRODUCTION

1990 24.211993 22.281994 20.231995 21.221996 20.841997 20.021998 20.091999 19.6

CAPRAL ALUMIN IUM18

A.B. Daniels OAMAppointed a non-executive director 1996. Age 64.Member of the Personnel Committee, CapralAluminium Limited. Director of Australian Gas LightCompany, Orica Limited, Pacific Dunlop Limited,Pasminco Limited, and IBJ Australia Bank Limited.Chairman of NSW State Superannuation Trustee Corporations.

J.T. Dominguez CBE, AM, BA, BCommAppointed a non-executive director 1994. Age 61.Chairman of the Audit Committee, Capral AluminiumLimited. Chairman of Ceedata Holdings Pty Ltd,Paladin Australia Limited, and Quicksmart Online PtyLimited. Director of ABB Australasia Group, EtradeAustralia Limited, Nestlé Australia Limited, O’ConnellStreet Associates Pty Ltd, PA Consulting Group,Scudder Investments Australia Limited, Tat HongHoldings Limited (Singapore) and WESFI Limited.Member of Australian Stock Exchange and Fuji XeroxCo.,Ltd (Japan) – Asia Pacific Advisory Council.Former Executive Chairman of Swiss BankCorporation’s Australian investment bankingoperations including SBC Dominguez Barry Limited.

Top row from left to right: J.G.A. Davis, I.F. Edwards, G.M. Carnegie, E.J. CloneyBottom row from left to right: A.B. Daniels, J.T. Dominguez, B.R. Kean, B.H. Lochtenberg

J.G.A Davis BEc, MBA, AM(Ec), FAICDAppointed a non-executive director 1981. Age 57.Chairman of the Board of Directors. Director ofTransurban City Link Limited.AMP Society Professor, Australian Graduate Schoolof Management, University of New South Wales.

I.F. Edwards BScAppointed a director 1992. Age 56. ManagingDirector, Capral Aluminium Limited. Member of thePersonnel Committee, Capral Aluminium Limited.Director of other Capral Aluminium Limited group companies. Director of the AustralianAluminium Council.

G.M. Carnegie BEc, MPA, FAICDAppointed a non-executive director 1997. Age 52.Member of the Personnel Committee, CapralAluminium Limited. Director of Golden Marketing PtyLimited and Australia Indonesia Institute.

E.J. Cloney FAICD, FAII, FAIMAppointed a non-executive director 1997. Age 59.Member of the Audit Committee, Capral AluminiumLimited. Chairman QBE Insurance Group Limited.Director of Boral Limited, Brambles Industries Limitedand C&W Optus Limited. Former Chief ExecutiveOfficer of QBE Insurance Group Limited.

B.R. Kean AM, DipChemE, FIEAust, FAICD, FRSA, FTSEAppointed a non-executive director 1995. Age 67.Member of the Audit Committee, Capral AluminiumLimited. Chairman of Committee for EconomicDevelopment of Australia. Director of AMP Limited,Pirelli Cables Australia Limited, Australian SubmarineCorporation Pty Limited and The Mental HealthResearch Institute of Victoria. Former ManagingDirector Boral Limited.

B.H. Lochtenberg BE, DPhil(Oxon), FTSEAppointed a non-executive director 1994. Age 68.Chairman of the Personnel Committee, CapralAluminium Limited. Chairman Orica Limited. Chairman of Mental Health Research Institute ofVictoria. Director of Inner & Eastern Health CareNetwork Board and Melbourne University PrivateServices Limited. Member of the Council, University of Melbourne.

board of directors


Corporate governance statementThe Board is responsible for the overall governance of the company, including setting the company’s strategic direction,establishing goals for management and monitoring the achievement of those goals. Directors are accountable to theshareholders for the company’s performance.The management of the business is delegated to the Managing Director as designated by the Board which has defined the limits of management responsibility.

Board compositionThe Board comprises seven independent non-executive directors including the Chairman and one executive director,who is the Managing Director. Details of the Board, their qualifications and experience can be found on page 18.

The full Board is involved in Board succession planning and the selection of new directors.The selection process isaimed at having a Board balanced in experience with a wide range of expertise and skills.The Board uses externalconsultants to assist with the selection process.

The Articles of Association require one third of the directors, with the exception of the Managing Director, to retirefrom office at the annual general meeting each year. Retiring directors are eligible for re-election.When a vacancy isfilled by the Board during a year, the new director must stand for election at the next annual general meeting.

Remuneration of directorsNon-executive directors fees are determined by the full Board within the aggregate of $500,000 approved byshareholders at the annual general meeting in 1999.The details of the remuneration of directors during 1999 are set outin the Directors’ report. On leaving the Board and depending on their length of service non-executive directors areentitled to a retiring allowance of up to a maximum of three years fees.

Dealings in Capral sharesThe Board has a policy that directors and relevant employees may only buy or sell Capral shares during three periods ofone month each following the annual and half-year results announcements and the annual general meeting.

Independent advice and access to company informationThe directors, either individually or as a group, in furtherance of their duties, may seek and obtain independent legaland professional advice from external sources at the expense of the company. Each director has the right of access to allrelevant company information.A director also has the right to have access to all documents which have been presentedto meetings of the Board whilst in office, or made available in relation to their position as director after ceasing to be adirector. In the latter instance the period of time will extend to one year longer than the period of time specified in theLimitations Act 1969 (NSW) for keeping the records.

Board meetingsBoard and committee agendas are structured throughout the year in order to review Company strategy and to give theBoard a detailed overview of the performance and significant issues confronting each business unit and to identify majorrisk elements.The number of Board Meetings held and the attendance details are set out in the Directors’ Report.

Directors receive detailed financial and operational reports from senior management during the year and management isavailable to discuss the reports with the Board.The Board also visits the company’s principal operating sites and holdsmeetings at company locations to enable Directors to meet with customers and employees.

Board appraisalThe Board has in place a process to review and evaluate the performance of the Board.The process involves all of theBoard’s key areas of responsibility.

Remuneration and succession planning for senior managementThe full Board reviews the succession planning for management and sets the remuneration of the Managing Director.The full Board reviews and approves remuneration guidelines for senior management and approves remunerationrecommendations based on these guidelines. In carrying out these functions, the Board utilises advice from its PersonnelCommittee and external remuneration consultants, as required.

CAPRAL ALUMIN IUM20

Corporate governance statement

Committees of the boardTo assist in the execution of its corporate governance responsibilities the Board has in place an Audit Committee and aPersonnel Committee. Both committees operate principally in a review or advisory capacity.The minutes of thesecommittees are circulated to all directors. Membership of committees are set out in the Directors’ Report.

Audit committeeThe Audit Committee consists of three non-executive directors and operates under a written mandate approved by theBoard.The Committee assists the Board to fulfil its responsibilities relating to corporate accounting and reportingpractices and financial and accounting controls and to provide effective oversight of the financial reporting process.TheCommittee has access to the external and internal auditors, management and employees.The Committee may obtainindependent legal and professional advice at the expense of the company.

If nomination of new external auditors was considered appropriate the Audit Committee would make arecommendation to the Board for submission to a general meeting of shareholders.The Committee considers the scopeof the audit work of the external and internal auditors and the quality of their audits.The Committee conducts adetailed consideration of the company’s financial statements and announcement of results before release.The Committeereviews and monitors significant financial business risks including policies related to insurance, foreign exchange, creditmanagement and hedging.The Committee meets three times per year.

Personnel committeeThe Personnel Committee consists of three non executive directors and the Managing Director.The Committeeoperates under terms of reference approved by the Board and utilises external advice as appropriate to fulfil its role.

The functions of the Committee incorporate the review of senior management succession and development,remuneration policies and guidelines for management, and the review of human resources policies including health and safety.

Risk managementIn addition to monitoring financial business risks which are reviewed by the Audit Committee, the Board regularlyreviews other major short and long term risks including those related to safety, environment, health, product quality,business interruption, hedging, foreign exchange and technology.There was a continuing focus during the year on theelimination of risks associated with Year 2000 compliance. Progress on projects within each Capral business unit werereviewed on an ongoing basis through regular reporting to Management and the Board.

Internal controlThe company has a well documented system of internal controls for key business exposures.The system is designed toprovide reasonable assurance that assets are safeguarded, proper accounting records are maintained and financialinformation is reliable.The company’s internal audit function provides an objective and continuing assessment of theinternal control system to both management and the Board.

ShareholdersThe Board is accountable to and elected by shareholders and is committed to enhancing long term shareholder value.The Board aims to ensure all shareholders are advised of major developments in the company which may affect itsfinancial affairs.The information is communicated through the annual report, the half yearly report, and, whenappropriate, through other interim reports.

Ethical standardsThe company has in place various codes and policies to guide the company, its directors and employees in complyingwith all legal requirements and in acting with integrity, fairness and honesty in dealings with other parties whilecarrying out the affairs of the company.The codes and policies in place include those applying to business conduct,environment, health and safety, quality and equal employment opportunity.


Directors’ reportIn accordance with a resolution of the directors, the directors submit herewith company and consolidated balance sheetat 31 December 1999 and profit and loss statement and statement of cash flows for the year ended on that date andreport as follows:

DirectorsDirectors in office at the date of this report were: J.G.A. Davis, I.F. Edwards, G.M. Carnegie, E.J. Cloney,A.B. Daniels, J.T. Dominguez, B.R. Kean, B.H. Lochtenberg.

Directors’ shareholdings of fully paid ordinary shares in the company at the date of this report are as follows:

J.G.A. Davis 30,508I.F. Edwards 30,000E.J. Cloney 34,000A.B. Daniels 5,000J.T. Dominguez 30,000B.R. Kean 2,000B.H. Lochtenberg 6,462

Principal activitiesThe principal activities of the economic entity are smelting and fabricating of aluminium products.

Trading resultsThe consolidated operating profit for the year after providing for income tax expense amounted to $22,609,000compared with a consolidated operating profit after income tax of $13,817,000 for the previous year.

DividendsThe directors of the company recommend that a fully franked final dividend of 5 cents per ordinary share and a fullyfranked special dividend of 5 cents per ordinary share be paid in respect of the year to 31 December 1999.Totaldividends for the year therefore are:

Proposed final dividend on ordinary shares payable 21 March 2000 10,291,379Proposed special dividend on ordinary shares payable 21 March 2000 10,291,379 Interim dividend on ordinary shares paid 26 October 1999 6,174,827Special dividend on ordinary shares paid 26 October 1999 10,291,379

$37,048,964

A fully franked final dividend of 10 cents per ordinary share was paid on 23 March 1999 in respect of the year ended31 December 1998.

Since 31 December 1998, no subsidiary has paid a dividend to or declared a dividend in favour of the company whichhas not been shown in the financial statements.

At the end of the year, franking credits were available to fully frank dividends of $30,819,000 at the rate of 36 per centafter adding franking credits applicable to income tax payable and deducting franking credits applicable to the proposeddividends.This compares with $41,858,000 at the end of the previous year.

State of affairsThere were no significant changes in the state of affairs during the year other than the issue of 4,081,670 ordinaryshares in accordance with the terms of the dividend reinvestment plan.

Events subsequent to balance dateSince 31 December 1999 the directors are not aware of any matter or circumstance not otherwise dealt with in thereport or consolidated financial statements that has significantly or may significantly affect the operations of theeconomic entity, the results of those operations or the state of affairs of the economic entity in subsequent financial years.

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Likely developmentsMajor developments which may affect the operations of the economic entity in subsequent financial years are referredto in the Review of Operations.

In the opinion of the directors, disclosure of any further information on likely developments in operations would beprejudicial to the interests of the economic entity.

Environmental regulationManufacturing licences and consents are in place at each Capral site as prescribed by laws and regulations and inconsultation with relevant environmental authorities. More specific details are set out on pages 16 and 17.

Directors’ meetingsThe number of directors’ meetings and meetings of committees of directors held in the period each director held officeduring the financial year and the number of meetings attended by each director are:

Board of Directors Audit Committee Personnel CommitteeHeld Attended Held Attended Held Attended

J.G.A. Davis 13 13 – – – –I.F. Edwards 13 13 – – 5 5G.M. Carnegie 13 11 – – 5 5E.J. Cloney 13 11 3 3 – –A.B. Daniels 13 10 – – 5 4J.T. Dominguez 13 12 3 3 – –B.R. Kean 13 12 3 3 – –B.H. Lochtenberg 13 12 – – 5 5

Directors’ and executives’ emolumentsDirectors of the Principal Board who are not employees of Capral receive an annual fee for their services.The currentannual fees which became effective on 1 May 1999 are $112,500 for the Chairman and $45,000 for each other director.Other than the Chairman of the company directors also receive additional fees for serving on the Audit Committee andPersonnel Committee. Remuneration of directors and their terms of office are governed by Capral’s Articles ofAssociation and not by contract. Independent experts advise the Board on levels of remuneration for directors.

The following table sets out the nature and amount of each element of the emoluments received or due and receivableby each director of the company in 1999.

Non-executive directors Directors’ Committee Super-Base Fees Fees annuation Total

J.G.A. Davis – Chairman $101,667 – $7,117 $108,784G.M. Carnegie $43,333 $5,000 $3,383 $51,716E.J. Cloney $43,333 $5,000 $3,383 $51,716A.B. Daniels $43,333 $5,000 $3,383 $51,716J.T. Dominguez $43,333 $7,500 $3,558 $54,391B.R. Kean $43,333 $5,000 $3,383 $51,716B.H. Lochtenberg $43,333 $7,500 $3,558 $54,391

Executive directors Salary Performance based OtherPayments Incentives Benefits Total

I.F. Edwards – Managing Director $423,378 $100,000 $76,622 $600,000

Directors’ report

23

Capral’s remuneration philosophy for its senior managers is to ensure that salaries and benefits are competitive in themarket place in which it operates. Senior managers’ remuneration, apart from a base salary, includes the provision of a motor vehicle and non contributory superannuation.A variable annual incentive component dependent uponcompany, business unit and individual performance can also be paid.Annually, the Board approves the salary andincentive levels for senior managers.

In 1999 the 5 officers of the company and the consolidated entity receiving the highest emoluments are set out in thefollowing table:

Executives* Salary Performance based OtherPayments incentives benefits Total

(a) (b)

T. Coombe, General Manager – Smelting $253,642 $30,900 $61,750 $346,292M. Haszard, General Manager – Extrusion $214,576 $22,500 $69,496 $306,572W. McElroy, Chief Financial Officer $60,378 $12,500 $213,273 $286,151W.Wright, Chief Technical Officer $160,250 $24,500 $82,597 $267,347R. Michael, General Manager, Foil $157,550 $19,500 $85,869 $262,919

(a) Includes regular salary payments plus Annual Leave and Long Service Leave payments if applicable.(b) Includes value of company cars, superannuation payments, relocation costs and resignation payments.

*The 5 highest paid officers of the company are also the 5 highest paid officers of the consolidated entity.

Directors’ benefitsNo director of the company has, since 31 December 1998, received or become entitled to receive a benefit (otherthan a benefit included in the aggregate amount of emoluments received or due and receivable by directors shown inthe consolidated financial statement, or the fixed salary of a full-time employee of the company or of a related bodycorporate as shown in Note 32 or benefits dealt with in Note 11) by reason of a contract made by the company or arelated body corporate with the director or with a firm of which he is a member, or with an entity in which he has asubstantial financial interest.

Directors’ and officers’ indemnities and insuranceDuring the financial year the company paid a premium of $73,000 for directors’ and officers’ indemnity insurance.Directors covered were those in office at the date of this report and those who served on the board during the year.

Corporate practices and conductA statement on Corporate Governance is set out on page 19 of these financial statements.

Rounding amounts to the nearest $000The company is a company of the kind referred to in ASIC Class Order 98/0100 and in accordance with this ClassOrder the amounts in the directors report and financial statements have been rounded off to the nearest thousanddollars unless specifically stated otherwise.

J.G.A. Davis I.F. Edwards Sydney

Chairman of Directors Managing Director 15 February 2000

CAPRAL ALUMIN IUM24

Operating profit before income tax 2 30,175 25,600 43,605 21,990

Income tax – attributable to operating profit 4 (7,566) (11,783) (7,451) (10,263)

Operating profit after income tax 22,609 13,817 36,154 11,727

Retained profits at the beginning of the financial year 64,467 86,577 40,366 64,566

Total available for appropriation 87,076 100,394 76,520 76,293

Dividend provided for or paid on ordinary shares 24 (37,049) (35,927) (37,049) (35,927)

Retained profits at the end of the financial year $50,027 $64,467 $39,471 $40,366

To be read in conjunction with the accompanying Notes.

Profit and loss statementFor the year ended 31 December 1999

Consolidated Company1999 1998 1999 1998

Note $000 $000 $000 $000


Current AssetsCash 6 23,675 31,783 21,120 28,952Receivables 7 113,655 112,449 106,035 108,891Inventories 8 133,318 125,494 126,180 117,134Prepayments and deferred charges 3,982 3,315 3,881 3,199

Total Current Assets 274,630 273,041 257,216 258,176

Non-Current AssetsReceivables 9 689 1,039 689 1,039Investments 10 – – 39,368 39,368Property, plant and equipment 12 461,105 486,563 448,408 468,470Intangibles 13 1,542 1,332 1,542 1,332Other 14 20,795 18,138 17,520 16,884

Total Non-Current Assets 484,131 507,072 507,527 527,093

Total Assets 758,761 780,113 764,743 785,269

Current LiabilitiesAccounts payable 15 69,149 76,417 62,763 73,654Borrowings 16 7,966 392 40,855 44,544Provisions 17 51,985 48,989 50,949 48,099

Total Current Liabilities 129,100 125,798 154,567 166,297

Non-Current LiabilitiesBorrowings 18 135,000 145,232 135,000 145,000Provisions 19 26,939 33,290 26,524 32,937

Total Non-Current Liabilities 161,939 178,522 161,524 177,937

Total Liabilities 291,039 304,320 316,091 344,234

Net Assets $467,722 $475,793 $448,652 $441,035

Shareholders’ EquityShare capital 21 300,084 291,572 300,084 291,572Reserves 22 117,611 119,754 109,097 109,097Retained profits 50,027 64,467 39,471 40,366

Total Shareholders’ Equity $467,722 $475,793 $448,652 $441,035


Balance sheetAs at 31 December 1999


Note $000 $000 $000 $000

CAPRAL ALUMIN IUM26

Cash flows from operating activitiesReceipts from customers 748,263 751,161 706,143 708,729Payments to suppliers and employees (670,496) (646,764) (640,311) (610,184)Dividend received – – 19,135 –Interest received 1,328 1,863 1,214 1,699Interest paid (8,160) (8,388) (9,854) (10,565)Income tax paid (17,534) (20,090) (12,921) (18,103)Other revenue received 181 215 181 215

Net cash from operating activities (see Note (ii)) 53,582 77,997 63,587 71,791

Cash flows from investing activitiesConsideration on acquisition of business (Note 34) (1,949) (2,913) (1,949) (2,913)Expenditure on system re-engineering (3,793) (11,200) (3,793) (11,200)Acquisition of property, plant and equipment (26,011) (29,990) (25,508) (28,344)Disposal of property, plant and equipment 793 1,006 255 906Loan repayments by related corporations 350 347 350 347Advances to controlled entities – – (10,433) (14)Advances from controlled entities – – 83 4,673

Net cash applied in investing activities (30,610) (42,750) (40,995) (36,545)

Cash flows from financing activitiesProceeds from borrowings 25,000 – 25,000 –Repayment of borrowings (35,232) (420) (35,000) (187)Dividends paid (see Note (iv)) (28,130) (25,994) (28,130) (25,994)

Net cash applied in financing activities (38,362) (26,414) (38,130) (26,181)

Net (decrease)/increase in cash held (15,390) 8,833 (15,538) 9,065Cash at the beginning of the financial year 31,651 22,872 28,952 19,887Effect of exchange rate changes on the balances

of cash held in foreign currencies (292) (54) – –

Cash at the end of the financial year (see Note (i)) $15,969 $31,651 $13,414 $28,952


Statement of cash flowsFor the year ended 31 December 1999

Consolidated Company1999 1998 1999 1998$000 $000 $000 $000


Notes to the statement of cash flows(i) For the purpose of this statement cash comprises short

term deposits and cash at bank and on hand net of bank overdrafts.At the end of the year items in the balance sheet comprising cash were as follows:

Short-term deposits andcash at bank and on hand (Note 6) 23,675 31,783 21,120 28,952

Unsecured bank overdrafts (Note 16) (7,706) – (7,706) –Secured bank overdraft (Note 16) – (132) – –

$15,969 $31,651 $13,414 $28,952

(ii) Reconciliation of net cash provided by operatingactivities to operating profit after income tax:

Operating profit after income tax 22,609 13,817 36,154 11,727Depreciation and amortisation 50,797 46,834 49,139 45,208Property plant and equipment written down

to recoverable amount including chargesto restructuring 2,804 27,387 – 27,387

Provision for doubtful trade debts 590 683 389 528Profit on sale of property, plant and equipment (106) (263) (14) (232)Loss on sale of property, plant and equipment 564 1,520 467 1,520(Decrease)/Increase in income tax payable (438) (4,459) 1,869 (3,965)(Decrease) in deferred taxes payable (9,623) (3,854) (7,516) (3,874)Gain on foreign currency loan transactions – – (2,561) (1,036)Change in assets and liabilities:

Decrease/(Increase) in current receivables 225 (12,184) 3,984 (13,016)(Increase) in inventories (7,698) (11) (8,431) (521)(Increase)/Decrease in prepayments and deferred charges (601) 950 (678) 858(Decrease)/Increase in trade creditors (6,925) 8,214 (10,891) 7,630Increase/(Decrease) in employee entitlement provisions 1,288 (519) 1,693 (410)Increase/(Decrease) in other non-current provisions 96 (118) (17) (13)

Net cash from operating activities $53,582 $77,997 $63,587 $71,791

(iii)Details of finance facilities are included in Note 25 to the Financial Statements.

(iv)During the year the economic entity declared dividends to a value of $36,640,795. Of this amount $28,129,697 waspaid in cash and, in accordance with an election by shareholders under the company’s dividend reinvestment plan,$8,511,098 was satisfied by the issue of shares.The issue of shares is not recorded in the Statement of Cash Flows.

Statement of cash flows


CAPRAL ALUMIN IUM28

Notes to the financial statementsFor the year ended 31 December 1999

1. Summary of accounting policiesThe financial statements are a general purpose financial report prepared in accordance with Accounting Standards,other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group ConsensusViews and the Corporations Law. The accounting policies adopted in preparing these financial statements have beenconsistently applied by entities in the economic entity except as otherwise indicated.

(a) Basis of accountingThe financial statements are prepared on the basis of historical cost, except for the revaluation of land and buildings.

Non-current assets have been reviewed to ensure their carrying value does not exceed their recoverable amount.Therecoverable amount of an asset is the net amount expected to be recovered through the net cash inflow arising fromits continued use and subsequent disposal. The expected net cash flows included in determining the recoverableamounts have not been discounted to their present value.

(b) Principles of consolidationThe consolidated financial statements of the economic entity include the assets and liabilities of the company andthe entities it controlled at the end of the financial year and the results of the company and the entities it controlledduring the year.Where entities are not controlled throughout the financial year, the consolidated results include theresult of those entities for that part of the year during which control exists.The controlled entities are listed in Note 10.

The effect of all transactions between entities in the economic entity and inter-entity balances are eliminated inpreparing the consolidated financial statements.

(c) Inventory valuationsInventories representing aluminium, raw materials and other supplies are valued at the lower of cost and netrealisable value. Cost has been determined principally on a moving average of monthly direct costs and, in the caseof finished goods and work in progress, includes fixed and variable factory overheads.

(d) Valuation of property, plant and equipmentProperty, plant and equipment is stated at cost to the economic entity, including capitalised interest referred to inNote 1(l ), with the exception of land and buildings. Freehold and leasehold land and buildings are revalued at leastevery three years with reference to an independent valuation.The surplus or deficiency, to the extent that thedeficiency reverses a previous increment, arising on revaluation is taken directly to asset revaluation reserve.

(e) DepreciationDepreciation is calculated on the straight-line method using rates based on the estimated useful lives of therespective assets. Leasehold property is amortised in equal annual instalments over the term of the lease. Profits and losses on the sale of property, plant and equipment have been included in determining the net results of the company and the economic entity.

The estimated useful lives are as follows:Buildings 20 – 50 yearsPlant and equipment 3 – 20 years

(f) Leased assetsLeased assets are recorded as an asset where the lease substantially transfers ownership to the company. Leasepayments due under such leases are recorded as liabilities. Depreciation of the assets is provided for using thestraight-line method.

Other leases under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to expense over the period of the expected benefit.

(g) Translation of foreign currenciesTransactions denominated in foreign currencies are translated at the rate prevailing on the day the transaction is recorded. Foreign currency receivables and payables are translated at exchange rates current at balance date.Exchange gains and losses are brought to account in determining the profit or loss for the year.

Exchange gains and losses and hedging costs arising on contracts entered into as hedges of specific commitments aredeferred and included in the determination of the amounts at which the transactions are brought to account. Theeconomic entity does not undertake speculative foreign currency transactions.


Assets and liabilities of self-sustaining overseas subsidiaries are translated at exchange rates existing at balance date andthe exchange gain or loss arising on translation is carried directly to a foreign currency translation reserve.

(h) TaxationTax effect accounting procedures are followed whereby the income tax expense in the profit and loss statement ismatched with the accounting profit after allowing for permanent differences.The future tax benefit relating to taxlosses is not carried forward as an asset unless the benefit is virtually certain of realisation. Income tax on cumulativetiming differences is set aside to the deferred income tax or the future income tax benefit accounts at the rateswhich are expected to apply when those timing differences reverse.

No provision has been made for taxes on capital gains which could arise in the event of a sale of certain revalued non-current assets for the amounts at which they are stated in the financial statements as it is not expected that any suchliability will crystallise.

(i) Sales revenueSales revenue comprises sales of goods and services at net invoice values of all entities within the economic entityafter excluding all sales within the economic entity. No amount of a non-trading nature is included.

A sale is recorded when goods have been despatched to a customer pursuant to a sales order and the associated riskshave passed to the carrier or customer.

(j) Employee entitlementsProvision is made for employee entitlements to annual leave and sick leave at current wage and salary rates and forthe on-costs applicable to these entitlements.

Provision for long service leave is recognised and is measured as the present value of expected future payments to bemade in respect of services provided by employees up to the reporting date. Consideration is given to expected futurewage and salary levels, experience of employee departures and periods of service. Expected future payments arediscounted using interest rates on national government guaranteed securities with terms to maturity that match, asclosely as possible, the estimated future cash outflows.

Contributions to employee superannuation funds are charged to expense as the contributions become payable and aredesigned to ensure there are sufficient funds available to provide all the benefits payable to the members under each plan.

(k) GoodwillGoodwill arising on acquisitions is written off in equal annual instalments over the period of anticipated benefitwith the remaining useful life reviewed on an ongoing basis. Goodwill currently on the balance sheet is beingwritten off over 10 years.

(l) Capitalised interestInterest paid on funds borrowed for capital projects with a cost in excess of $5 million and a construction period inexcess of one year is capitalised until completion of construction. Capitalised interest is amortised over the life of therelated property, plant and equipment from the completion of construction.

(m) Deferred expensesResearch and development expenditure and software licensing fees and associated implementation costs, other thantraining and audit expenses arising from major upgrades to computer facilities, are written off as incurred exceptwhere the future benefits expected from such projects ensure recovery of costs beyond any reasonable doubt.

Deferred expenses currently on the balance sheet will be written off over a period of five years from the date of implementation.

(n) Year 2000 software modification costsCosts relating purely to the modification of computer software for Year 2000 compatibility are charged as expenseswhen incurred.

(o) Comparative figuresCertain comparative figures have been adjusted to conform with the current year’s disclosures.

Notes to the financial statements

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2. Operating profitOperating profit before income tax is after crediting/charging the following items of income and expense:

IncomeDividend attributable to controlled entities – – 19,135 –Interest receivable 1,300 1,931 1,186 1,767Net exchange gain on trading transactions 5 – 5 –Net gain on foreign currency loans – – 2,561 1,036Profit on sale of property, plant and equipment 106 263 14 232

ExpenseAmortisation of deferred expenditure 3,157 162 3,157 162Amortisation of capitalised interest 1,905 2,201 1,905 2,201Amortisation of goodwill 990 940 990 940Depreciation of

Buildings 11,530 11,851 11,163 11,505Plant and equipment 33,215 31,680 31,924 30,400

Loss on sale of property, plant and equipment 564 1,520 467 1,520Interest attributable to

Controlled entities – – 1,785 2,199Other persons 7,375 8,381 7,323 8,315Interest capitalised (35) (62) (35) (62)

Operating lease rental 6,428 5,745 5,454 4,817Research and development 1,441 2,455 1,385 2,333Remuneration received or receivable

by auditors of the company for auditing andreviewing the financial statements 309 309 309 309Any other services 281 168 270 168

Remuneration receivable by other auditorsof the economic entity for auditing and reviewing the financial statements 128 124 – –Any other services 11 11 – –

Amount set aside to provisionsDoubtful trade debts 590 683 389 528Controlled entity receivable – – 3,250 –Employee entitlements 7,347 10,850 6,233 10,050

Bad trade debts written off 2 18 2 18Contributions to employee superannuation plans 6,916 2,953 6,549 2,777

Abnormal itemsRestructuring costs 7,361 3,874 5,042 3,571

Income tax applicable thereto (2,641) (1,395) (1,815) (1,286)Property, plant and equipment written down

to recoverable amount 3,004 27,292 – 27,292Income tax applicable thereto (991) (9,825) – (9,825)

Superannuation surplus distribution (5,545) – – –Income tax applicable thereto – – – –

Provision for controlled entity receivable – – 3,250 –Income tax applicable thereto – – – –

Product liability claim – 1,196 – 1,196Income tax applicable thereto – (431) – (431)




3. Operating revenueSales revenue 743,430 750,110 701,643 709,446Other revenue

– Dividend – – 19,135 –– Superannuation surplus distribution 5,545 – – –– Interest 1,300 1,931 1,186 1,767– Proceeds on disposal of property, plant and equipment 791 1,006 253 906– Other 181 215 181 215

$751,247 $753,262 $722,398 $712,334

4. Income taxThe prima facie tax payable on the operating profit

is reconciled to the income tax expense in thefinancial statements as follows:

Prima facie tax on operating profit at 36% 10,863 9,216 15,700 7,916Add tax effect of:Depreciation and amortisation not allowable as a deduction 3,372 3,122 2,917 3,016Other non-allowable items 1,056 515 1,340 92

15,291 12,853 19,957 11,024Deduct tax effect of:Non-assessable dividend received from controlled entity – – (6,889) –Non-assessable superannuation refund received (1,996) – – –Other non-assessable items (13) (184) (8) (36)

Income tax expense calculated on operatingprofit after adjusting for permanent differences 13,282 12,669 13,060 10,988

Effect of lower tax rates on overseas income (100) (161) – –(Over)/under provision in prior years (1,432) (725) (1,425) (725)

Income tax attributable to operating profit 11,750 11,783 11,635 10,263

Abnormal item-effect of change in income tax rateson closing balances of net deferred tax liabilities (4,184) – (4,184) –

Income tax expense $7,566 $11,783 $7,451 $10,263

Income tax attributable to operating profit comprises amounts set aside to:

Provisions for current income tax 17,961 15,600 15,577 14,054Provisions for deferred income tax (6,674) (3,869) (6,674) (3,066)Future income tax benefit (2,289) 777 (27) –(Over)/under provision for income tax in prior years (1,432) (725) (1,425) (725)

$7,566 $11,783 $7,451 $10,263

The future income tax benefit in Note 14 includes an amount of $1,036,000 (1998: $952,000) attributable to tax losses.

CAPRAL ALUMIN IUM32


5. Segment informationThe economic entity only operates in one industry segment i.e. the smelting and fabricating of aluminium productspredominantly in Australia.

In November 1999, the directors announced their intention, subject to shareholders’ approval, to separate the smeltingbusiness from the downstream fabrication businesses. On 1 February 2000, the directors further announced theirintention to explore the sale of the smelter (refer also to Note 35).

For the purpose of providing additional information, the following financial information is supplied in relation to thecompany’s existing business.

Smelter Fabrication Eliminations Consolidated$000 $000 $000 $000

1999

Sales to customers outside the consolidated entity 211,343 532,087 – 743,430Inter-segment sales 158,003 – (158,003) –Other revenue 165 6,351 – 6,516

369,511 538,438 (158,003) 749,946Unallocated other revenue 1,301Total revenue $751,247

Segment result 25,167 24,872 (3,401) 46,638Unallocated expenses (16,463)Consolidated operating profit before income tax $30,175

Segment assets 394,002 332,182 (9,344) 716,840Unallocated assets 41,921Total assets $758,761

1998

Sales to customers outside the consolidated entity 224,475 525,635 – 750,110Inter-segment sales 171,440 – (171,440) –Other revenue 352 868 – 1,220

396,267 526,503 (171,440) 751,330Unallocated other revenue 1,932Total revenue $753,262

Segment result 38,017 731 1,713 40,461Unallocated expenses (14,861)Consolidated operating profit before income tax $25,600

Segment assets 390,781 345,830 (5,942) 730,669Unallocated assets 49,444Total assets $780,113




6. Cash Short-term deposits and cash at bank and on hand $23,675 $31,783 $21,120 $28,952

7. Current receivablesTrade debtors 113,161 114,756 105,597 106,859Provisions for doubtful debts (2,629) (2,667) (2,040) (2,179)

110,532 112,089 103,557 104,680

Non-trade debts owing by controlled entities – – 6,218 4,701Provision for doubtful debts – – (4,100) (850)

– – 2,118 3,851

Non-trade debts owing by related corporations 360 360 360 360

Other debtors 2,763 – – –

$113,655 $112,449 $106,035 $108,891

8. InventoriesRaw materials and stores 42,390 44,279 40,122 40,016Work in progress 27,465 28,346 27,465 27,803Finished goods 63,463 52,869 58,593 49,315

$133,318 $125,494 $126,180 $117,134

9. Non-current receivablesNon-trade debts owing by related corporations $689 $1,039 $689 $1,039

10.Investments Unlisted securitiesShares in controlled entities at cost – – 52,985 52,985Provisions for diminution in value – – (13,617) (13,617)

– – $39,368 $39,368

CAPRAL ALUMIN IUM34

10.Investments (cont’d)Capral Staff Superannuation Pty Limited 100 100 NSW * *

Capral Wages Superannuation Pty Limited 100 100 NSW * *

Aluminium Distributors Pty Limited 100 100 VIC – –Controlled entity:Hockney Pty Limited NSW

Australian Aluminium (Australuco) Pty Limited 100 100 VIC 209 209

Unalex Pty Limited 100 100 VIC 1,402 1,402

Capral Properties Pty Limited 100 100 ACT 5,574 5,574

Capral Aluminium NZ Limited 100 100 NZ 32,183 32,183Controlled entities:Capral Fiduciary Limited NZHorizon Aluminium Products Limited NZHorizon Automatic Door Systems Pty Limited NSW

$39,368 $39,368

*The investment in this company amounted to $2 (1998 $2).

Each of the controlled entities incorporated outside Australia carries on business in the country of its incorporation.

Details of investment in controlled entities

The holding of issued ordinary shares and the amounts at which the investments are recorded in the books of the controlled entities of Capral Aluminium Limited are as follows:

Equity of Book Value of ControlledControlled Entity Entity’s Investment

1999 1998 1999 1998% % $000 $000

Entities controlled by Aluminium Distributors Pty Limited:

Hockney Pty Limited 100 100 – –

Entities controlled by Capral Aluminium NZ Limited:

Capral Fiduciary Limited 100 100 1 1Horizon Aluminium Products Limited 100 100 530 530Horizon Automatic Door Systems Pty Limited 100 100 198 198

Notes to the financial statementsEquity of Place of Company InvestmentCompany Incorp. at Book Value

1999 1998 1999 1998% % $000 $000


11.Related partiesDirectorsThe directors named in the attached Directors’ Report eachheld office as a director of the company throughout the yearended 31 December 1999.There were no transactions during the year with the directors other than the provision of remuneration set out in Note 32 and the acquisition on market of the company’s shares.The aggregate number of ordinary shares acquired, disposed and held at the end of the year was as follows:

1999 1998Acquired during the year 35,006 39,514Disposed during the year 2,084 –Held at the end of the year 137,970 105,048

Other related partiesAs parent entity in the economic entity, the company advanced and was repaid loans and bought and sold goods to controlled entities within the economic entity. These transactions were conducted on commercial terms and conditions at market rates.

Current amounts receivable from related partiesControlled entities (see Note 7) – – 2,118 3,851Other related corporations (see Note 7) 360 360 360 360

Non-current amounts receivable from related partiesRelated corporations other than controlledentities (see Note 9) 689 1,039 689 1,039

Current amounts payable to related partiesControlled entities (see Note 16) – – 33,121 44,516



CAPRAL ALUMIN IUM36

12.Property, plant and equipment (see Note 1(d))Freehold land and buildings:

At cost 4,216 1,862 4,216 1,862Provision for depreciation (88) (14) (88) (14)

4,128 1,848 4,128 1,848

At independent valuation 1998* 253,755 254,088 252,564 252,898Provision for depreciation (17,299) (5,936) (17,186) (5,900)

236,456 248,152 235,378 246,998

At independent valuation 1999** 9,135 – – – At independent valuation 1996 – 10,416 – – Provision for depreciation – (601) – –

9,135 9,815 – –Net freehold land and buildings 249,719 259,815 239,506 248,846

Leasehold property:At cost 207 – 207 –Provision for amortisation (46) – (46) –

161 – 161 –

At independent valuation 1998* 520 520 – –Provision for amortisation (60) (19) – –

460 501 – –Net Leasehold Property 621 501 161 –

Plant, machinery and equipment:At cost 635,321 641,464 637,014 621,102Provision for depreciation (438,749) (430,693) (437,001) (415,592)

196,572 210,771 200,013 205,510At recoverable amount*** 4,631 – – –

Net plant, machinery and equipment 201,203 210,771 200,013 205,510

Construction work in progress at cost 9,562 15,476 8,728 14,114Net property, plant and equipment $461,105 $486,563 $448,408 $468,470

* Valuations of freehold and leasehold land and building as at 1 July 1998 were undertaken by G. Pyman AAPI, P. Macadam AAPI, R. Mason AAPI, K.Ashcroft FAPI (Val),F. Julier AVLE (Val), M. Klenke AAPI and R.G. Pember FAPI of Edward Rushton Pty Limited.The valuations were undertaken on the basis of market value existing use.

**An independent valuation of Capral Aluminium NZ Limited freehold land and buildings as at 31 December 1999 was undertaken by D.A. Culav Dip Urb Val ANZIV of Edward Rushton New Zealand Limited.The valuation was undertaken on the basis of market value existing use for part of the site and market value vacant possessionfor the remainder.

***The valuation of certain plant and equipment items to recoverable amount was undertaken by the directors as at 31 December 1999.

Plant and equipment at cost includes interest capitalised of $46,267,000 (1998 $46,495,000)




13.IntangiblesGoodwill at cost 10,601 9,401 10,601 9,401Provision for amortisation (9,059) (8,069) (9,059) (8,069)

$1,542 $1,332 $1,542 $1,332

14.Other non-current assetsDeferred expenditure – system re-engineering 20,839 17,046 20,839 17,046Provision for amortisation (3,319) (162) (3,319) (162)

17,520 16,884 17,520 16,884Future income tax benefit (see Note 20) 3,275 1,254 – –

$20,795 $18,138 $17,520 $16,884

15.Accounts payableTrade creditors $69,149 $76,417 $62,763 $73,654

16.Current borrowingsUnsecured loans:

Bank overdrafts 7,706 – 7,706 –Non-trade debts owing to controlled entities – – 33,121 44,516 Other loans 260 260 28 28

Secured loans:Bank overdraft – 132 – –

$7,966 $392 $40,855 $44,544

The secured loans are secured by a charge over assets and uncalled capital in a controlled entity.

17.Current provisionsIncome tax 7,525 5,156 7,484 5,615Employee entitlements (a) 23,877 23,658 22,882 22,309Dividends 20,583 20,175 20,583 20,175

$51,985 $48,989 $50,949 $48,099

18.Non-current borrowingsUnsecured borrowings:Multi-option facility 85,000 120,000 85,000 120,000Bill facility 50,000 25,000 50,000 25,000Non-bank loans – 232 – –

$135,000 $145,232 $135,000 $145,000

19.Non-current provisionsDeferred tax (see Note 20) 22,379 29,895 22,379 29,895Employee entitlements (a) 4,110 3,041 4,110 2,990Extended warranty 450 354 35 52

$26,939 $33,290 $26,524 $32,937

(a) Aggregate employee entitlements $27,987 $26,699 $26,992 $25,299





CAPRAL ALUMIN IUM38

20.Deferred income tax benefit and liabilityComprising tax effect of:Items claimed for tax not yet expensed (34,920) (42,148) (34,920) (42,148)Provisions not yet claimed for tax purposes 15,816 13,507 12,541 12,253

Net future tax liability (19,104) (28,641) (22,379) (29,895)

Being:Deferred tax liability (see Note 19) (22,379) (29,895) (22,379) (29,895)Future income tax benefit (see Note 14) 3,275 1,254 – –

$(19,104) $(28,641) $(22,379) $(29,895)

21. Share capitalPaid-up capital205,827,570 (1998 201,745,900) ordinary shares fully paid $300,084 $291,572 $300,084 $291,572

Movements in share capital during the year were:Number

Date Details of shares $000

1.1.1999 Opening balance 201,745,900 291,57223.3.1999 Dividend reinvestment plan* 4,081,670 8,512

31.12.1999 Balance 205,827,570 $300,084

*4,081,670 ordinary shares were issued at $2.0852 per share

22. ReservesAsset revaluation reserve 117,601 117,302 109,097 109,097Foreign currency translation reserve 10 2,452 – –

$117,611 $119,754 $109,097 $109,097

Movements in reserves were:

Asset revaluation reserveBalance brought forward 117,302 114,366 109,097 106,522Increment on revaluations 299 2,936 – 2,575

Balance carried forward 117,601 117,302 109,097 109,097

Foreign currency translation reserveBalance brought forward 2,452 3,496 – –Arising on translation of overseas

controlled entities (2,442) (1,044) – –

Balance carried forward 10 2,452 – –


23.Earnings per share Cents per Share1999 1998

¢ ¢Basic earnings per share 11.0 7.1

There are no existing securities with potential to dilute future earnings.The weighted average number of ordinaryshares on issue used in the calculation of basic earnings per share was 204,948,653 (1998 196,439,272). Comparativefigures have been adjusted for the bonus element attached to shares issued under the dividend reinvestment plan.

24.Dividends

Dividends provided for or paid on ordinary shares5 cents per share final fully franked at 36% 10,291 – 10,291 –5 cents per share special fully franked at 36% 10,291 – 10,291 –3 cents per share interim fully franked at 36% 6,176 – 6,176 –5 cents per share special fully franked at 36% 10,291 – 10,291 –8 cents per share interim fully franked at 36% – 15,752 – 15,75210 cents per share final fully franked at 36% – 20,175 – 20,175

$37,049 $35,927 $37,049 $35,927

At the end of the year franking credits were available to fully frank dividends of $30,819,000 (1998 $41,858,000) at the rate of 36% after adding franking credits applicable to income tax payable and deducting franking credits applicable to the proposed dividends.

The balances of the franking accounts disclosed above are based on a tax rate of 36%. Legislation was introduced intoParliament in December 1999 which deals with the implications for franking accounts of the company tax rate change from 36% to 34% for the 2000 – 2001 income tax year.The legislation requires companies to convert theirexisting Class C franking account balances from an underlying tax rate of 36% to an underlying tax rate of 34% on 1 July 2000. Should the legislation be enacted and the above accounts be converted, the balance of the frankingaccounts will increase accordingly and all franking debits and credits arising after 1 July 2000 (including those relating to dividends) will be entered into the converted franking account using the new rate of 34%.

25.Standby arrangements and credit facilitiesAvailable credit facilities at the end of year were as follows:Utilised 142,966 145,624 142,734 145,028Unutilised 93,193 91,231 92,294 90,000

$236,159 $236,855 $235,028 $235,028

Details of the principal facilities are:(a) A$175 million (1998 A$200 million) Multi-Option Facility committed to 2002 of which A$85 million (1998 A$120

million) was utilised at the end of the year.(b) A$50 million (1998 A$25 million) Bill Facility committed to 2002 of which A$50 million (1998 A$25 million)

was utilised at the end of the year.(c) A$10 million (1998 A$10 million) Overdraft Facility committed to 2000 of which A$8 million (1998 unutilised) was

utilised at the end of the year.



CAPRAL ALUMIN IUM40



26.Capital commitmentsCommitments for capital expenditurecontracted for but not providedfor in the accounts amounted to:

Not later than one year $3,365 $9,060 $3,333 $8,991

27.Operating lease commitmentsNon-cancellable operating lease commitmentsnot provided for in the accounts amounted to:

Not later than one year 4,910 4,705 4,635 3,794Later than one year but not later than five years 12,267 10,020 11,441 8,777Later than five years 2,305 2,848 2,267 2,652

$19,482 $17,573 $18,343 $15,223

28.Superannuation commitmentsThe economic entity operates two (1998 two) superannuation plans providing defined benefits on disability, death orretirement with one of these plans providing defined contribution benefits to certain members.With the exception of one plan, contributions by companies within the economic entity are legally enforceable. Employees contribute atvarious percentages of their wages or salaries whilst companies within the economic entity contribute in accordancewith recommendations made by actuaries.

The directors believe that at balance date, the assets of each plan were sufficient to satisfy all benefits which wouldhave been vested under the plan in the event of its termination or in the event of the voluntary or compulsorytermination of employment of each employee. Details of each plan at the date of the most recent financial report as stated, are as follows:

Accrued Net Market VestedBenefits** Surplus Value of Assets Benefits

$000 $000 $000 $000

Capral Superannuation Plan(Aust) – 30 June 1999 107,422 19,491 126,913 103,817Capral Retirement Fund(NZ) – 31 March 1999* 12,531 11,527 24,058 8,241

$119,953 $31,018 $150,971 $112,058

* A distribution was made from this fund in accordance with a resolution of members on 28 October 1999 from which the company received $5,545,000.

** Accrued benefits are stated in accordance with actuarial assessments undertaken respectively as follows:30 June 1999 – D. J. Solomon MA, FIAA,ASA of Towers Perrin31 March 1999 – J. Spooner BSc, FIAA, FNZSA of Watson Wyatt New Zealand Limited

29.Other operating expenditure commitmentsOperating expenditure commitments not provided forin the accounts amounted to:

Not later than one year 94,000 15,600 94,000 15,600Later than one year but not later than five years 227,000 50,500 227,000 50,500Later than five years 45,000 71,900 45,000 71,900

$366,000 $138,000 $366,000 $138,000




30.Financial instruments(a) Forward foreign exchange contractsThe economic entity’s use of derivative instruments is currently limited to forward exchange contracts used to manageforeign currency exposures.

The economic entity enters into forward foreign exchange contracts to sell or purchase specified amounts of variousforeign currencies in the future at a pre-determined exchange rate.The contracts are entered into to hedge certain firmpurchase and sale commitments denominated in foreign currencies.

Derivative contracts are not entered into for speculative purposes.

The settlement dates and dollar amounts to be sold or purchased on outstanding contracts at balance date were:

Contracts to sell foreign exchange:United States dollars within 12 months – 25,929 – 25,929Other currencies within 12 months – 301 – 301

– $26,230 – $26,230

Contracts to purchase foreign exchange:United States dollars within 12 months 60 – – –Other currencies within 12 months 1,340 1,607 1,340 1,509Other currencies 12 – 24 months 1,026 – 1,026 –

$2,426 $1,607 $2,366 $1,509

Trade accounts receivable and payable at balance date include aggregate net receivables of Consolidated $7,910,000(1998 net payables $1,650,000) Company $7,787,000 (1998 net payables $107,300) in respect of sales proceeds andpurchases due in foreign currencies, part of which have been hedged with forward foreign exchange contracts included above.

(b) Interest rate riskExposure to interest rate risk and the effective interest rates on financial instruments at balance date were:

Cash at average floating interest rateof 4.5% (1998 4.8%) 23,675 31,783 21,120 28,952Non-interest bearing receivables 114,344 113,488 106,724 109,930

Total financial assets 138,019 145,271 127,844 138,882

Short-term borrowings at average floatinginterest rate of 8.0 % (1998 8.2 %) 7,966 392 40,855 44,544Long-term borrowings at average floatinginterest rate of 5.3 % (1998 5.5 %) 135,000 145,232 135,000 145,000Non-interest bearing payables and employeeprovisions 117,719 123,291 110,338 119,128

Total financial liabilities 260,685 268,915 286,193 308,672

Net financial liabilities $(122,666) $(123,644) $(158,349) $(169,790)

CAPRAL ALUMIN IUM42



Reconciliation of Net Financial Liabilities to Net Assets

Net financial liabilities as above (122,666) (123,644) (158,349) (169,790)Non-financial assets and liabilitiesInventories 133,318 125,494 126,180 117,134Prepayments and deferred charges 3,982 3,315 3,881 3,199Investments – – 39,368 39,368Property, plant and equipment 461,105 486,563 448,408 468,470Intangibles 1,542 1,332 1,542 1,332Other assets 20,795 18,138 17,520 16,884Provisions (30,354) (35,405) (29,898) (35,562)

Net assets per balance sheet $467,722 $475,793 $448,652 $441,035

Trade debtors and creditors are reflected in the financial statements at the historical cost as they are short term in nature and are subject to normal trading terms and conditions.

(c) Net fair valuesFinancial assets and liabilities included in (b) above are carried at amounts that approximate net fair value.

Certain forward foreign exchange contracts have become favourable or unfavourable since their inception and,accordingly, constitute unrecognised financial assets or liabilities. Forward foreign exchange contracts net fair value is the amount quoted by the economic entity’s bankers to realise favourable contracts or settle unfavourable contracts.Net fair values as at the balance date were as follows:

Net foreign exchange contracts loss $(462) $(2,762) $(464) $(2,791)

(d)Credit riskCarrying amounts of financial assets included in the consolidated balance sheet represent the economic entity’s exposureto credit risk in relation to these assets.The credit exposure of forward foreign exchange contracts is represented by thenet fair value of the contracts as disclosed in (c) above.

The economic entity does not have any significant exposure to any individual customer or counterparty. Majorconcentrations of credit risk are in the construction, transport, container and packaging, consumer durable and electricalindustries principally in Australasia.

(e) Price riskTo the extent that price variations are not able to be passed on to end users, the economic entity is exposed tomovements in the price of aluminium in respect of purchases of alumina and sales of aluminium and does not enterinto forward purchase or sale agreements to hedge these exposures.

From time to time, the economic entity will enter into a commodity derivative to specifically hedge the sale ofaluminium where a fixed price has been agreed with the customer.

The amounts involved are considered not material for the purposes of disclosure in the financial statements.

31. Contingent liabilitiesClaims and possible claims, indeterminable in amount, have arisen in the ordinary course of business against entities in the economic entity. Based on legal advice obtained, the directors of the company believe that any resulting liability will not materially affect the financial position of the economic entity.




$ $ $ $

32. Directors’ remunerationIncome paid or payable, or otherwise made available to directors, in connection with the management of the company or its controlled entities was as follows:

Capral Aluminium LimitedNon-executive directors 424,430 378,076 424,430 378,076Executive directors 600,000 508,397 600,000 508,397

Controlled EntitiesNon-executive directors – – – –Executive directors (other than directors

of the Principal Board disclosed above) 183,000 179,000 – –

$1,207,430 $1,065,473 $1,024,430 $886,473

The number of directors of Capral Aluminium Limited dealt with in the above figures are shown below in theirrelevant income bands:

$ 40,000 – 49,999 – 4$ 50,000 – 59,999 6 2$ 80,000 – 89,999 – 1$100,000 – 109,999 1 –$500,000 – 509,999 – 1$600,000 – 609,999 1 –

Further details of Directors’ remuneration are set out on page 22 in the Directors’ Report

33. Executives’ remunerationIncome received, or due and receivable, in connection with the management of the company or of the economic entity by executives, including executive directors, whose total income was more than $100,000 was as follows:

$3,504,422 $3,233,290 $3,504,422 $3,233,290

The number of executives dealt with in this note are shown below in their relevant income bands:

$ 100,000 – 109,999 1 – 1 –$ 160,000 – 169,999 – 1 – 1$ 170,000 – 179,999 – 1 – 1$ 180,000 – 189,999 1 2 1 2$ 200,000 – 209,999 – 1 – 1$ 210,000 – 219,999 1 1 1 1$ 230,000 – 239,999 2 – 2 –$ 240,000 – 249,999 2 – 2 –$ 260,000 – 269,999 2 1 2 1$ 280,000 – 289,999 1 1 1 1$ 300,000 – 309,999 1 – 1 –$ 330,000 – 339,999 – 1 – 1$ 340,000 – 349,999 1 1 1 1$ 370,000 – 379,999 – 1 – 1$ 500,000 – 509,999 – 1 – 1$ 600,000 – 609,999 1 – 1 –

CAPRAL ALUMIN IUM44

34.Acquisition of businessThe company acquired the distribution business of Aluminium Services & Supply on 2 August 1999 for a total cashconsideration of $1,949,000.The fair value of the net tangible assets at the date of acquisition was $749,000 resultingin goodwill on acquisition of $1,200,000.The operating results of this business were included in the company’s profit and loss statement from 3 August 1999.

Last year the company acquired the stainless steel distribution and fabrication business of Applied Kinetics (Ind.) Pty Ltd on 26 May 1998 for a total cash consideration of $2,913,000.

Details of these acquisitions were as follows:

Cash consideration $1,949 $2,913Net assets acquired:Inventories 615 1,879Plant and equipment 130 1,300Prepayments and deferred charges 4 13Current provisions – (279)Goodwill on acquisition 1,200 –

$1,949 $2,913

As at 31 December 1999 $1,949,000 of the cash consideration had been paid.

35.Events occurring after balance dateOn the 1st February 2000, the directors announced that they had resolved to explore the sale of the company’saluminium smelter at Kurri Kurri.Any sale of the smelting operations will be conditional upon receiving approval from shareholders.

The company is currently undertaking due diligence on the purchase of the Hamilton aluminium extrusion facilityin New Zealand from Fletcher Aluminium Limited. If successful, Capral Aluminium NZ Limited will progressivelytransfer its extrusion manufacturing operations from Auckland to Hamilton.

The financial effect of the above events cannot be reliably estimated and has not been recognised in these financial statements.


Company1999 1998$000 $000


Directors’ declarationThe directors declare that the financial statements and the notes set out on pages 24 to 44:

(a) comply with Accounting Standards, the Corporations Regulations and other mandatory professional reportingrequirements; and

(b) give a true and fair view of the company’s and consolidated entity’s financial position as at 31 December 1999 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date.

In the directors’ opinion:

(a) the financial statements and notes are in accordance with the Corporations Law; and

(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become dueand payable.

This declaration is made in accordance with a resolution of the directors.

J.G.A. DavisChairman of Directors

I.F. EdwardsManaging Director

Sydney

15 February 2000

CAPRAL ALUMIN IUM46

ScopeWe have audited the financial report of Capral Aluminium Limited (the Company) for the financial year ended 31 December 1999 as set out on pages 24 to 45.The Company’s directors are responsible for the financial report whichincludes the financial statements of the Company and the consolidated financial statements of the consolidated entitycomprising the Company and the entities it controlled at the end of, or during, the financial year.We have conductedan independent audit of the financial report in order to express an opinion on it to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as towhether the financial report is free of material misstatement. Our procedures included examination, on a test basis, ofevidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policiesand significant accounting estimates.These procedures have been undertaken to form an opinion as to whether, in allmaterial respects, the financial report is presented fairly in accordance with Accounting Standards, other mandatoryprofessional reporting requirements and the Corporations Law in Australia so as to present a view which is consistentwith our understanding of the Company’s and the consolidated entity’s financial position, and performance asrepresented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit opinion

In our opinion the financial report of the Company is in accordance with:

(a) the Corporations Law, including:

(i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 31 December 1999 and of their performance for the financial year ended on that date; and

(ii) complying with Accounting Standards and the Corporations Regulations; and

(b) other mandatory professional reporting requirements.

PricewaterhouseCoopersChartered Accountants

D.C. BrownPartner

Sydney

15 February 2000

Independent audit reportTo the members of Capral Aluminium Limited


Shareholder detailsDetails of Capral Aluminium Limited shares required by the Australian Stock Exchange Limited:

Number of Percentage ofShares Held Shares Held

1. Details of the twenty largest shareholders as at 31 January 2000 were as follows:NameWestpac Custodian Nominees Limited 13,933,811 6.77Chase Manhattan Nominees Limited 12,841,424 6.24National Nominees Limited 11,971,909 5.82ANZ Nominees Limited 11,130,762 5.41PTA Nominees Limited 10,964,264 5.33Permanent Trustee Australia Limited 10,958,265 5.32Mercantile Mutual Holdings Limited 10,547,061 5.12Commonwealth Custodial Services Limited 7,354,556 3.57Perpetual Trustee Company Limited 3,973,982 1.93Citicorp Nominees Pty Ltd 3,940,489 1.91Guardian Trust Australia Limited 3,198,867 1.55GIO Personal Investment Services Limited 3,000,000 1.46AMP Custodian Service Pty Ltd 2,705,717 1.31QBE Investments Pty Limited 2,638,264 1.28AMP Nominees Pty Limited 2,092,065 1.02Tyndall Life Insurance Company Limited 1,681,685 .82B.T. Custodial Services Pty Ltd 1,580,574 .77Swiss Re Life & Health Australia Limited 1,500,010 .73Suncorp General Insurance Limited 1,227,104 .60Australian Foundation Investment Company Limited 1,138,413 .55

118,379,222 57.51Total issued 205,827,570 100.00

2. The company’s register of substantial shareholders recorded the following information as at 31 January 2000:Name No. of SharesPermanent Trustee Company Limited 25,411,700Mercantile Mutual Holdings Limited 18,853,931Colonial Limited 13,457,483Maple-Brown Abbott Limited 12,474,618

3. At 31 January 2000 there were 14,109 holders of ordinary shares.Voting rights attaching to the fully paid ordinaryshares 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.

4. At 31 January 2000 the distribution of ordinary shares was as follows:Range of shares No. of Holders

1 – 1,000 2,4361,001 – 5,000 8,0995,001 – 10,000 2,317

10,001 and over 1,257TOTAL 14,109

There are 353 shareholders holding less than a marketable parcel of shares.

CAPRAL ALUMIN IUM48

Sales Revenue– Domestic $M 547 544 543 630 617– Export $M 196 206 200 166 212– Total $M 743 750 743 796 829

Contributions from– Primary $M 27 39 58 29 96– Fabrication $M 28 33 27 41 29– Inter-divisional eliminations $M (4) 2 (3) 3 1– Unallocated items $M (10) (10) (8) (8) (7)

Profit before interest, exchange and abnormals $M 41 64 74 65 119Net interest expense $M (6) (6) (6) (8) (7)Net (loss)/gain on foreign currency loans $M – – – – (4)Profit before abnormals $M 35 58 68 57 108Abnormal items $M (5) (32) (5) (8) (4)Operating profit before income tax $M 30 26 63 49 104Income tax– Attributable to operating profit $M (11) (12) (23) (20) (40)– Attributable to change in income tax rate $M 4 – – – (4)Operating profit after income tax $M 23 14 40 29 60

Current assets (excluding cash) $M 251 241 231 219 248Property, plant and equipment $M 461 487 526 532 567Other non-current assets (excluding future income tax benefit) $M 20 19 10 5 6Current liabilities (excluding borrowings) $M (121) (125) (149) (158) (152)Non-current liabilities (excluding borrowings and deferred tax liability) $M (5) (3) (3) (3) (3)Net Assets Employed $M 606 619 615 595 666

Shareholders’ equity $M 468 476 459 465 507Deferred tax liability (net) $M 19 29 33 31 33Borrowings (net of cash) $M 119 114 123 99 126Funds Employed $M 606 619 615 595 666

Primary production 000 tonnes 147 152 151 150 142Metal purchases 000 tonnes 39 34 34 50 *61Scrap purchases 000 tonnes 3 3 6 5 8Ingot sales 000 tonnes 93 98 95 111 128Fabricated sales 000 tonnes 92 93 94 96 77* Includes 13,000 tonnes on acquisition of Comalco businesses.

Average LME 3 month price US$ per tonne 1,389 1,380 1,619 1,537 1,833Cash from Operations $M 54 78 77 84 126Capital Expenditure $M 32 44 46 42 106Net Tangible Asset backing per Ordinary Share cents 226.5 235.2 243.2 251.5 281.7Return on Average Shareholders’ Funds % 4.8 3.0 8.7 6.1 13.1Earnings per Share cents 11.0 7.1 21.6 16.2 33.7Ordinary Dividend Rate on fully paid Ordinary Shares cents 8.0 18.0 18.0 14.0 18.0Special Dividend Rate on fully paid Ordinary Shares cents 10.0 – 15.0 25.0 –Net Debt: Equity % 26 24 27 21 25Number of Employees 2,311 2,519 2,658 2,758 2,915

Group five year summary

1999 1998 1997 1996 1995

Corporate directoryCapral Aluminium Limited

(ACN 004 213 692 – Incorporated in the State of Victoria)

Registered OfficeUnwin Street, Granville NSW 2142,Australia. Telephone: +61 2 9682 0711 Facsimile: +61 2 9682 0777Internet: www.capral-aluminium.com.au

Auditors PricewaterhouseCoopers, Sydney, NSW.

Share RegistersSydney: Computershare Registry Services Pty. Limited, Level 3, 60 Carrington Street, Sydney,NSW 1115,Australia.Auckland: Capral Aluminium NZ Limited,Wiri Station Road, Manukau Auckland, New Zealand.The company’s shares are quoted on the Australian Stock Exchange and the New Zealand Stock Exchange.

Senior managementIan Edwards Managing Director

Chris Clement-Jones General Manager,Asia and Business Development

Trevor Coombe General Manager, Smelting

Martin Haszard General Manager, Extrusion

John Krenich Company Secretary

Bob Heiler Chief Financial Officer

Richard Michael General Manager, Foil

Tony Rae General Manager, Human Resources

John Spinaze General Manager, Sheet

Glen Thomas General Manager, Distribution

Bill Wright Chief Technical Officer

Financial calendar(dates subject to change)


1 March 2000 Record date for 1999 final dividend and special dividend

21 March 2000 1999 final dividend and special dividend paid.

18 April 2000 Annual general meeting

15 August 2000 Half-year results and interim dividend announced

29 August 2000 Record date for 2000 interim dividend

19 September 2000 Interim dividend paid


6 March 2001 Record date for 2000 final dividend

27 March 2001 2000 final dividend paid.

Des

igne

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Performance 2From the Chairman and Managing Director 4

Smelter 8

Extrusion 10

Distribution 12

Rolling, Sheet and Foil 14

Environment and Safety 16Board of directors 18

Corporate governance statement 19Directors’ report 21

Financial statements 24Shareholders details 47

Group five year summary 48Corporate information 49

Documents

1999 Annual Report - globaldocuments.morningstar.com