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2021
Annual Report
CAPRAL LIMITED • ABN 78 004 213 692
ii
CONTENTS
Key Statistics
Chairman’s Report
Managing Director’s Operations and Financial Review
Board of Directors
Sustainability Report
Directors’ Report
Remuneration Report (Audited)
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Member Details
2
3
7
11
15
21
25
43
45
46
47
48
51
92
93
98
Capral’s Vision & Values Annual Report 2021
1
CAPRAL’S VISION & VALUES
Our Vision is to be Australia’s
first choice supplier
of aluminium products and solutions.
We are committed to our values
SAFETY FIRST
CUSTOMER SUCCESS
PLAY FAIR
Everyone is responsible
Injuries can be
prevented
All jobs can
be done safely
Customers determine
our success
Committed to
service and quality
Be responsive
to customer needs
Be honest & respectful
Do the right thing
by each other & the
environment
Work as a team
BETTER EVERY DAY
OWN IT
Continuous
improvement
Embrace change
Be innovative
Be accountable
Feel empowered
Take pride in our work
Act boldly
2
Annual Report 2021 Key Statistics
KEY STATISTICS
For The Year Ended 31 December
Sales Volume – Tonnes
Revenue
EBITDA
Trading EBITDA1
Profit after Tax
Operating Cash Flow
Net Cash
1 Please refer to note on page 4.
2021
2020
VARIANCE
76,300
$M
593.5
59.2
38.2
42.7
41.7
50.1
61,000
$M
432.0
47.2
19.7
25.9
52.1
49.4
15,300
$M
161.5
12.0
18.5
16.8
(10.4)
0.7
Chairman’s Report Annual Report 2021
3
CHAIRMAN’S REPORT
ANNUAL REVIEW
2021 presented many challenges as well as opportunities
for Capral and its stakeholders. The strong shift to local
supply resulting from disruptions to import supply chains
and shipping congestion seen at the end of 2020 gathered
momentum throughout the year and, combined with
Government assistance targeted to the residential
construction market through HomeBuilder and other
incentives, created unprecedented demand underpinning
Capral’s strong growth in volumes in 2021.
The numerous challenges which the Company faced
included; gearing up production capability through
recruitment to increase employee levels, adding operating
shifts to meet and satisfy customer demand, and resolving
supply and logistical disruptions. I was particularly
impressed by management’s responses to all of these
challenges whilst at the same time grasping the
opportunities created by the increased customer demand.
Management has clearly driven these positive responses
throughout the entire Capral workforce.
I direct shareholders to the Managing Director’s Report and
the Results Presentation released to the market today.
FINANCIAL PERFORMANCE
Revenues of $593 million were 37% higher than the $432
million reported in 2020. Volume increased year on year by
25%. The increase in aluminium supply prices rose
throughout the year as the LME Aluminium price rose to its
highest levels in 13 years.
The revenue growth from increased volumes and higher
prices (offset by higher raw material costs and operating
costs) combined with the ongoing operating efficiencies
flowing from Bremer Park, and the profitable contribution
from the company’s extrusion plants including the newly
acquired Smithfield plant, added significantly to this year’s
profit. These benefits will continue to contribute going
forward. Higher productivity and operational leverage in all
parts of the business helped deliver a Trading EBITDA1 of
$38.2 million, 94% higher than last year’s $19.7 million.
Reported Net Profit After Tax (NPAT) includes $9.4 million
arising from recognition of deferred tax brought to account
(2020: $3.0 million). NPAT was $42.7 million ($1.80 per
share normalised2) compared to last year’s $25.9 million
($0.72 per share normalised2).
Whilst the substantial increase in revenues increased
working capital as a result of higher receivables and
inventory and the impact of higher LME prices, strong cash
flows were another feature of Capral’s performance for the
year. The Company increased its net cash at 31 December
2021 by $1.0 million to $50 million. This was despite
funding increased working capital of $13.7 million, investing
$9.5 million in fixed assets and $10.3 million for the
Smithfield plant, and $10.9 million returned to shareholders
by way of dividends. Our strong cash position enables us to
continue to balance our utilisation of free cash between
funding internal growth, investing in additional capacity and
returning cash to our shareholders through fully franked
dividends.
DIVIDENDS
Our performance over the past two years demonstrates
that our strategies are delivering value and that Capral is
now better placed to succeed through the various phases
of the business cycle. Accordingly, Capral paid a fully
franked interim dividend of 20 cents per share during the
2021 year and the result for the year supports an increase
in the final fully franked dividend for the 2021
reporting period.
The Company has declared a fully franked final dividend
of 50 cents per ordinary share (2020: 45 cents) to be paid
on 25 March 2022 in respect of the financial year ended
31 December 2021. The dividend will be paid to all
shareholders on the register of members as at the Record
Date of 4 March 2022. Our Dividend Reinvestment Plan will
be active for this dividend with election to be made by
11 March 2022.
SAFETY
Our safety performance for the year under review delivered
excellent results which is especially pleasing given that all
of our facilities experienced material increases in activity
levels. The Company recorded 7.2 lost time injuries per
1 million hours worked in 2021, well below peer
comparatives. Capral’s management continues to roll out
new initiatives and prioritise safety across every part
of our business.
SUSTAINABILITY
The environment is a key priority for Capral. A full report on
our progress is included in the Sustainability Report.
4
Annual Report 2021 Key Statistics
CHAIRMAN’S REPORT
(continued)
LOOKING AHEAD
It is most encouraging to see that the increased level of demand enjoyed in 2021 has
carried into 2022, and there are positive signs that we are retaining a significant amount
of the business which we secured over the last two years. Unfortunately, COVID
continues to impact our daily activities. Thanks to the dedication and excellent
performance of our employees across Australia, we are now stronger than ever and
well positioned to again deliver strong earnings for our shareholders. I direct you to
the Outlook section of the Managing Director’s Report for details of our earnings
guidance for 2022.
BOARD CHANGES
Capral continued its commitment to board renewal with the appointment of
Mark White as an Independent Non‑Executive Director during the year. In
addition, on 24 February 2022 we announced Bryan Tisher’s appointment to
the board, as well as the forthcoming retirement of Phil Jobe at the
conclusion of the AGM on 27 April 2022 after 13 years of executive and
non‑executive service and contribution to Capral’s success.
We welcome both Mark and Bryan to Capral and their combined extensive
business experience will make a significant contribution to the Board.
At the same time, we thank Phil for his dedication and support during his
tenure. His contributions and insights have been invaluable to the Board.
On behalf of the board I wish to thank all of Capral’s stakeholders for
their tremendous support during 2021. We look forward to delivering
strong results in 2022. Thank you to all of my Capral colleagues for
their tireless efforts throughout a record‑breaking year.
Rex Wood‑Ward
Chairman
1 Trading EBITDA is the Statutory EBITDA adjusted for significant items that
are material items of revenue or expense that are unrelated to the
underlying performance of the business. Capral believes that Trading
EBITDA provides a better understanding of its financial performance and
allows for a more relevant comparison of financial performance between
financial periods. These items are LME and Premium revaluation, and
one‑off costs relating to restructuring that are non‑recurring in nature.
Trading EBITDA is presented with reference to the Australian Securities and
Investment Commission Regulatory Guide 230 “Disclosing non‑IFRS
financial information” issued in December 2011
2 Normalised Earnings Per Share is Basic Earnings Per Share adjusted for
Income Tax Benefit ($9.4 million) and LME Revaluation Gain ($2.8 million) on
the same basis as Note 1 above
5
We are commited to
investing in our community
In 2021 we continued our support of programs to
nuture and foster future leaders of our industry
6
Managing Director’s Operations and Financial Review Annual Report 2021
7
MANAGING DIRECTOR’S
Operations and Financial Review
HIGHLIGHTS
» Record earnings result
» Volume at 76,300 tonnes was 25% above last year
» Market conditions and demand were strong throughout the year
» Trading EBITDA1 $38.2 million, up $18.5 million on last year
» EBITDA $59.2 million, up $12.0 million on last year
» Net Profit Before Tax $33.3 million, up $10.4 million on last year
» Net Profit After Tax $42.7 million including $9.4 million deferred tax benefit,
up $16.8 million on last year
» Normalised earnings per share at $1.80
» Balance sheet strong with net cash of $50.1 million
» Fully franked final dividend of 50 cents per share declared, total FY21 dividends
of 70 cents per share
» Acquisition of Smithfield (NSW) extrusion plant in February 2021
» Excellent safety performance with TRIFR 7.2
FINANCIAL REVIEW
Market conditions rebounded strongly in the second half of 2020 and this continued
throughout 2021. In addition, disruption to import supply chains and higher shipping costs lead
to increased demand for local extrusion. In response, Capral increased its workforce and
operated its manufacturing plants at full available capacity leading to higher operating leverage
driving earnings to record levels.
The residential market remained buoyant on the back of government housing stimulus programs
and is on track to record 233,000² starts in 2021, 25% above last year. Commercial construction
was adversely impacted by COVID restrictions, but our key industrial markets (manufacturing,
transport and marine) remained strong, underpinned by high levels of economic activity.
Local extrusion demand lifted by a shift to local manufacture and away from imports. This growth was
driven by; import supply chain disruption, high international shipping costs, enforcement of
anti‑dumping measures, and a growing “Australia Made” sentiment with local supply providing
customers the benefit of shorter and more reliable lead times.
The international LME price of aluminium rose rapidly from mid 2021 and was still rising at year end.
Capral’s average LME cost for 2021 was 30% above last year, finishing the year 40% up, having reached
13 year highs in the fourth quarter. This flowed through to higher selling prices and working capital levels
which will continue into 2022.
In 2019 Capral completed a significant restructure of its largest manufacturing operation at Bremer Park in
Queensland. This successfully transformed Capral’s business delivering permanent cost savings and
increased operational efficiencies. These benefits were evident in 2021 with Bremer Park delivering a strong
profit contribution to the group.
The acquisition of the GJames extrusion plant in Smithfield was completed in February 2021. The plant has
been successfully integrated into Capral’s operations and moved from a one shift operation to two shifts mid
year. Smithfield made a modest positive profit contribution in 2021.
Capral delivered a record profit result in 2021 with a Trading EBITDA1 of $38.2 million (2020: $19.7 million) on 25%
higher volumes. EBITDA of $59.2 million (2020: $47.2 million) and a net profit before tax of $33.3 million
(2020: $22.9 million). An outstanding result.
1 Refer to Trading EBITDA and Normalised EPS explanation in footnote to Chairman’s Report on Page 4
8
Annual Report 2021 Managing Director’s Operations and Financial Review
MANAGING DIRECTOR’S
Operations and Financial Review (continued)
Capral ended 2021 with a net cash balance of $50.1 million.
Debtors collection performance remained good and
inventory levels were below plan at year end due to delayed
shipments. Working capital levels lifted due to the impact of
the higher LME on debtors and inventory levels.
Capral will pay a fully franked final dividend of 50 cents per
share and, together with the interim dividend of 20 cents
per share, lifts total FY21 dividends to 70 cents per share
(FY20: 45 cents per share).
KEY INITIATIVES AND STRATEGIES
Key high‑level strategies remain consistent:
» Build on our strengths; product offer, scale, capability
and our people
» Optimise what we do; improve productivity in all
aspects of our business
» Grow for the future; develop new & innovative products,
solutions and services
A key focus in 2022 will be increasing Smithfield to a three
shift operation to lift Capral’s available extrusion capacity.
Recruiting the required numbers of operational employees
in Sydney has been very challenging with the third shift now
targeted in the second quarter of 2022. This strategically
important acquisition gives Capral an expanded
manufacturing presence in NSW, provides savings in freight
costs, and improved service to customers. Smithfield
continues to supply GJames with certain extrusions under
a supply agreement and is also expanding its local
customer base. The Smithfield plant is expected to
contribute moderate earnings growth in 2022.
Capral is installing a new paint line at its new Huntingwood
(NSW) distribution centre during 2022. The other major
capital project will be the first stage of the Penrith extrusion
plant upgrade with the rebuild of the extrusion press and
hydraulics late in 2022.
During 2022 we will continue to focus on growing Capral’s
aluminium distribution business with the objective of
increasing the volume and profitability of Capral’s direct
distribution channel.
FAIR TRADE
Capral continues to lead the local industry in the pursuit
of fair trade.
» Measures on Chinese imports in place until 2025
»
Increased enforcement by Australian Border Force
against anti‑circumvention activities
» Measures in place against certain Malaysian and
Vietnamese suppliers
Market share gains have been made against imports over
the last two years but they continue to represent a material
proportion of the total extrusion market which means we
must remain vigilant in the pursuit of fair trade.
SAFETY
Safety First is the first of Capral’s key values. We continue to
focus on risk assessment, training, systems and our safety
culture. Capral’s safety performance over the last two years
has been excellent with a total reportable injury frequency rate
of 7.2 (2020: 5.8). This compares favourably with the peer
average of 9.8 for listed building products manufacturers.
SUSTAINABILITY
Capral advanced its commitment to its environmental
obligations by forming a National Sustainability Committee
last year with employee representation across Capral’s
operations. This has resulted in the development of Capral’s
sustainability four pillars and a roadmap to net zero by 2050.
Refer to Capral’s Sustainability Report (pages 15 to 18).
OUTLOOK
External forecasts for the residential market remain
positive, with starts expected to be 234,0001 in 2022, on par
with 2021, and with significant work in the pipeline.
The non‑residential market is forecast to lift in 2022 after a
COVID disrupted last two years. The industrial markets are
also expected to remain robust with customers continuing
to support local supply.
LME is unpredictable and volatile, and is subject to a number
of international influences. Based on external forecasts, we
expect LME to come off its peaks during the first half but to
remain at historically elevated levels throughout 2022.
The overall market for Capral’s aluminium extrusion and
rolled product is forecast to remain strong in 2022 and we
expect to retain a good proportion of market share gained
from imports. Trading EBITDA2 is forecast, absent any
unforeseen events, to be between $34 million and $38
million with EBITDA between $53 million and $57 million.
On that basis Capral would be in a position to continue the
payment of a franked dividend.
1 BIS Oxford Economics December 2021 forecast
2 Refer to Trading EBITDA and Normalised EPS explanation in
footnote to Chairman’s Report on Page 4
9
The focus in the year ahead will be to
deliver benefits from the Smithfield
acquisition, improve efficiencies in all
our extrusion operations, and grow our
distribution business. We plan to
enhance our range, service and quality
to help grow our customer base to
deliver consistent volume and profit
growth into the future.
I wish to thank the Capral team for
their tremendous contribution to the
outstanding 2021 result which was
achieved during the challenge of
COVID restrictions. Capral is in a
position to capitalise on its strong
foundation, maximise the opportunities
in the current market, and develop the
business for the long term.
Tony Dragicevich
Managing Director
25 February 2022
10
Board of Directors Annual Report 2021
11
BOARD OF DIRECTORS
Directors in office during the financial year and up to the date of this report:
REX WOOD‑WARD
Chairman of Board (Independent)
Appointed 6 November 2008
» Chairman of the Board
» Member of the Audit & Risk Committee
» Member of the Remuneration & Nomination
Committee.
Mr Wood‑Ward has 45 years of experience in general
management, mergers and acquisitions, corporate strategy
and structuring, including in manufacturing and
distribution. Over his career he has been a director of over
10 publicly listed companies in Australia, the United
Kingdom and South Africa.
Directorships of other listed companies held in last 3 years
before end of the Financial Year: None
TONY DRAGICEVICH B. COMM A.C.A
Managing Director (Non‑independent)
Appointed 15 April 2013
Mr Dragicevich joined Capral in January 2013 and became
the Managing Director and Chief Executive Officer on
15 April 2013. Mr Dragicevich is an experienced CEO and
business leader who has been involved in the improvement
of a number of businesses, having previously served as
Managing Director of the Wattyl Group, and as Chief
Executive of GWA Bathroom and Fittings, Managing
Director of the Red Paper Group and General Manager of
Tasman Insulation.
Directorships of other listed companies held in last 3 years
before end of the Financial Year: None
PHILIP JOBE B. COMM
Non‑executive director (Independent)
Appointed 24 April 2009
» Member of the Audit & Risk Committee
» Member of the Remuneration & Nomination
Committee.
Mr Jobe became a non‑executive director following the
expiry of his term as Capral’s Chief Executive Officer and
Managing Director in April 2013. Before joining Capral,
Mr Jobe was the Executive General Manager of Boral
Limited’s Cement Division, including Managing Director of
Blue Circle Southern Cement Pty Limited. This also
encompassed the role of Chairman of the Cement Industry
Federation. He also had executive responsibility for Boral’s
expanding Asian construction materials businesses.
Mr Jobe was previously Managing Director of Stegbar Pty
Limited from 1989 to 1994.
Directorships of other listed companies held in last 3 years
before end of the Financial Year: None
GRAEME PETTIGREW FIPA, FAIM, FAICD
Non‑executive director (Independent)
Appointed 18 June 2010
» Chairman of the Remuneration & Nomination
Committee Member of the Audit & Risk Committee.
Mr Pettigrew has held chief executive roles at CSR Building
Products Pty Ltd and Chubb Australia Ltd and he retired as
a non‑executive director of Adelaide Brighton Ltd. He has
relevant experience in the construction and building
materials industry, as well as manufacturing and
distribution businesses.
» Directorships of other listed companies held in last
3 years before end of the Financial Year: None
12
Annual Report 2021 Board of Directors
BOARD OF DIRECTORS
(continued)
KATHERINE OSTIN B. COMM, GAICD, F FIN, CA
Non‑executive director (Independent)
Appointed 17 June 2020
» Chairman of the Audit & Risk Committee from 17 June
2020.
» Member of the Remuneration & Nomination Committee
from 17 June 2020.
Ms Ostin is a Chartered Accountant and Company Director
of a number of listed and unlisted companies where she
also chairs the Audit & Risk Committees. She has diverse
experience in Audit & Risk management having previously
been a KPMG Audit and Assurance Partner responsible for
a wide range of listed and unlisted companies. Ms Ostin
has also previously been non‑executive director of a
number of not‑for‑profit organisations.
Directorships of other listed companies held in last 3 years
before end of the Financial Year:
» Non‑executive director of Swift Media Ltd: 1 October
2019 to 19 November 2021.
» Non‑executive director of Dusk Group Ltd:
16 September 2020 to date of this report.
» Non‑executive director of 3P Learning Ltd: 6 August
2021 to date of this report.
MARK WHITE B. COMM
Non‑executive director (Independent)
Appointed 1 September 2021
BRYAN TISHER B. ENG, MBA
Non‑executive director (Independent)
Appointed 24 February 2022
» Member of the Audit & Risk Committee
» Member of the Remuneration & Nomination
Committee.
Mr Tisher has extensive experience in the resources,
building materials and electrical products sectors. He is
currently the Chief Executive Officer of Legend Corporation,
an Australian leader in industrial and electrical products
and previously held senior positions at Orica, Boral and
Rio Tinto.
» Member of the Audit & Risk Committee from
1 September 2021
» Member of the Remuneration & Nomination Committee
from 1 September 2021.
Mr White has extensive experience in the aluminium and
building materials sectors. He is currently the General
Manager of Gove Aluminium Finance Limited. He also has
more than 10 years’ experience as an Executive Director on
the Board of Tomago aluminium smelter and has held a
number of senior positions in CSR Limited’s building
products businesses and has over 20 years of experience
across a number of manufacturing industries.
Mr Tisher was the Managing Director of Orica Asia
responsible for manufacturing and distribution
operations covering 14 countries, and the Divisional
Managing Director of Boral Building Products
responsible for the Plasterboard Australia, Timber,
Bricks, Roofing, Masonry and Windows business
units. He has had extensive board experience as an
Executive Chairman for six joint ventures in Asia and
the Boral Carter Holt Harvey Softwood
Manufacturing Joint Venture at Oberon, and, as a
Non‑Executive Director at Sustainable Timber
Tasmania and Cape York Enterprises.
Directorships of other listed companies held in last 3 years
before end of the Financial Year: None
Directorships of other listed companies held in last
3 years before end of the Financial Year: None
13
Photo: NH Architecture – Burwood Brickworks
14
Right: MacCormac Architects
– Perth RSL Offices
Sustainability Report Annual Report 2021
15
SUSTAINABILITY REPORT
A SUSTAINABLE FUTURE
During 2019 Capral launched a new initiative establishing a Sustainability Committee to advance key sustainability
strategies throughout its operations. As a result, Capral has committed to reach net zero emissions by 2050. This target will
be based on achieving net zero Scope 1 and Scope 2 emissions and is underpinned by emerging and breakthrough
technology options.
We recognise that in the world in which we live, Capral must act wisely to protect the environment and the broader society
while working in the interests of our stakeholders and customers. Capral recognises the United Nations Sustainable
Development Goals (SDGs) as a shared blueprint for peace and prosperity for people and the planet. Capral also recognises
that ending poverty and other social deprivations goes hand‑in‑hand with strategies that improve health and education
within our communities, reduce inequality, and encourage economic growth while tackling climate change.
As a major aluminium supplier our buying strategies and corporate activities will demonstrate the goal for Capral to work
towards sustainability best practice underpinned by a commitment to the United Nations SDGs.
In our operations we continue to develop our position as a socially and environmentally aware organisation. We are
developing our policies and disclosure, committing to openness, and generating a positive impact on our customers,
employees, the environment, and our broader society. Our best practice approach will look for opportunities to integrate
circularity principles within our business models. We also understand our stewardship obligations and will use our impact to
enable stakeholders to invest in long‑term, sustainable value creation.
We believe that our sustainability approach and ongoing dedication to launching new Capral sustainable solutions to
address customer and stakeholder needs will make a positive contribution to our business growth.
The United Nations Sustainable Development Goals (SDGs) set out a shared vision to end poverty, fight inequality and
injustice, and tackle climate change. We recognise the importance of all 17 interconnected SDGs. Capral is responding to
the UN’s call for a decade of action to deliver the global goals by setting out several specific commitments.
SDG
SDG OBJECTIVE
CAPRAL’S COMMITMENT
SDG 7 calls for affordable, reliable, and
sustainable energy for all by 2030 to reduce
the demand and depletion of the world’s
natural capital
We are committed to developing plans to
adopt renewable energy solutions across our
sites
SDG 12 calls for substantial reduction of
waste through prevention, reduction,
recycling, and reuse
We are committed to reducing waste through
our manufacturing and distribution activities,
including supporting a circular economy
SDG 13 calls for the integration of climate
change measures into strategies and
planning by 2030
We continue to take action to reduce carbon
emissions from our manufacturing plants by
reducing energy consumption and developing
renewable energy sources
SDG 3 calls for ensuring health and
well‑being for all
We continue to promote and actively
participate in good health and well‑being
activities to raise awareness of both physical
and mental health issues with our employees
16
Annual Report 2021 Sustainability Report
OUR ROADMAP – ON A PATH TO A BETTER TOMORROW
In 2021 Capral introduced its Sustainability Roadmap embracing four pathways to a better tomorrow where Capral and its
employees can contribute to a more sustainable future. Capral’s Roadmap aligns with a number of the United Nations
Sustainable Development Goals (SDGs).
Identify and implement strategies and processes to minimise
the use of energy and develop sources of renewal energy
Reduce the amount of waste going to landfill by reuse,
repurpose, and recycle
Identify and introduce ways to minimise the use of paper
and ensure any paper used is from sustainable sources
Source from ethical suppliers providing sustainable, nontoxic,
biodegradable and recycled products
THE ENVIRONMENT
At Capral we care for the environment. We are committed to the efficient use of resources and the reduction and prevention
of pollution and emissions. We believe that all environmental incidents are preventable.
We recognise that our activities, products, and services may impact on the environment and, as a responsible corporate
citizen, will work towards sustainable development that embodies life cycle thinking to reduce the demand and depletion of
our world’s natural capital.
In line with this commitment we will effectively manage our waste materials with a more circular vision of reduce – reuse–
repurpose, and disposal compliant with environmental standards.
Capral is committed to maintaining an Environment Management System that incorporates requirements for planning,
implementation, and review based on a risk management approach. Capral manufacturing sites are certified to ISO14001
Environmental Management.
Capral acknowledges the importance of the impact of our operations on stakeholders by providing appropriate information
to employees, shareholders, government agencies and local communities.
Capral’s Scope 1 emissions are direct emissions primarily related to gas used in heating processes in our manufacturing
operations. Capral’s Scope 2 emissions is primarily electricity used in running our equipment, HVAC and lighting systems in
our manufacturing and distribution sites. Capral has undertaken a number of initiatives over the last five years which has
resulted in the reduction of its energy usage and emissions.
Aluminium Extrusion Emissions Intensity
Sustainability Report Annual Report 2021
17
Capral makes energy efficiency a priority in its capital plant upgrade considerations by assessing the environmental
implications in the design, purchase and commissioning phases. Key energy saving initiatives recently undertaken are:
Installation of voltage optimisation system at Campbellfield
»
» Closure of energy intensive anodising line at Bremer Park
»
» Renewable energy roof‑top solar installation designed for installation at Campbellfield in early 2022
» Manufacturing plants utilising cloud‑based energy monitoring systems (SYMBOL) continuously assessing energy
Introduction of variable speed drives at Smithfield adopting EU guidance by using Ultra Low Harmonic (ULH) technology
consumption at individual equipment level
» Majority of Capral sites have switched to LED lighting and sensing technology
Capral’s employees are encouraged to embrace an obligation to take due care and attention when performing their role and
to comply with directions given to ensure that environmental damage does not occur. Capral’s Managers, Supervisors and
Team Leaders demonstrate sound environmental leadership and communicate clear environmental accountabilities and
expectations to their teams in the workplace. Employees actively participate in environmental audits and assessments,
corrective actions, and rehabilitation plans.
HEALTH AND SAFETY
Capral has invested significantly in centralising and standardising its Safety systems under Capral’s Integrated
Management System (IMS) to ensure every level of the business understands associated risks and controls in its
operations. This approach has provided a consistent application of Capral’s IMS throughout all sites.
Rather than focusing on an incident itself, Capral’s injury reduction philosophy is about understanding the behaviours of
people and workplace activity inconsistencies before incidents occur. All operational leaders are tasked with training and
development functions to ensure their team can perform tasks without incident and can freely speak up when something is
wrong. This approach has led to a reduction in Capral’s reportable incidents and hours lost over the last six years.
By expanding an employee’s ability to access expert medical support staff to manage injury concerns, we have been able to
reduce incidents, minimise injury severity and improve recovery. Capral’s preventative injury management approach has
reduced our total reportable injury frequency rate (TRIFR) over the last two years to below the industry average of 9.8 for
listed building products manufacturers.
Total Reportable Injury Frequency Rate
Capral’s IMS compels all sites to comply with safety, health, and environmental legislation under ISO 45001. IMS also
incorporates monitoring and improvement targeted at increasing employee lifespan and supporting SDG goal #3 “good
health and well‑being”.
18
Annual Report 2021 Sustainability Report
PEOPLE & COMMUNITY
Capral employs around 1,000 people over 21 sites around
Australia with around half of our employees covered by
enterprise agreements.
Our Values underpin how our business is conducted:
» Safety First – Everyone is responsible. Injuries can be
prevented. All jobs can be done safely.
» Customer Success – Customers determine our
success. Service and quality. Be responsive.
» Play Fair – Be honest and respectful. Do the right thing
by each other and the environment. Work as a team.
» Better Every Day – Continuous improvement.
Be innovative. Embrace change.
» Own It – Be accountable. Feel empowered; Take pride
in your work. Act boldly.
Capral’s Code of Conduct provides a set of guiding
principles for our people and promotes and respects the
benefits arising from workplace diversity. We strive to
promote an environment conducive to the employment of
well qualified people and ensure appropriate diversity
in our workplace.
We understand that cultural awareness and diversity
creates a cohesive workplace. Capral also successfully
sponsored two employees for Australian permanent
residency as skilled migrants play a pivotal role in assisting
Capral to increase its depth of knowledge and skills.
Understanding the skills, knowledge and the capabilities of
our people is central to our business success. Capral has
partnered with the Australian Institute of Management
(AIM) to develop a continuous learning and development
program which adds to employee confidence and
professional development. Through our AIM online training
program employees are given the opportunity to expand
their knowledge and receive additional support where
needed.
Capral continues to work with community organisations
making positive contributions across a broad spectrum of
areas. Company‑wide initiatives included awareness
campaigns for mental health through R U Ok? Day and
men’s health through Tievember, our version of Movember.
Locally Capral sites also supported charity organisations
including:
» Allison Baden Clay Foundation – Strive to Be Kind
» Goodna Street Life Kids Christmas Party
» Disability Sport and Recreation Victoria
19
20
Directors’ Report Annual Report 2021
21
DIRECTORS’ REPORT
Your directors present their report on the consolidated
entity consisting of Capral Limited (Capral) and the entities
it controlled at the end of, or during, the financial year ended
31 December 2021 (Financial Year).
DIRECTORS
The following persons were directors of Capral during the
Financial Year and up to the date of this report:
2021 final dividend. The DRP will be at a discount of 2.5% to
the 5 days Volume Weighted Average Price (VWAP)
calculated from 7 March 2021 to 11 March 2021, both days
included. A final dividend of 45 cents per ordinary share
(fully franked) was paid in March 2021 in respect of the
2020 financial year and an interim dividend of 20 cents per
ordinary share (fully franked) was paid in September 2021
in respect of the 2021 financial year, no other dividends or
distributions have been paid during the Financial Year.
NAME
PERIOD OFFICE HELD
R. L. Wood‑Ward
6 November 2008 – Date of this report
REVIEW OF OPERATIONS AND
FINANCIAL POSITION
A. M. Dragicevich
15 April 2013 – Date of this report
P. J. Jobe
24 April 2009 – Date of this report
K. Ostin
17 June 2020 – Date of this report
G. F. Pettigrew
18 June 2010 – Date of this report
M. White
B. Tisher
1 September 2021 – Date of this report
24 February 2022 – Date of this report
Details of directors, their qualifications, experience, special
responsibilities (including committee memberships) and
directorships of other listed companies held in the last
three years before end of the Financial Year are set
out on pages 11 and 12.
PRINCIPAL ACTIVITIES
During the Financial Year, the principal
continuing activities of the consolidated entity
consisted of the manufacturing, marketing
and distribution of fabricated and
semi‑fabricated aluminium related products.
DIVIDENDS
The Directors recommend that a final
dividend of 50 cents per ordinary share
(fully franked) be declared. The record date
for the final ordinary dividend will be 4
March 2022, with payment being made on
25 March 2022. Shareholders can choose
to receive their dividends as cash or
reinvest for an equivalent number of shares
under the Dividend Reinvestment Plan
(DRP). The DRP election date will be
11 March 2022. The Board has decided to
issue new shares to satisfy the DRP for the
A review of operations and financial position of the
consolidated entity are referred to in the Managing Director’s
Operations and Financial Review on pages 7 and 9.
SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
There were no significant changes other than the Smithfield
business acquisition in the state of affairs of the
consolidated entity during the year.
MATTERS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
No matter or circumstance other than those disclosed in
Note 35 has arisen since the end of the Financial Year that
has significantly affected, or may significantly affect the
consolidated entity’s operations, the results of those
operations or the consolidated entity’s state of affairs in
future financial years.
LIKELY DEVELOPMENTS, BUSINESS STRATEGIES,
PROSPECTS AND RISKS
Information on likely developments, business strategies,
prospects and risks are detailed in the Managing Director’s
Operations and Financial Review on pages 7 and 9
and the Sustainability Report on pages 15 and 18.
Whilst Capral continues to meet its continuous disclosure
obligations, this report omits information where it would be
likely to result in unreasonable prejudice to Capral.
This includes information that is commercially sensitive,
is confidential or could provide a third party with
a commercial advantage (such as internal budgets
and forecasts).
22
Annual Report 2021 Directors’ Report
OTHER INFORMATION FOR MEMBERS TO MAKE AN INFORMED ASSESSMENT
Other than information set out in this report, there is no information that members would reasonably require to make an
informed assessment of the operations, financial position, business strategies and prospects for future financial years of
the consolidated entity.
COMPANY SECRETARY
Ms K Bradley‑Ware – Joint Company Secretary, B Comm, CPA, LLB
Ms Bradley‑Ware has over 20 years of experience as a Company Secretary and CFO. Ms Bradley‑Ware is an employee of
Company Matters Pty Ltd, a company secretarial service provider. Prior to joining Company Matters, Ms Bradley‑Ware was
a Company Secretary and Chief Financial Officer at ASX listed Pan Pacific Petroleum Limited (ASX: PPP) and prior to that,
held various roles in accounting across a variety of different industries including credit reporting, telecommunications
and media.
Ms Bradley‑Ware has provided support to a large number of ASX companies including Elixinol Global Limited (ASX: EXL),
Energy Action Limited (ASX: EAX), People Infrastructure Ltd (ASX: PPE), as well as various Infrastructure Joint Ventures and
Private Companies.
Ms Bradley‑Ware was appointed as a Company Secretary on 11 December 2020.
Mr T Campbell – Chief Financial Officer and Joint Company Secretary, B.Com (Hons), CA
Mr Campbell was appointed Chief Financial Officer on 1 June 2011.
Mr Campbell is a member of the Australia and New Zealand Institute of Chartered Accountants.
Prior to joining Capral, Mr Campbell held various executive positions at UXC, Macsteel and The South African Breweries.
Mr Campbell was appointed as a Company Secretary on 8 March 2019.
DIRECTORS’ MEETINGS
The numbers of directors’ meetings (including meetings of committees) held, and the number of meetings attended, by
each director during the Financial Year, are as follows:
BOARD
AUDIT & RISK COMMITTEE
REMUNERATION &
NOMINATION COMMITTEE
DIRECTOR
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
R.L. Wood‑Ward
A.M. Dragicevich
P.J. Jobe
K. Ostin
G.F. Pettigrew
M. White
12
12
12
12
12
3
12
12
12
12
12
3
3
3
3
3
3
1
3
31
3
3
3
1
2
2
2
2
2
1
2
21
2
2
2
1
1 Attended meeting(s) in an ex‑officio capacity
Directors’ Report Annual Report 2021
23
DIRECTORS’ INTERESTS AND BENEFITS
Ordinary Shares
Details of holdings of ordinary shares in Capral for the directors (including former directors who held office during the
Financial Year) at the beginning and end of the Financial Year and at the date of this report are as follows:
NAME
POSITION
ORDINARY SHARES FULLY PAID IN THE COMPANY
BALANCE AT
1.1.2021
BALANCE AT
31.12.2021
BALANCE AT DATE
OF THIS REPORT
R.L .Wood‑Ward
Director and Chairman of the Board
–
A.M. Dragicevich
Managing Director
P.J. Jobe
K. Ostin
Director
Director
G.F. Pettigrew
Director
M. White
B. Tisher
Director
Director
346,066
270,016
–
–
–
–
–
444,0291
270,016
–
–
–
–
–
444,029
270,016
–
–
–
–
1 Acquired 39,460 as part of 2021 STI program on 5 May 2021. Acquired 24,045 as part of Dividend Reinvestment Plan on 26 March 2021.
Allotted 34,458 as vesting of 2018 LTI rights on 6 May 2021.
In addition to the interests shown above, indirect interests in Capral shares held by the Managing Director, Mr. Dragicevich
are as follows:
MR A. M. DRAGICEVICH
NATURE OF OTHER INTERESTS
Performance rights
BALANCE AT
1.1.20211
254,330
BALANCE AT
31.12.2021
BALANCE AT DATE
OF THIS REPORT
267,3002
267,300
1 Shown as post 3 November 2020 share consolidation quantity
2 38,872 performance rights lapsed on 1 March 2021; 34,458 performance rights were vested on 1 March 2021and 86,300 performance
rights were issued on 28 April 2021
UNISSUED SHARES OR INTERESTS UNDER OPTION
At the date of this report, there are 754,310 (2020: 700,000) unissued shares or interests under option. Refer to sections 1 to
3 of the Remuneration Report and Note 38.
24
Remuneration Report (Audited) Annual Report 2021
25
REMUNERATION REPORT
(Audited)
This report sets out Capral’s remuneration of its directors
and executives. It also details the actual remuneration of its
key management personnel (including the directors) during
the Financial Year.
SECTION 1: THE REMUNERATION FRAMEWORK
(a) Key Principles
Capral’s remuneration framework and practices are based on
the principles that remuneration is performance driven, aligns
with shareholder interests, provides market competitive
remuneration that attracts qualified and experienced
candidates, and retains and motivates employees.
The variable components of remuneration (short and long
term) are driven by challenging targets focused on both
external and internal measures of financial and non‑financial
performance. Details of performances measures are set out
in sections 1(g) and 1(h) below. Executive remuneration is
aligned with shareholder interests via an emphasis on
variable (incentive) remuneration, the award of which is
linked to performance benchmarks that support business
strategies and future success. A significant proportion of
executive remuneration is at‑risk. Details of the link between
performance and remuneration is set out in section 4.
(b) Role of Remuneration & Nomination
Committee
The Remuneration & Nomination Committee is responsible
for reviewing and making recommendations to the Board of
Directors (the Board) on remuneration policies for Capral
including, in particular, those governing the directors
(including the Managing Director) and executive managers.
The Committee operates in accordance with its Charter.
Remuneration of the Managing Director and certain
executive managers is reviewed at least annually by the
Remuneration & Nomination Committee and
recommendations are put to the Board for its approval.
Short‑ and long‑term incentives are linked to performance
criteria. The Board can exercise its discretion in relation to
approving bonuses and incentives. Changes must be
justified by reference to measurable performance criteria
and having regard to Capral’s overall financial performance
and other special circumstances.
The Remuneration & Nomination Committee may seek
independent advice as appropriate in setting the structure
and levels of remuneration based on the principle that the
elements of remuneration should be set at an appropriate
level having regard to market practice for roles of similar
scope and skill. No remuneration recommendations have
been made by remuneration consultants in relation to the
Financial Year. Capral has reviewed generally available
market information regarding remuneration, as outlined
further below.
(c) Performance Planning and Review
Capral has a Performance Planning and Review (PPR)
process to evaluate and discuss performance and
development plans at least annually with salaried
employees. This PPR process covers:
» An agreement of objectives for the year ahead and the
setting of key performance measures against which the
achievement of those objectives will be assessed.
These are set by reference to financial targets and key
business strategies.
» A review of performance against the previously agreed
objectives for the period under review.
» Employee comment and feedback.
» Short‑ and long‑term training and development needs
and career aspirations.
The PPR process ensures that there is better understanding
of Capral’s objectives thereby increasing the likelihood of
their achievement. It also enables managers to evaluate
and develop employee skills and performance and identify
future development needs.
(d) Non‑executive Directors
The structure of Capral’s non‑executive director
remuneration is distinct from that applicable to the
Managing Director and other senior executives.
Remuneration of non‑executive directors is established at a
level that enables Capral to attract and retain high quality
directors at a reasonable cost. Remuneration of
non‑executive directors and their terms of office are
governed by Capral’s constitution and not by contract.
Remuneration of non‑executive directors is allocated out of
the pool of funds, the limit of which is approved by
shareholders in general meeting; the fee pool limit is currently
$500,000 per annum. Each non‑executive director is entitled
to the payment of an annual fee in cash and superannuation
contributions for their services. Additional fees are not paid
for sitting on Board committees; however, the extra
responsibility of the Chairman of the Board and committees
is recognised by the payment of a higher fee. The fees for the
26
Annual Report 2021 Remuneration Report (Audited)
non‑executive directors are regularly reviewed having regard
to generally available market information and are currently
considered to be similar to those paid at comparable listed
companies. Non‑executive directors do not receive any
shares, options or other securities as part of their
remuneration however they are eligible to participate in
Capral’s equity incentive plans, although none currently
participate. There are no schemes for retirement benefits
(other than statutory superannuation payments).
The fixed remuneration of the Managing Director is
determined by the Board having regard to other ASX listed
companies in building product related industries, his
particular skills and previous remuneration, experience and
capability to lead Capral in delivering financial targets and
executing key business strategies. It forms part of his
executive employment contract and is subject to annual
review. The fixed remuneration of the Managing Director
has not increased since March 2019.
(e) Senior Management Remuneration
The remuneration policy for the Managing Director and
executives seeks to attract and retain people with the
required capabilities to lead Capral in the achievement of
business objectives and focus on delivering financial and
non‑financial measures.
The Board has reviewed generally available market
information regarding fixed remuneration of the key
management personnel for over 10 ASX listed companies
in either building product related industries or with
comparable revenues and market capitalisation. The fixed
remuneration of Capral’s key management personnel is
generally in line with this group.
Remuneration is reviewed annually, and approved changes
applied from 1 March.
The fixed remuneration of Capral’s other key management
personnel has not increased since March 2019.
The Remuneration & Nomination Committee reviews the
remuneration arrangements of the Managing Director, his
direct reports and certain other executive managers. The
Managing Director reviews the remuneration arrangements
of the other members of senior management, based on the
recommendations of his direct reports.
For the Managing Director and other senior management,
remuneration consists of a fixed annual salary and
superannuation (refer to section 1(f) below) plus at‑risk
components comprised of a short term incentive plan
(STIP) (refer to section 1(g) below) and a long term
incentive plan (LTIP) (refer to section 1(h) below).
The proportions of fixed and at‑risk remuneration are
established for the Managing Director and other senior
management relative to their position in Capral. As a general
guide, at‑risk remuneration is 50% for the Managing
Director, 25% for executive management and 10%–20% for
other senior managers, for the achievement of ‘target’ goals.
(f) Fixed remuneration
The level of the total employment cost (being base salary
plus superannuation) (TEC) is determined having regard to
job responsibilities, skills, experience, and performance.
Salaries are reviewed annually, with any changes applied
from 1 March. Fixed remuneration of executives is generally
targeted at market median.
(g) Short Term Incentives
Capral’s short‑term incentive schemes are designed to
encourage participants to assist Capral in achieving
continuous improvement by aligning their interests with
those of Capral and its stakeholders and rewarding them
when key performance measures are achieved.
For the Financial Year, there were 3 short term incentive
programs:
(1) Short Term Incentive Plan (STIP): The Managing
Director and senior employees have the opportunity to
earn a cash and deferred equity incentive, based on a
specified percentage of TEC dependent on each
individual’s level of responsibility. The actual incentive
earned is based on the achievement of financial and
non‑financial objectives.
(2) Bonus scheme: other salaried employees can earn
fixed payments, as approved by the Managing
Director, for achieving key performance measures set
by their managers and outlined in the employee’s
individual PPR.
(3) Sales incentives: Sales employees participate in
quarterly sales incentive programs in relation to
revenue, gross margin, and debtor days targets.
Remuneration Report (Audited) Annual Report 2021
27
STIP is weighted 70% to financial objectives and 30% non‑financial objectives. A summary of STIP is set out in the
table below:
Frequency
Awards determined annually with payment made in the March following the end of the
performance year.
Financial Measures
Non‑financial
Measures
» Trading EBITDA for Capral and (for relevant General/Divisional Managers) Business Units (30%).
Key financial threshold measure as reflects underlying earnings after excluding the impact of
external economic factors such as the volatility of global aluminium prices and the unrealised
impact of foreign exchange rate fluctuations.
» Net Profit After Tax for Capral (15%). Aligned to ability to pay dividends.
»
» % Working Capital to Annualised Sales for Capral and (for relevant General/ Divisional Managers)
Free Cash Flow for Capral (15%). Selected to ensure effectiveness of cash management.
Business Units (10%). Selected to ensure effectiveness of capital management.
Specific individual objectives are set to reflect measurable and numeric (where possible) strategic
initiatives and profit and safety improvement objectives. The key individual objectives include
performance to customers, sales targets/growth, productivity and operational improvements, key
projects and cost improvements. The weightings are generally 5% however may be higher or lower
depending on importance to company performance.
Assessment of
performance against
measures
Performance against financial measures is assessed after the end of each financial year based on
Capral’s financial results. The performance against non‑financial measures is assessed as part of
the PPR process.
The Managing Director, in consultation with senior managers, is responsible for recommending to
the Board the amount of STIP, if any, to be paid.
Payments are subject to the achievement of applicable Capral, Divisional or Regional minimum
annual Trading EBITDA targets. Stretch payments are not made where target financial metrics are
not met.
Discretionary override
The Board retains absolute discretion regarding payments having regard to Capral’s overall financial
position and other special circumstances that have arisen during the year (ie normalisation or
clawback). The intent however is to minimise the exercise of discretionary adjustments to the
planned outcomes set at the start of the year. Material adjustments would be disclosed.
Service condition
The Managing Director is eligible to receive a pro‑rata payment where his employment is terminated
other than for cause. Other employees who leave Capral part way through a performance period are
not eligible for a payment for that period.
Clawback of awards
In the event of fraud, misstatement or misrepresentation of the financials, the Board may exercise its
discretion to withhold some or all of a payment before it is made or recover some or all of payments
already made.
Deferral
Plan review
Any ‘Stretch’ STIP payments (after tax) to the Managing Director and Executive Team is satisfied by
Capral Shares and held in escrow for 3 years. These shares can be issued or acquired on market
(priced at the 12‑month Volume Weighted Average Price (VWAP) as at the end of the performance
period) as determined by the Board. There is no deferred cash/equity component for other STIP
participants. The Board introduced deferred equity in 2018 to further strengthen alignment of
Capral’s executive managers with shareholders.
The STIP design is reviewed at least annually by the Remuneration & Nomination Committee and
approved by the Board. The Managing Director, in consultation with senior managers, is responsible
for recommending to the Board the STIP financial targets. The non‑financial objectives are approved
by the Managing Director. The Managing Director’s non‑financial targets are established and
approved by the Board.
28
Annual Report 2021 Remuneration Report (Audited)
The Managing Director and key management personnel are eligible for the following awards of STIP relative to TEC:
POSITION
Managing Director
Chief Financial Officer
MINIMUM
25%
12.5%
% OF TEC
TARGET
50%
25%
STRETCH
100%
50%
Where objectives can be financially measured, ‘Minimum’ is generally set around 15% below Board approved Budget.
‘Target’ is generally set around Board approved Budget and ‘Stretch’ is generally set 30% above Budget.
The Board has reviewed available market information regarding short term incentive schemes of the key management
personnel for over 10 ASX listed companies in either building product related industries or with comparable revenues and
market capitalisation. The Board considers that Capral’s short‑term incentive scheme is generally in line with this group.
(h) Long Term Incentives
Capral’s long‑term incentive plan (LTIP) was designed to strengthen the alignment of the interests of senior managers with
shareholders and support a culture of share ownership and shareholder wealth. It also aims to provide competitive
remuneration for the retention of specifically targeted members of senior management.
The Managing Director, Mr Dragicevich, was granted 78,330 performance rights following shareholder approval in April 2019
and 102,670 performance rights following shareholder approval in April 2020. During the Financial Year, an additional 86,300
performance rights were granted to Mr Dragicevich following shareholder approval in April 2021.
On the recommendation of the Managing Director to the Remuneration & Nomination Committee, selected senior
executives participate in LTIP.
A summary of LTIP for the Managing Director and other senior executives is set out below:
Frequency
Awards determined annually.
Type of award
Amount of award
Performance rights subject to service requirements and vesting criteria. If the conditions
are met, shares will be issued around the vesting date.
The Managing Director is eligible to receive additional annual issues of up to 50% of the
value of TEC, subject to shareholder approval.
The value of individual awards for all other participating senior executives is generally less
than 30% of TEC.
As a matter of practice, the aggregate amount of each annual award to all Executives is
about 1.5% of issued capital and the number of rights awarded is based on the 12 month
Volume Weighted Average Price (VWAP) as at the start of the performance period.
Performance period &
vesting dates
3 years with 31 December testing dates.
2019 award: vesting date of 1 March 2022.
2020 award: vesting date of 1 March 2023.
2021 award: vesting date of 1 March 2024.
Remuneration Report (Audited) Annual Report 2021
29
Performance conditions
Performance rights granted under LTIP are subject to the participant remaining employed
by Capral at the vesting date and the achievement of the following performance
conditions:
»
»
50% of rights are subject to an EPS performance condition. The actual EPS
performance is measured over a 3‑year period, must meet, in aggregate, the 3 annual
targets combined. The EPS condition is calculated each year as follows: Net Profit
After Tax Target as specified by the Board for that year (adjusted for any extraordinary
items approved by the Board) divided by weighted average number of securities on
issue during the year. The Net Profit After Tax Target used for this condition is set at
least at minimum Budget level. The Board may adjust EPS to normalise results and
exclude the effects of material business acquisitions/ divestments and certain one‑off
costs; any material adjustments would be disclosed. The number of rights that may
vest is set out in Table B below.
50% of rights are subject to a TSR performance condition as against the entities with
ordinary shares and units (as the case may be) included in the S&P/ASX All Ordinaries
Index as at 1 January in the year of grant but excluding those companies who are
classified in the Global Industry Classification Standard sector number 40. The
number of rights which may vest is set out in Table A below.
» Refer to the explanation above (LTIP) regarding the setting of the EPS condition and
the use of EPS and TSR tests.
Assessment of performance
against measures
Performance against the EPS and TSR conditions are assessed at the end of the 3‑year
period (31 December testing date).
There is no re‑testing of EPS or TSR conditions. Vested rights convert on the relevant
vesting date a one‑for‑one basis to ordinary shares. Unvested rights lapse.
Treatment of awards on
cessation of employment
If employment ceases all unvested rights will immediately lapse. However, if the cessation
relates to the redundancy or permanent disability/death of the employee or other reason
determined by the Board then the Board has absolute discretion to determine that some or
all of the rights vest.
Treatment of awards on change
of control
The Board has discretion to allow awards to vest on a change of control. In exercising this
discretion, the Board is not bound to award all shares.
Dividend/ participation rights
There is no entitlement to dividends on performance rights during the vesting period or to
participate in respect of issues of shares to shareholders.
Clawback of awards
Plan review
In the event of fraud, misstatement or misrepresentation of the financials, the Board may
exercise its discretion to forfeit some or all of the award prior to the issue of shares or
recover some or all of the award already made.
The LTIP design is reviewed at least annually by the Remuneration & Nomination
Committee and approved by the Board. The Managing Director makes recommendations
to the Remuneration & Nomination Committee regarding the proposed LTIP award
participants and the amount of the entitlements.
30
Annual Report 2021 Remuneration Report (Audited)
Vesting of rights subject to the TSR and EPS performance conditions at each testing date is determined in accordance with
Tables A and B respectively below:
TABLE A
PERCENTILE OF TSR
< 50th
50th
> 50th and < 75th
> 75th
TABLE B
EPS TARGET
> 5% below target
5% below target
% RIGHTS VESTING
None
50
Between 50 and 100 (pro rata)
100
% RIGHTS VESTING
None
50
< 5% below target to 10% above target
Between 50 and 100 (pro rata)
> 10% above target
100
The Board has reviewed generally available market information regarding long term incentive schemes of the key
management personnel (including the Managing Director) for over 10 ASX listed companies in either building product
related industries or with comparable revenues and market capitalisation. The Board considers that Capral’s long‑term
incentive scheme is generally in line with this group.
(i) Anti‑Hedging Policy
Capral’s personnel are not permitted to enter into transactions with securities (or any derivative thereof) which limit the
economic risk of any unvested entitlements awarded under any Capral equity‑based remuneration scheme currently in
operation or which will be offered by Capral in the future. As part of Capral’s due diligence undertaken at the time of the
financial results, participants in any Capral equity plan are required to confirm that they have not entered into any such
prohibited transactions.
Remuneration Report (Audited) Annual Report 2021
31
SECTION 2: ACTUAL REMUNERATION OF KEY MANAGEMENT PERSONNEL
During the Financial Year there were a number of remuneration outcomes. The expensed remuneration is set out in detail in
the remuneration table below however in summary the key outcomes were as follows:
(a) Remuneration
No general pay increases were implemented for executives. Total expensed remuneration for the key management
personnel (including the directors) remained largely unchanged as compared to the prior year.
(b) STIP
STIP payments in respect of the 2021 year are higher than the prior year.
(c) LTIP
86,300 performance rights were granted to the Managing Director in April 2021 following shareholder approval
(2020: 102,670) and 164,700 rights were granted under the 2021 LTIP award to executives in March 2021 (2020: 180,650).
Performance rights granted to the Managing Director and executives under LTIP awards were tested after the year end with
the outcomes detailed in section 3 below. No JobKeeper benefit had been taken into account in determining LTIP calculation.
For the financial year ending 31 December 2022, Capral intends to:
increase the fixed remuneration of the Managing Director and executives by an average of 2%; and
»
» grant further performance rights under the LTIP to the Managing Director (subject to shareholder approval) and selected
senior managers.
Photo courtesy of DECO –
Marsden Park using
Decowood and Decobatten
32
Annual Report 2021 Remuneration Report (Audited)
(d) Remuneration Table–key management personnel
The following table sets out the remuneration of the key management personnel (including the directors) during the
Financial Year and the 2020 financial year.
The key management personnel of the consolidated entity are the non‑executive directors, Managing Director and Chief
Financial Officer/Company Secretary. These people have the authority and responsibility for planning, directing and
controlling the day‑to‑day activities of Capral.
SHORT‑TERM EMPLOYEE BENEFITS
NAME
YEAR
TITLE
SALARY & FEES
$
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2021
2020
Managing Director
Managing Director5
Chairman
Chairman4
Non‑executive director
Non‑executive director4
Non‑executive director
Non‑executive director7
Non‑executive director
Non‑executive director4
Non‑executive director8
CFO/ Company Secretary
CFO/Company Secretary9
DIRECTORS
A.M. Dragicevich
R.L. Wood‑Ward
P.J. Jobe
K. Ostin
G.F. Pettigrew
M. White
EXECUTIVES
T. Campbell*
Total 2021
Total 2020
690,000
684,688
120,000
109,616
60,000
54,808
70,000
35,714
70,000
63,942
20,000
401,000
401,000
1,431,000
1,378,602
BONUS1
$
357,500
357,500
–
–
–
–
–
–
–
–
–
106,250
106,250
463,750
463,750
NON‑MONETARY
BENEFITS
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
26,650
24,808
11,703
10,414
5,852
5,207
6,827
3,393
6,827
6,074
2,000
24,981
24,000
84,840
76,635
1 All bonus amounts are on an accrual basis.
2 Termination benefits include leave accrued and payments made in lieu of notice at the end of employment with Capral.
3 All LTIP performance rights listed are securities that have not yet vested. In relation to the performance rights of the key management
personnel refer to Note 38 of the financial statements.
4 Due to COVID‑19 in 2020 pandemic crisis, Capral directors had their remuneration reduced by 25% for 9 fortnights.
5 Due to COVID‑19 in 2020 pandemic crisis, Mr Dragicevich had his hours reduced by 25% via a combination of annual leave reduction
and leave without pay.
6 Mr Blair resigned as director on 17 June 2020 and due to COVID‑19 pandemic crisis, Mr Blair had his remuneration reduced by 25% for
9 fortnights pro‑rata.
POST‑EMPLOYMENT
BENEFITS
SUPERANNUATION10
BENEFITS
BENEFITS2
OTHER
LONG‑TERM
TERMINATION
SHARE‑BASED PAYMENTS
DEFERRED
EQUITY1
$
PERFORMANCE
RIGHTS3
$
TOTAL
$
TOTAL
PERFORMANCE
RELATED
%
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
332,400
308,100
192,535
78,209
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
98,250
93,450
430,650
401,550
65,847
32,836
258,382
111,045
1,599,085
1,453,305
131,703
120,030
65,852
60,015
76,827
39,107
76,827
70,016
22,000
665,600
657,536
2,668,622
2,431,582
55
51
–
–
–
–
–
–
–
–
–
39
35
Remuneration Report (Audited) Annual Report 2021
33
(d) Remuneration Table–key management personnel
The following table sets out the remuneration of the key management personnel (including the directors) during the
Financial Year and the 2020 financial year.
The key management personnel of the consolidated entity are the non‑executive directors, Managing Director and Chief
Financial Officer/Company Secretary. These people have the authority and responsibility for planning, directing and
controlling the day‑to‑day activities of Capral.
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2021
2020
Managing Director
Managing Director5
Chairman
Chairman4
Non‑executive director
Non‑executive director4
Non‑executive director
Non‑executive director7
Non‑executive director
Non‑executive director4
Non‑executive director8
CFO/ Company Secretary
CFO/Company Secretary9
DIRECTORS
A.M. Dragicevich
R.L. Wood‑Ward
P.J. Jobe
K. Ostin
G.F. Pettigrew
M. White
EXECUTIVES
T. Campbell*
Total 2021
Total 2020
690,000
684,688
120,000
109,616
60,000
54,808
70,000
35,714
70,000
63,942
20,000
401,000
401,000
1,431,000
1,378,602
BONUS1
$
357,500
357,500
–
–
–
–
–
–
–
–
–
106,250
106,250
463,750
463,750
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
NAME
YEAR
TITLE
SALARY & FEES
$
SHORT‑TERM EMPLOYEE BENEFITS
NON‑MONETARY
BENEFITS
POST‑EMPLOYMENT
BENEFITS
SUPERANNUATION10
$
OTHER
LONG‑TERM
BENEFITS
$
SHARE‑BASED PAYMENTS
TERMINATION
BENEFITS2
$
DEFERRED
EQUITY1
$
PERFORMANCE
RIGHTS3
$
TOTAL
$
TOTAL
PERFORMANCE
RELATED
%
26,650
24,808
11,703
10,414
5,852
5,207
6,827
3,393
6,827
6,074
2,000
24,981
24,000
84,840
76,635
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
332,400
308,100
192,535
78,209
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
98,250
93,450
430,650
401,550
65,847
32,836
258,382
111,045
1,599,085
1,453,305
131,703
120,030
65,852
60,015
76,827
39,107
76,827
70,016
22,000
665,600
657,536
2,668,622
2,431,582
55
51
–
–
–
–
–
–
–
–
–
39
35
7 Mrs Ostin was appointed as a director on 17 June 2020 and due to COVID‑19 pandemic crisis, Mrs Ostin had her remuneration reduced
by 25% for 9 fortnights pro‑rata.
8 Mr White was appointed as a director on 1 September 2021.
9 Due to COVID‑19 pandemic crisis, Mr Campbell has had his hours reduced by 20% via annual leave reduction.
10 Superannuation guarantee percentage has been changed from 9.5% to 10.0% from 1 July 2021.
* Capral’s key management personnel (other than directors).
34
Annual Report 2021 Remuneration Report (Audited)
SECTION 3: PERFORMANCE RIGHTS, OPTIONS AND BONUSES PROVIDED AS COMPENSATION
Performance rights–Managing Director
During the Financial Year and the financial year ended 31 December 2020, performance rights were granted as equity
compensation benefits under the LTIP, to the Managing Director as disclosed as at balance date below. The performance
rights were granted at no cost to him.
86,300 performance rights were granted to the Managing Director in April 2021 following shareholder approval.
These rights have a vesting date of March 2024.
102,670 performance rights were granted to the Managing Director in April 2020 following shareholder approval.
These rights have a vesting date of March 2023.
78,330 performance rights were granted to the Managing Director in April 2019 following shareholder approval.
These rights have a vesting date of March 2022. The EPS condition (39,165 rights) was tested as at 31 December 2021.
Capral achieved the EPS condition and consequently 39,165 rights will vest in March 2022. The TSR condition (39,165
rights) was also tested as at 31 December 2021. Capral’s relative TSR performance over the period from January 2019 to
December 2021 was in the 89th percentile and thus 100% of the rights subject to the TSR condition will vest in March 2022.
Consequently, a total of 39,165 rights will vest and convert into Capral shares on a 1 for 1 basis as at 1 March 2022.
73,330 performance rights were granted to the Managing Director in April 2018 following shareholder approval. A total of
38,872 rights lapsed and a total of 34,458 rights vested and converted into Capral shares on a 1 for 1 basis, as at
1 March 2021.
TRANCHE
GRANT
NO.
GRANT
DATE
FAIR VALUE
PER RIGHT AT
GRANT DATE ($)
TEST
DATE
LAPSED
NO.
VESTED
NO.
2021 OFFER
A. Dragicevich
Total 2021 Offer
2020 OFFER
A. Dragicevich
Total 2020 Offer
28/04/2021
29/04/2020
EPS 50%
TSR 50%
43,150
43,150
86,300
EPS 50%
TSR 50%
51,335
51,335
102,670
$6.43
31/12/2023
$5.17
31/12/2023
$1.56
31/12/2022
$2.04
31/12/2022
–
–
–
–
–
–
–
–
–
–
–
–
Remuneration Report (Audited) Annual Report 2021
35
TRANCHE
GRANT
NO.
GRANT
DATE
FAIR VALUE
PER RIGHT AT
GRANT DATE ($)
TEST
DATE
LAPSED
NO.
VESTED
NO.
2019 OFFER
A. Dragicevich
Total 2019 Offer
2018 OFFER
A. Dragicevich
Total 2018 Offer
EPS 50%
TSR 50%
EPS 50%
TSR 50%
16/04/2019
19/4/2018
39,165
39,165
78,330
36,665
36,665
73,330
$3.00
31/12/2021
$2.10
31/12/2021
Nil
Nil
Nil
(39,165)
(39,165)
(78,330)
$3.60
31/12/2020
(36,665)
–
$3.00
31/12/2020
(2,207)
(34,458)
(38,872)
(34,458)
Performance rights – other key management personnel
During the Financial Year and the financial year ended 31 December 2020, performance rights were granted as equity
compensation benefits under the LTIP, to certain executives including key management personnel as disclosed as at
balance date below. The performance rights were granted at no cost to the participants.
164,700 performance rights were granted under the 2021 LTIP award to executives in March 2021. These rights have
a vesting date of March 2024.
180,650 performance rights were granted under the 2020 LTIP award to executives in March 2020. These rights have
a vesting date of March 2023.
141,660 performance rights were granted under the 2019 LTIP award to executives in March 2019. These rights have a
vesting date of March 2022. The EPS condition (70,830 rights) was tested as at 31 December 2021. Capral achieved the
EPS condition and consequently 70,830 of these rights will vest in March 2022. The TSR condition (70,830 rights) was also
tested as at 31 December 2021. Capral’s relative TSR performance over the period from January 2019 to December 2021
was in the 89th percentile and thus 100% of the rights subject to the TSR condition will vest in March 2022. Consequently,
a total of 70,830 rights will vest and convert into Capral shares on a 1 for 1 basis as at 1 March 2022.
123,360 performance rights were granted under the 2018 LTIP award to executives in March 2018. A total of 65,393 rights
lapsed and a total of 57,967 rights vested and converted into Capral shares on a 1 for 1 basis, as at 1 March 2021.
36
Annual Report 2021 Remuneration Report (Audited)
OTHER
KMP/OFFER
2021 OFFER
T. Campbell
Total 2021
2020 OFFER
T. Campbell
Total 2020
2019 OFFER
T. Campbell
Total 2019
2018 OFFER
T. Campbell
Total 2018
Options
TRANCHE
GRANT
NO.
GRANT
DATE
FAIR VALUE
PER RIGHT AT
GRANT DATE ($)
TEST
DATE
LAPSED
NO.
VESTED
NO.
25,700
03/03/2021
EPS 50%
TSR 50%
12,850
12,850
25,700
$5.49
31/12/2023
$4.18
31/12/2023
30,670
03/03/2020
EPS 50%
TSR 50%
15,335
15,335
30,670
$2.82
31/12/2022
$2.10
31/12/2022
21,670
22/03/2019
EPS 50%
TSR 50%
10,835
10,835
21,670
$3.15
31/12/2021
$2.25
31/12/2021
–
–
–
–
–
–
–
–
–
Nil
Nil
Nil
–
–
–
–
–
–
–
–
–
–
(10,835)
(10,835)
(21,670)
–
–
16,670
06/03/2018
EPS 50%
TSR 50%
8,335
8,335
16,670
$3.90
31/12/2020
(8,335)
$3.60
31/12/2020
(502)
(7,833)
(8,837)
(7,833)
No options were issued under the LTIP during the Financial Year and the financial year ended 31 December 2020.
Remuneration Report (Audited) Annual Report 2021
37
Equity grants during the Financial Year
Details of the performance rights granted, as well as the movement during the Financial Year in rights previously granted,
to Key Management Personnel are as follows:
2021 – PERFORMANCE
SHARE RIGHTS
HELD AT
START OF YEAR
GRANTED AS
COMPENSATION
LAPSED
VESTED
OTHER
CHANGES
HELD AT
END OF YEAR
A Dragicevich
T Campbell
254,330
69,010
323,340
86,300
(38,872)
(34,458)
25,700
(8,837)
(7,833)
133,340
(47,709)
(42,291)
–
–
–
267,300
78,040
354,340
The non‑executive directors hold no performance rights.
Bonuses
During the Financial Year and the financial year ended 31 December 2020, STIP bonus payments were made to the
Managing Director and key management personnel. The Managing Director’s STIP payments for 2021 and 2020 equated to
96% and 93% (respectively) of his TEC (above the Capral Trading EBITDA1 ‘target’ level detailed in section 1 above) and the
Board considers it appropriate having regard to the achievement of certain key financial measures as well as critical
non‑financial measures regarding customers, capital projects, anti‑dumping activities and other strategic plans. The other
key management personnel’s STIP payments were 48% and 47% of TEC for 2021 and 2020 respectively (above the Capral
Trading EBITDA1 ‘target’ level detailed in section 1 above).
The percentages of bonus accrued and forfeited (as a result of not meeting the performance criteria at ‘target’ level) during
the Financial Year and the financial year ended 31 December 2020 are disclosed below:
2021
EXECUTIVES
A. Dragicevich
T. Campbell
2020
EXECUTIVES
A. Dragicevich
T. Campbell
% OF BONUS
ACCRUED
% OF BONUS
FORFEITED
% OF COMPENSATION FOR THE YEAR
CONSISTING OF STIP BONUS2
193
192
–
–
49
32
% OF BONUS
ACCRUED
% OF BONUS
FORFEITED
% OF COMPENSATION FOR THE YEAR
CONSISTING OF STIP BONUS2
186
188
–
–
48
32
Note:
1 Trading EBITDA (non‑IFRS measure) is EBITDA adjusted for items assessed as unrelated to the underlying performance of the
business and allows for a more relevant comparison between financial periods. Any JobKeeper related benefit have been excluded in
full and not taken into account for any financial measure.
2 Total compensation used for calculating % purposes excludes equity compensation benefits under the LTIP and termination benefits.
3 Bonuses relating to a financial year are payable in the following financial year.
38
Annual Report 2021 Remuneration Report (Audited)
Shareholdings of Key Management Personnel – fully paid ordinary shares of the Company
Details of the holdings of Capral’s ordinary shares of key management personnel during the Financial Year are as follows:
2021
DIRECTORS
R.L. Wood‑Ward
A.M. Dragicevich
P.J. Jobe
K. Ostin
G.F. Pettigrew
M. White
EXECUTIVES
T. Campbell
HELD AT START
OF YEAR
GRANTED AS
COMPENSATION
RECEIVED ON VESTING OF
PERFORMANCE RIGHTS/
EXERCISE OF OPTIONS
OTHER CHANGES
DURING THE
YEAR
HELD AT END
OF YEAR
–
346,066
270,016
–
–
–
24,953
641,035
–
39,4601
–
–
–
–
11,9701
51,430
–
34,4582
–
24,0453
–
–
–
–
–
–
–
–
–
444,029
270,016
–
–
–
7,8332
42,291
4,2013
28,246
48,957
763,002
1 Deferred equity acquisition as part of 2020 STIP plan.
2 Acquired on vesting of performance rights in March 2021.
3 Acquired through DRP
SECTION 4: RELATIONSHIP BETWEEN REMUNERATION AND COMPANY PERFORMANCE
There is a link between company performance and executive reward. For the Financial Year and the previous 4 financial years,
Capral has made STIP payments based upon the achievement of performance (financial and non‑financial) measures.
Whilst continuing to ensure that Capral attracts and retains qualified, experienced and motivated employees in accordance
with the remuneration policy by remunerating employees at a competitive level, Capral has placed more emphasis on at‑risk
remuneration in order to align remuneration of the employees to the performance of Capral and encourage
shareholder wealth.
Remuneration Report (Audited) Annual Report 2021
39
During the Financial Year and the previous 4 financial years (2017–2020), Capral’s financial performance was as follows,
with the minimum targets (M) that were set for the 2021 STIP financial measures also shown:
YEAR ENDED 31 DEC
Trading EBITDA $’0001
Free Cash Flow $’000
Net (Loss)/Profit $’000
% Working Capital to Annualised Sales
Dividend – cents per share
Basic earnings/(loss) – cents per share
Share price (closing) $
2021 (A)
2021 (M)
2020 (A)
2019 (A)
2018 (A)
2017 (A)
38,157
17,2292
33,3132
10.70
70.0
179.702
9.47
19,200
5,000
11,800
13.50
–
69.56
n/a
19,668
20,7523
11,4643
13.21
45.0
69.513
5.95
11,021
14,268
18,409
4754
3,1054
14.68
15.0
19.264
3.45
1,573
6,415
13.92
45.0
40.11
3.60
8,883
12,085
13.89
37.5
76.20
4.50
Note:
Any JobKeeper related benefit received in 2020 have been excluded in full and not taken into account
1 Trading EBITDA (non‑IFRS measure) is Statutory EBITDA adjusted for items assessed as unrelated to the underlying performance of
the business and allows for a more relevant comparison between financial periods.
2 Free Cash Flow, Net Profit and Basic Earnings per share adjusted to exclude Deferred Tax Benefit of $9.430 million, property revaluation
$3.074 million and LME revaluation ($2.829 million).
3 Free Cash Flow, Net Profit and Basic Earnings per share adjusted to exclude Deferred Tax Benefit of $3.048 million and other one‑off
items of $0.499 million.
4 Free Cash Flow, Net Profit and Basic Earnings per share adjusted to exclude Restructuring Cost and other one‑off items of $7.345 million.
In the Financial Year, Capral’s Trading EBITDA and Net Profit After Tax were all significantly above 2020 levels. The minimum
targets were surpassed in all instances and as a result, STIP will be payable to Capral key management and other senior
personnel. Discretionary Bonusses will also be payable to other qualifying employees. At a Divisional and Regional level
minimum Trading EBITDA measures were achieved in all business units, and there were mixed results relating to Working
Capital and sales volume measures.
40
Annual Report 2021 Remuneration Report (Audited)
SECTION 4: RELATIONSHIP BETWEEN REMUNERATION AND COMPANY PERFORMANCE (CONTINUED)
The following provides examples of other key measures (that are not commercially sensitive) used to assess executive
performance:
PERFORMANCE AREA
MEASURE
OUTCOME
Safety
Reduction in total reportable injury
frequency rate
Rate improved significantly and Group Stretch
targets were met
Hours lost & return to work hours lost
from injuries
Stretch performance targets met
Customers
Volume retention/ growth
Production
Operational efficiency
Supply Chain
Supply chain and inventory reduction
programs
People
AL & LSL balance reduction
Sales areas met most of the specific growth and
revenue targets as well as margin measures.
Performance varied by region/ division
Manufacturing plants met most of their
operational efficiency/ improvement targets
Initiatives were generally achieved
Overall leave balance reduction initiatives were not
achieved. Performance varied by region/ division
Anti‑dumping
Pursue anti‑dumping campaign
Overall the outcomes were successful.
Costs
Cost reduction initiatives
Many of the specific cost and expense reduction
initiatives were achieved. Performance varied by
region/ division
The 2021 STIP payments are higher than those paid in 2020, aligned to financial performance. There is a clear link between
financial performance and the level of STIP awarded.
LTIP is linked to Capral’s performance as the value of the performance rights awarded depends on Capral’s share price and
dividend payments, and whether the awards vest relate to earnings growth and Capral’s relative TSR performance. There is
a link between Capral’s performance and the vesting of rights under LTIP awards. In this regard:
In 2021:
» Capral’s relative TSR performance over the period from January 2019 to December 2021 achieved the 89th percentile,
above the minimum 50th percentile. Consequently, 100% or 109,995 of the rights subject to the TSR condition that were
awarded in 2019 to executives will vest and convert into Capral shares.
» Given earnings in, 2019, 2020 and 2021, the aggregate EPS result for the 3 year period to 2021 was 285.16 cents per
share against an aggregate target of 156.04 cents per share and therefore the EPS condition of the 2019 award was
achieved. Consequently, 100% or 109,995 of the rights subject to the EPS condition of the 2019 award will vest and
convert into Capral shares.
In 2020:
» Capral’s relative TSR performance over the period from January 2018 to December 2020 achieved the 72nd percentile,
above the minimum 50th percentile. Consequently, 93.98% or 92,425 of the rights subject to the TSR condition that were
awarded in 2018 to executives vested.
» Given earnings in, 2018, 2019 and 2020, the aggregate EPS result for the 3 year period to 2020 was 128.92 cents per
share against an aggregate target of 147.13 cents per share and therefore the EPS condition of the 2018 award was not
achieved. Consequently, no rights subject to the EPS condition of the 2018 award will vest and convert into Capral shares.
Remuneration Report (Audited) Annual Report 2021
41
SECTION 5: SUMMARY OF KEY EMPLOYMENT CONTRACTS
Details of the key contract terms for the Managing Director and other key management personnel as at the end of the
Financial Year are as follows:
CONTRACT DETAILS
Expiry date
A. DRAGICEVICH
No fixed end date
Notice of termination by Capral
6 months
Notice of termination by employee
6 months
Termination payments (in lieu of
notice)
6 months salary plus accrued but unpaid STIP
(pro rata for incomplete financial year).
In addition, unvested LTIP rights may vest if
employment is terminated by Capral other than
for cause.6 weeks annual leave per annum.
T. CAMPBELL
No fixed end date
6 months
6 months
6 months salary. STIP entitlement
for incomplete financial years is
subject to Board discretion
Environmental regulations
Indemnities to auditors
Manufacturing licences and consents required by laws and
regulations are held by the consolidated entity at each
relevant site as advised by consulting with relevant
environmental authorities. All applications for and renewals
of licences have been granted and all consents have been
given by all relevant authorities.
Directors’ and officers’ indemnities and
insurance
Under Capral's constitution, Capral is required to indemnify,
to the extent permitted by law, each director and secretary
of Capral against any liability incurred by that person as an
officer of Capral. The directors listed on pages 11 to 12
and the secretary listed on page 22 have the benefit of
this indemnity. During the Financial Year, Capral paid a
premium for directors’ and officers’ liability insurance
policies which cover current and former directors, company
secretaries and officers of the consolidated entity. Details
of the nature of the liabilities covered and the amount of the
premium paid in respect of the directors' and officers'
insurance policies are not disclosed, as such disclosure is
prohibited under the terms of the contracts.
In respect of non‑audit services provided in relation to
reviews of consulting and compliance advice during the
Financial Year, Deloitte Touche Tohmatsu, Capral’s auditor,
has the benefit of an indemnity (including in respect of legal
costs) for any third party claim in connection with the use,
distribution or reliance on their work (except to the extent
caused by the wilful misconduct or fraud of Deloitte Touche
Tohmatsu, or where it has agreed that the third party may
rely on the work or it may be used in a public document).
Proceedings on behalf of Capral
No person has applied to the Court under section 237 of
the Corporations Act for leave to bring proceedings on
behalf of Capral, or to intervene in any proceedings to which
Capral is party, for the purpose of taking responsibility on
behalf of Capral for all or part of those proceedings. No
proceedings have been brought or intervened in on behalf
of Capral with leave of the Court under section 237 of the
Corporations Act.
42
Annual Report 2021 Directors' Report
Non‑audit services
Rounding of amounts
Capral may decide to employ the auditor on assignments
additional to their statutory audit services where the
auditor’s expertise and experience with the consolidated
entity are important.
The Board has considered this position and in accordance
with the advice received from the Audit & Risk Committee, it
is satisfied that the provision of these services during the
Financial Year by the auditor is compatible with, and did not
compromise, the general standard of auditor independence
imposed by the Corporations Act for the following reasons:
(1)
the non‑audit services provided do not involve
reviewing or auditing the auditor’s own work and have
not involved partners or staff acting in a management
or decision‑making capacity for Capral or in the
processing or originating of transactions;
Capral is a company of the kind referred to in ASIC
Corporations Instrument 2016/191, dated 24 March 2016,
and in accordance with that ASIC Corporations Instrument
amounts in the Directors’ Report and the Financial Report
are rounded off to the nearest thousand dollars, unless
otherwise indicated.
Signed in accordance with a resolution of directors made
pursuant to section 298(2) of the Corporations Act 2001.
On behalf of the directors
(2) all non‑audit services and the related fees have been
reviewed by the Audit & Risk Committee to ensure
complete transparency and that they do not affect the
integrity and objectivity of Deloitte Touche Tohmatsu;
and
R. L. Wood‑Ward
Chairman
Sydney
25 February 2022
A. M. Dragicevich
Managing Director
(3)
the declaration required by section 307C of the
Corporations Act 2001 confirming independence has
been received from Deloitte Touche Tohmatsu.
Details of the amounts paid or payable to Capral’s auditor
(Deloitte Touche Tohmatsu) for audit and non‑audit
services provided during the Financial Year are set out in
Note 33 of the financial statements.
Auditor's independence declaration
The auditors’ independence declaration as required under
section 307C of the Corporations Act is set out on
page 43.
Auditor’s Independence Declaration Annual Report 2021
43
AUDITOR’S INDEPENDENCE
DECLARATION
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Eclipse Tower
60 Station Street
Parramatta
Sydney, NSW, 2150
Australia
Tel: +61 2 9840 7000
www.deloitte.com.au
The Board of Directors
Capral Limited
Level 4
60 Philip Street
Parramatta NSW 2150
Dear Board Members,
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo CCaapprraall LLiimmiitteedd
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
of independence to the directors of Capral Limited..
As lead audit partner for the audit of the financial report of Capral Limited for the year ended 31 December
2021, I declare that to the best of my knowledge and belief, the only contraventions of:
·
The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
· Any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
X Delaney
Partner
Chartered Accountant
Parramatta, 25 February 2022
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Liability limited by a scheme approved under Professional Standards Legislation.Member of Deloitte Asia Pacific Limited and the Deloitte organisation.Deloitte Touche TohmatsuABN 74 490 121 060Eclipse Tower60 Station StreetParramattaSydney, NSW, 2150AustraliaTel: +61 2 9840 7000www.deloitte.com.auThe Board of DirectorsCapral LimitedLevel 460 Philip StreetParramatta NSW 2150Dear Board Members,AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo CCaapprraall LLiimmiitteeddIn accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declarationof independence to the directors of Capral Limited..As lead audit partner for the audit of the financial report of Capral Limited for the year ended 31 December2021, I declare that to the best of my knowledge and belief, the only contraventions of:·The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and·Any applicable code of professional conduct in relation to the audit.Yours faithfullyDELOITTE TOUCHE TOHMATSUX DelaneyPartnerChartered AccountantParramatta, 25 February 2022 44
Financial Statements Annual Report 2021
45
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the financial year ended 31 December 2021
CONTINUING OPERATIONS
Sales revenue
Scrap and other revenue
Revenue
Other income
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Finance costs
Freight expense
Occupancy costs
Repairs and maintenance expense
Restructuring costs
Other expenses
Profit before tax
Income tax benefit
Profit for the year
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Gain on revaluation of properties
Other comprehensive income for the year
NOTE
3
3
2
2
2
2
2
4
2021
$’000
550,854
42,607
593,461
2020
$’000
406,721
25,288
432,009
2,723
2,985
(376,398)
(266,419)
(96,895)
(20,170)
(5,760)
(13,675)
(4,087)
(6,978)
–
(75,402)
(18,352)
(6,030)
(12,038)
(3,249)
(5,642)
173
(38,908)
(25,163)
33,313
9,430
42,743
3,074
3,074
22,872
3,048
25,920
–
–
Total comprehensive income for the year
45,817
25,920
Earnings per share
Basic earnings per share
Diluted earnings per share
($ PER SHARE)
($ PER SHARE)
26
26
2.52
2.42
1.57
1.51
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
46
Annual Report 2021 Financial Statements
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
as at 31 December 2021
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Prepayments
Total current assets
Non‑current assets
Deferred tax assets
Property, plant and equipment
Right‑of‑use assets
Other intangible assets
Goodwill
Total non‑current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Other financial liabilities
Deferred income
Total current liabilities
Non‑current liabilities
Lease liabilities
Provisions
Total non‑current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total equity
NOTE
7
8
9
31(c)
10
11
14
17
15
16
19
20
21
31(c)
22
20
21
23
24
24(b)
2021
$’000
2020
$’000
50,132
96,290
130,507
–
723
49,396
66,250
79,130
–
2,517
277,652
197,293
15,335
53,195
75,313
700
3,070
147,613
425,265
139,037
15,810
18,798
67
213
5,905
38,814
70,776
321
–
115,816
313,109
77,242
13,528
14,820
1,615
127
173,925
107,332
87,730
6,485
94,215
268,140
157,125
430,588
69,888
82,948
4,639
87,587
194,919
118,190
426,965
44,006
(343,351)
(352,781)
157,125
118,190
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Financial Statements Annual Report 2021
47
CONSOLIDATED STATEMENT OF CASH FLOWS
for the financial year ended 31 December 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest and other costs of finance paid
Net cash provided by operating activities
36(ii)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Payments for purchase of a business
40
Interest received
Proceeds from sale of property, plant and equipment
NOTE
2021
$’000
2020
$’000
622,566
471,524
(575,577)
(413,864)
46,989
(5,260)
41,729
(9,181)
(368)
(10,302)
–
131
57,660
(5,511)
52,149
(3,986)
–
–
2
29
Net cash flows used in investing activities
(19,720)
(3,955)
Cash flows from financing activities
Payments of dividends
Proceeds from dividend reinvestment plan
Payments for share purchase – employee share plan
25
(10,870)
3,494
(273)
(2,422)
1,221
–
Payment of lease liabilities excluding financing component
36(iv)
(14,951)
(15,092)
Net cash flows used in financing activities
(22,600)
(16,293)
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effect of foreign exchange rate changes
(591)
49,396
1,327
31,901
17,938
(443)
Cash and cash equivalents at the end of the financial year
36(i)
50,132
49,396
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
48
Annual Report 2021 Financial Statements
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
for the year ended 31 December 2021
Balance as at 1 January 2020
Profit for the year
Total comprehensive profit for the year
Share‑based payments expense
Shares issued – dividend reinvestment plan
Dividends paid
Balance as at 31 December 2020
Balance as at 1 January 2021
Profit for the year
Total comprehensive profit for the year
Share‑based payments expense
Shares issued – dividend reinvestment plan
Shares issued – employee escrow shares
Employees shares on‑market purchase
FULLY PAID ORDINARY
SHARES
$’000
EQUITY‑SETTLED
COMPENSATION RESERVE
$’000
NOTE
EMPLOYEE SHARE
ASSET REVALUATION
RESERVE
$’000
DIVIDEND RESERVE*
ACCUMULATED LOSSES
425,744
10,874
–
–
–
1,221
–
426,965
426,965
–
–
–
3,494
129
–
–
–
–
445
–
–
11,319
11,319
–
–
590
–
–
–
–
RESERVE
$’000
1,014
–
–
–
–
–
–
–
–
–
–
–
1,014
1,014
3,074
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(225)
(225)
$’000
23,130
10,965
10,965
(2,422)
31,673
31,673
33,313
33,313
–
–
–
–
–
–
(10,870)
54,116
$’000
(367,736)
14,955^
14,955^
(352,781)
(352,781)
9,430^
9,430^
–
–
–
–
–
–
–
–
TOTAL
$’000
93,026
25,920
25,920
445
1,221
(2,422)
118,190
118,190
42,743
45,817
590
3,494
129
(225)
(10,870)
157,125
Dividends paid
25
Balance as at 31 December 2021
430,588
11,909
4,088
(343,351)
* Dividend reserve represents undistributed profits since the financial year 2010.
^
JobKeeper benefit (2020: $11.907 million) and income tax benefit (2021: $9.430 million; 2020: $3.048 million) in relation to deferred tax
assets on tax losses are excluded from dividend reserve.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Financial Statements Annual Report 2021
49
Balance as at 1 January 2020
Profit for the year
Total comprehensive profit for the year
Share‑based payments expense
Shares issued – dividend reinvestment plan
Dividends paid
Balance as at 31 December 2020
Balance as at 1 January 2021
Profit for the year
Total comprehensive profit for the year
Share‑based payments expense
Shares issued – dividend reinvestment plan
Shares issued – employee escrow shares
Employees shares on‑market purchase
SHARES
$’000
425,744
1,221
426,965
426,965
3,494
129
–
–
–
–
–
–
–
–
–
$’000
10,874
445
11,319
11,319
–
–
–
–
–
–
–
–
–
–
590
Dividends paid
25
Balance as at 31 December 2021
430,588
11,909
* Dividend reserve represents undistributed profits since the financial year 2010.
^
JobKeeper benefit (2020: $11.907 million) and income tax benefit (2021: $9.430 million; 2020: $3.048 million) in relation to deferred tax
assets on tax losses are excluded from dividend reserve.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
FULLY PAID ORDINARY
EQUITY‑SETTLED
COMPENSATION RESERVE
NOTE
EMPLOYEE SHARE
RESERVE
$’000
ASSET REVALUATION
RESERVE
$’000
DIVIDEND RESERVE*
$’000
ACCUMULATED LOSSES
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
(225)
–
(225)
1,014
–
–
–
–
–
1,014
1,014
–
3,074
–
–
–
–
–
4,088
23,130
10,965
10,965
–
–
(2,422)
31,673
31,673
33,313
33,313
–
–
–
–
(10,870)
54,116
(367,736)
14,955^
14,955^
–
–
–
(352,781)
(352,781)
9,430^
9,430^
–
–
–
–
–
(343,351)
TOTAL
$’000
93,026
25,920
25,920
445
1,221
(2,422)
118,190
118,190
42,743
45,817
590
3,494
129
(225)
(10,870)
157,125
50
Photo courtesy of
WillPlay – Shuster Park
Notes to the Financial Statements Annual Report 2021
51
NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2021
1A. GENERAL INFORMATION
1C. SIGNIFICANT ACCOUNTING POLICIES
Capral Limited (the Company) is a public listed company
incorporated and operating in Australia. The Company’s
shares are quoted on the Australian Securities Exchange
(ASX Code: CAA).
The Company’s registered office and its principal place of
business is as follows:
Registered office & principal place of business
71 Ashburn Road
Bundamba QLD 4304
Tel: (07) 3816 7000
The principal continuing activities of the consolidated entity
consist of the manufacturing, marketing and distribution of
fabricated and semi‑fabricated aluminium related products.
1B. ADOPTION OF NEW AND REVISED
ACCOUNTING STANDARDS
In the current year, the Group has applied the below
amendments to AASB Standards and Interpretations
issued by the Board that are effective for an annual period
that begins on or after 1 January 2021. Their adoption has
not had any material impact on the disclosures or on the
amounts reported in these financial statements.
AASB 2020‑8 Amendments to Australian Accounting
Standards – Interest Rate Benchmark Reform – Phase 2
AASB 2020‑1 Amendments to Australian Accounting
Standards – Classification of Liabilities as Current or
Non‑current and AASB 2020‑6 Amendments to Australian
Accounting Standards – Classification of Liabilities as
Current or Non‑current – Deferral
AASB 2021‑2 Amendments to Australian Accounting
Standards – Disclosure of Accounting Policies and
Definition of Accounting Estimates
AASB 2021‑5 Amendments to Australian Accounting
Standards – Deferred Tax related to Assets and Liabilities
arising from a Single Transaction
Statement of Compliance
The financial report is a general purpose financial report
which has been prepared in accordance with the
Corporations Act 2001, Accounting Standards and
Interpretations, and complies with other requirements of
the law.
The financial report includes the financial statements of the
Company and the financial statements of the Group.
For the purpose of preparing the consolidated financial
statements, the Company is a for‑profit entity.
Accounting Standards include Australian equivalents to
International Financial Reporting Standards (‘A‑IFRS’).
Compliance with A‑IFRS ensures that the financial
statements and notes of the Group comply with
International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the
directors on 25 February 2022.
Basis of Preparation
The financial report has been prepared on the basis of
historical cost, except for the revaluation of certain
non‑current assets and financial instruments. Cost is
based on the fair values of the consideration given in
exchange for assets. All amounts are presented in
Australian dollars, unless otherwise noted.
The Company is of a kind referred to in ASIC Corporations
Instrument 2016/191, dated 24 March 2016, issued by the
Australian Securities and Investments Commission, relating
to the “rounding off” of amounts in the financial report.
Amounts in the financial report have been rounded off in
accordance with that ASIC Corporations Instrument to the
nearest thousand dollars, or in certain cases, the nearest
dollar as indicated.
52
Annual Report 2021 Notes to the Financial Statements
1C. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The following significant accounting policies have been
adopted in the preparation and presentation of the
financial report:
(a) Basis of Consolidation
The financial statements incorporate the financial
statements of the Company and entities (including special
purpose entities) controlled by the Company (and its
subsidiaries) (referred to as ‘the Group’ in these financial
statements).
consideration arrangement, measured at its acquisition‑
date fair value. Subsequent changes in such fair values are
adjusted against the cost of acquisition where they qualify
as measurement period adjustments (see below). All other
subsequent changes in the fair value of contingent
consideration classified as an asset or liability are
accounted for in accordance with relevant Standards.
Changes in the fair value of contingent consideration
classified as equity are not recognised.
The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under
AASB 3 are recognised at their fair value at the acquisition
date, except that:
Control is based on whether an investor has:
» deferred tax assets or liabilities and liabilities or assets
» power over the investee
»
exposure, or rights, to variable returns from its
involvement with the investee, and
the ability to use its power over the investee to affect
the amount of the returns.
»
The results of the subsidiaries acquired or disposed of
during the year are included in the consolidated statement
of profit or loss and other comprehensive income from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with those used by other members of the
Group. All intra‑group transactions, balances, income and
expenses are eliminated in full on consolidation.
(b) Borrowing Costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to
get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation. All other borrowing costs are recognised in
profit or loss in the period in which they are incurred.
(c) Business Combinations
Acquisitions of subsidiaries and businesses are accounted
for using the acquisition method. The consideration for
each acquisition is measured at the aggregate of the fair
values (at the date of exchange) of assets given, liabilities
incurred or assumed, and equity instruments issued by the
Group in exchange for control of the acquiree. Acquisition‑
related costs are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition
includes any asset or liability resulting from a contingent
related to employee benefit arrangements are
recognised and measured in accordance with AASB
112 Income Taxes and AASB 119 Employee Benefits
respectively;
liabilities or equity instruments related to the
replacement by the Group of an acquiree’s share based
payment awards are measured in accordance with
AASB 2 Share‑based Payment; and
»
» assets (or disposal groups) that are classified as held
for sale in accordance with AASB 5 Non‑Current Assets
Held for Sale and Discontinued Operations are
measured in accordance with that Standard.
(d) Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits. Cash
equivalents are short‑term, highly liquid investments that
are readily convertible to known amounts of cash and
which are subject to an insignificant risk of change in value
and have a maturity of three months or less at the date of
acquisition. Bank overdrafts are shown within borrowings in
current liabilities in the statement of financial position.
(e) Derivative Financial Instruments
The Group enters into a variety of derivative financial
instruments to manage its exposure to interest rate and
foreign exchange rate risk, including foreign exchange
forward contracts.
Further details of derivative financial instruments are
disclosed in Note 31 to the financial statements. Derivatives
are initially recognised at fair value at the date a derivative
contract is entered into and are subsequently remeasured
to their fair value at each reporting date.
The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and
effective as a hedging instrument, in which event the timing
of the recognition of profit or loss depends on the nature of
the hedge relationship. The fair value of hedging derivatives
is classified as a non‑current asset or a non‑current liability
if the remaining maturity of the hedge relationship is more
than 12 months, and as a current asset or current liability if
Notes to the Financial Statements Annual Report 2021
53
1C. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(e) Derivative Financial Instruments (continued)
Further details on how the fair value of equity‑settled
share‑based transactions have been determined can be
found in Note 38.
the remaining maturity of the hedge relationship is less
than 12 months. The Group’s derivatives do not qualify for
hedge accounting and are not designated into an effective
hedge relationship and are classified as a current asset
and current liability.
Embedded Derivatives
Derivatives embedded in hybrid contracts with hosts that
are not financial assets within the scope of AASB 9
(e.g. financial liabilities) are treated as separate derivatives
when they meet the definition of a derivative, their risks and
characteristics are not closely related to those of the host
contracts and the host contracts are not measured at
FVTPL.
(f) Employee Benefits
(i) Salaries, wages and leave benefits
A liability is recognised for benefits accruing to employees
in respect of wages and salaries, including non‑monetary
benefits, annual leave and long service leave, when it is
probable that settlement will be required, and they are
capable of being measured reliably. Liabilities recognised in
respect of short‑term employee benefits are measured at
their nominal values using the remuneration rate expected
to apply at the time of settlement. Liabilities recognised in
respect of long‑term employee benefits are measured at
the present value of the estimated future cash outflows to
be made by the Group in respect of services provided by
employees up to reporting date.
(ii) Share‑based payments
Equity‑settled share‑based payments with employees are
measured at the fair value of the equity instrument at the
grant date.
The fair value of the performance rights is estimated at
grant date using a Monte‑Carlo Simulation analysis taking
into account the terms and conditions upon which the
securities are granted.
The fair value of the options is estimated at grant date
using a binomial tree model taking into account the terms
and conditions upon which the securities are granted.
The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of
non‑transferability, exercise restrictions, and behavioural
considerations.
The fair value determined at the grant date of the
equity‑settled share‑based payments is expensed on a
straight‑line basis over the vesting period, based on the
Group’s estimate of shares that will eventually vest.
(iii) Defined contribution plan
Contributions to defined contribution superannuation plans
are expensed when incurred.
(g) Financial Assets
Investments are recognised and derecognised on trade
date where the purchase or sale of an investment is under
a contract whose terms require delivery of the investment
within the timeframe established by the market concerned,
and are initially measured at fair value, net of transaction
costs except for those financial assets classified as at fair
value through the profit or loss which are initially measured
at fair value. Subsequent to initial recognition, investments
in subsidiaries are measured at cost in the Company’s
financial statements. Other financial assets are classified
into the following specified categories: financial assets at
amortised cost; financial assets at fair value through other
comprehensive income and financial assets at fair value
through profit or loss account. The classification depends
on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset, or,
where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for
debt instruments other than financial assets ‘at fair value
through profit or loss’.
Financial assets at FVTPL are measured at fair value at the
end of each reporting period, with any fair value gains or
losses recognised in profit or loss to the extent they are not
part of a designated hedging relationship.
The net gain or loss recognised in profit or loss on the
financial assets is included in the other income or other
expenses. Fair value is determined in the manner described
in Note 31.
Trade and other receivables
Trade and other receivables that were measured at
amortised cost under AASB 139 continue to be measured
at amortised cost under AASB 9 as they are held within a
business model to collect contractual cash flows. Trade
and other receivables are measured at amortised cost
using the effective interest method less impairment.
Interest is recognised by applying the effective interest rate.
54
Annual Report 2021 Notes to the Financial Statements
1C. SIGNIFICANT ACCOUNTING POLICIES
(h) Financial Instruments Issued by the Group
(CONTINUED)
(g) Financial Assets (continued)
Impairment of financial assets
Impairment of financial assets is based on an expected
credit loss (“ECL”) model under AASB 9 rather than incurred
loss model. ECLs are a probability‑weighted estimate of
credit losses. The group calculated ECLs based on
consideration of customer‑specific factors and actual
credit loss experience over the past 3 years. As a
percentage of revenue, the Group’s actual credit loss
experience has not been material.
In accordance with AASB 9 paragraph 7.2.20 the group will
recognise a loss allowance at an amount equal to lifetime
expected credit losses at each reporting date. The group
calculated ECLs based on consideration of
customer‑specific factors and actual credit loss experience
over the past 3 years. The credit loss includes consideration
for the COVID 19 impact.
For financial assets carried at amortised cost, the amount
of the impairment is the difference between the asset’s
carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by
the impairment loss directly for all financial assets with the
exception of trade receivables where the carrying amount is
reduced through the use of an allowance account. When a
trade receivable is uncollectible, it is written off against the
allowance account. Subsequent recoveries of amounts
previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance
account are recognised in profit or loss.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire,
or it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially
all the risks and rewards of ownership and continues to
control the transferred asset, the Group recognises its
retained interest in the asset and an associated liability for
the amounts it may have to pay. If the Group retains
substantially all the risks and rewards of ownership of a
transferred financial asset, the Group continues to
recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
Debt and equity instruments
Debt and equity instruments are classified as either
liabilities or as equity in accordance with the substance of
the contractual arrangement.
Compound instruments
The component parts of compound instruments are
classified separately as financial liabilities and equity in
accordance with the substance of the contractual
arrangement. At the date of issue, the fair value of the
liability component is estimated using the prevailing market
interest rate for a similar non‑convertible instrument.
This amount is recorded as a liability on an amortised cost
basis until extinguished on conversion or upon the
instruments reaching maturity. The equity component
initially brought to account is determined by deducting the
amount of the liability component from the fair value of the
compound instrument as a whole. This is recognised and
included in equity, net of income tax effects and is not
subsequently remeasured.
Financial guarantee contract liabilities
Financial guarantee contract liabilities are measured initially
at their fair values and subsequently at the higher of the
amount recognised as a provision and the amount initially
recognised less cumulative amortisation.
Financial liabilities
Financial liabilities are classified as either financial liabilities
‘at fair value through profit or loss’ or other financial
liabilities.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are
stated at fair value, with any resultant gain or loss
recognised in profit or loss. The net gain or loss recognised
in profit or loss incorporates any interest paid on the
financial liability. Fair value is determined in the manner
described in Note 31.
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at
amortised cost using the effective interest method, with
interest expense recognised on an effective yield basis.
Refer note 1c (o).
Notes to the Financial Statements Annual Report 2021
55
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or CGU) is estimated
to be less than its carrying amount, the carrying amount of
the asset (CGU) is reduced to its recoverable amount.
An impairment loss is recognised in profit or loss
immediately, unless the relevant asset is carried at fair
value, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (CGU) is increased to the
revised estimate of its recoverable amount, but only to the
extent that the increased carrying amount does not exceed
the carrying amount that would have been determined had
no impairment loss been recognised for the asset (CGU) in
prior years. A reversal of an impairment loss is recognised
in the profit or loss immediately, unless the relevant asset is
carried at fair value, in which case the reversal of the
impairment loss is treated as a revaluation increase.
(l)
Income Tax
The income tax expense or revenue for the period is the tax
payable on the current period’s taxable income based on
the national income tax rate for each jurisdiction adjusted
by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
The Company and its wholly owned Australian entities have
implemented the tax consolidation legislation.
The current and deferred tax amounts for the
tax‑consolidated group are allocated to the members of the
tax‑consolidated group (including the Company as the
head entity) using the ‘separate taxpayer within group’
approach, with deferred taxes being allocated by reference
to the carrying amounts in the financial statements of each
member entity and the tax values applying under tax
consolidation. Current tax liabilities and assets and deferred
tax assets arising from unused tax losses and relevant tax
credits arising from this allocation process are then
accounted for as immediately assumed by the head entity,
as under Australian taxation law the head entity has the
legal obligation (or right) to these amounts.
1C. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(i) Foreign Currency
In preparing the financial statements, transactions in
currencies other than the entity’s functional currency
(foreign currencies) are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance
date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the balance date.
Non‑monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the
rates prevailing on the date when the fair value was
determined. Non‑monetary items that are measured in
terms of historical cost in a foreign currency are
not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise except for exchange differences
which relate to assets under construction for future
productive use, which are included in the cost of those
assets where they are regarded as an adjustment to
interest costs on foreign currency borrowings.
(j) Government Grant
Grants are recognised where there is a reasonable
assurance that the grant will be received and all attached
conditions will be complied with.
The Government grants towards staff are recognised as a
deduction from the related Employee benefits expenses.
During financial year 2020, the Group received jobkeeper
subsidies from government during COVID‑19, as disclosed
in Note 2 & 34.
(k) Impairment of Other Tangible and
Intangible Assets excluding goodwill
At each reporting date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where
the asset does not generate cash flows that are
independent from other assets, the Group estimates the
recoverable amount of the cash‑generating unit (CGU) to
which that asset belongs.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment at
least annually and whenever there is an indication that the
asset may be impaired. Recoverable amount is the higher
of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are
discounted to their present value using a post‑tax discount
rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which
56
Annual Report 2021 Notes to the Financial Statements
1C. SIGNIFICANT ACCOUNTING POLICIES
(o) Leases
(CONTINUED)
(m) Intangible Assets
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where
they satisfy the definition of an intangible asset and their
fair value can be measured reliably.
SaaS arrangements
Configuration and customisation costs incurred in
implementing SaaS arrangements are recognised in profit
or loss as the customisation and configuration services are
performed, or, in certain circumstances, over the SaaS
contract term when access to the cloud application
software is provided.
Patents, trademarks and licences
Patents, trademarks and licences are recorded at cost less
accumulated amortisation and impairment. Amortisation is
charged on a straight‑line basis over their estimated useful
lives, which vary from 5 to 16 years.
The estimated useful life and amortisation method is
reviewed at the end of each annual reporting period, with
any changes being recognised as a change in
accounting estimate.
Software
Software assets including system development costs have
a finite useful life and are carried at cost less accumulated
amortisation and impairment losses. Amortisation is
calculated using the straight‑line method to allocate the
cost over the assets estimated useful lives, which vary from
3 to 5 years.
(n) Inventories
Inventories representing aluminium log, other supplies and
finished goods are valued at the lower of cost and net
realisable value.
Net realisable value represents the estimated selling price
less all estimated costs of completion and costs necessary
to make the sale.
Aluminium log is valued at moving average of direct
purchase cost. Cost of rolled product has been determined
principally on moving average of direct purchase costs.
Costs for finished and partly finished includes moving
average metal cost, direct labour, and appropriate
proportion of fixed and variable factory overhead.
The Group assesses whether a contract is or contains a
lease, at inception of the contract. The Group recognises a
right‑of‑use asset and a corresponding lease liability with
respect to all lease arrangements in which it is the lessee,
except for short‑term leases (defined as leases with a lease
term of 12 months or less) and leases of low value assets
(such as copiers). For these leases, the Group recognises the
lease payments as an operating expense on a straight‑line
basis over the term of the lease unless another systematic
basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit
in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate.
Lease payments included in the measurement of the lease
liability comprise:
» Fixed lease payments (including in‑substance fixed
payments), less any lease incentives receivable;
» Variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date; and
» Payments of penalties for terminating the lease, if the
lease term reflects the exercise of an option to
terminate the lease.
The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the
carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right‑of‑use asset)
whenever:
» The lease term has changed or there is a significant
event or change in circumstances resulting in a change
in the assessment of exercise of a purchase option, in
which case the lease liability is remeasured by
discounting the revised lease payments using a revised
discount rate.
» The lease payments change due to changes in an index
or rate or a change in expected payment under a
guaranteed residual value, in which cases the lease
liability is remeasured by discounting the revised lease
payments using an unchanged discount rate (unless
the lease payments change is due to a change in a
floating interest rate, in which case a revised discount
rate is used).
» A lease contract is modified and the lease modification
is not accounted for as a separate lease, in which case
the lease liability is remeasured based on the lease term
of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective
date of the modification.
Notes to the Financial Statements Annual Report 2021
57
1C. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(o) Leases (continued)
The right‑of‑use assets comprise the initial measurement
of the corresponding lease liability, lease payments made at
or before the commencement day, less any lease incentives
received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.
The depreciation starts at the commencement date of
the lease.
Rental income from operating leases is recognised on a
straight‑line basis over the term of the relevant lease. Initial
direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of the
leased asset and recognised on a straight‑line basis over
the lease term.
For comparatives, leases are classified as finance leases
when the terms of the lease transfer substantially all the
risks and rewards incidental to ownership of the leased
asset to the lessee. All other leases are classified as
operating leases.
Operating lease payments are recognised as an expense on
a straight‑line basis over the lease team, except where
another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset
are consumed.
In the event that lease incentives are received to enter into
operating leases, such incentives are recognised as a
liability. The aggregate benefits of incentives are recognised
as a reduction of rental expense on a straight‑line basis,
except where another systematic basis is more
representative of the time pattern in which economic
benefits from the leased asset are consumed.
(p) Property, Plant and Equipment
Land and buildings are measured at fair value less any
subsequent accumulated depreciation and subsequent
accumulated impairment losses. Fair value is determined
on the basis of a periodic, independent valuation by external
valuation experts, based on discounted cash flows or
capitalisation of net income, as appropriate.
Periodic reviews are conducted every three to five years.
The fair values are recognised in the financial statements of
the Group and are reviewed at the end of each reporting
period to ensure that the carrying value of land and
buildings is not materially different from their fair values.
Any revaluation increase arising on revaluation of land and
buildings are credited to the asset revaluation reserve
except to the extent that the increase reverses a revaluation
decrease for the same asset previously recognised as an
expense in profit or loss, in which case the increase is
credited to the profit and loss to the extent of the decrease
previously charged. A decrease in carrying amount arising
on the revaluation of land and buildings is charged as an
expense in profit or loss to the extent that it exceeds the
balance, if any, held in the revaluation reserve relating to a
previous revaluation of that asset.
Depreciation on revalued buildings is charged to profit or
loss. On the subsequent sale or retirement of revalued
property, the attributable revaluation surplus remaining in
the revaluation reserve, net of any related taxes, is
transferred directly to retained earnings.
Plant and equipment, and leasehold improvements are
stated at cost less accumulated depreciation and
impairment. Cost includes expenditure that is directly
attributable to the acquisition of the item.
In the event that settlement of all or part of the purchase
consideration is deferred, cost is determined by discounting
the amounts payable in the future to their present value as
at the date of acquisition. Depreciation is provided on
property, plant and equipment, including freehold buildings
but excluding land. Depreciation is calculated on a
straight‑line basis so as to write off the net cost or other
revalued amount of each asset over its expected useful life
to its estimated residual value.
Leasehold improvements are depreciated over the period of
the lease or estimated useful life, whichever is shorter,
using the straight‑line method. The estimated useful lives,
residual values and depreciation method are reviewed at
the end of each annual reporting period, with the effect of
any changes recognised on a prospective basis.
Right‑of‑use assets are depreciated over the shorter period
of lease term and useful life of the underlying asset.
(q) Provisions
Provisions are recognised when the Group has a present,
legal or constructive obligation as a result of past events, it
is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the
amount of the obligation.
The amount recognised as a provision is the best estimate
of the consideration required to settle the present obligation
at reporting date, taking into account the risks and
uncertainties surrounding the obligation. Where a provision
is measured using the cashflows estimated to settle the
present obligation, its carrying amount is the present value
of those cashflows. When some or all of the economic
benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognised as
an asset if it is virtually certain that the reimbursement will
be received and the amount of the receivable can be
measured reliably.
58
Annual Report 2021 Notes to the Financial Statements
1C. SIGNIFICANT ACCOUNTING POLICIES
Royalties
(CONTINUED)
(q) Provisions (continued)
Onerous contracts
Present obligations arising under onerous contracts are
recognised and measured as a provision. An onerous
contract is considered to exist where the Group has a
contract under which the unavoidable costs of meeting the
obligations under the contract exceed the economic
benefits expected to be received under it.
Restructuring
A restructuring provision is recognised when the Group has
developed a detailed formal plan for the restructuring and
has raised a valid expectation in those affected that it will
carry out the restructuring by starting to implement the
plan or announcing its main features to those affected by it.
The measurement of a restructuring provision includes only
the direct expenditures arising from the restructuring, which
are those amounts that are both necessarily entailed by the
restructuring and not associated with the ongoing activities
of the entity.
Provision for restoration and rehabilitation (provision for
make good on leased assets)
A provision for restoration and rehabilitation (provision for
make good on leased assets) is recognised when there is a
present obligation as a result of production activities
undertaken, it is probable that an outflow of economic
benefits will be required to settle the obligation, and the
amount of the provision can be measured reliably.
The estimated future obligations include the costs of
removing the facilities and restoring the affecting areas.
(r) Revenue Recognition
Revenue is recognised when (or as) a performance
obligation is satisfied, i.e. when ‘control’ of the goods or
services underlying the particular performance obligation is
transferred to the customers.
The Group recognises revenue from the sale of products
and the sale of scrap and when it transfers control of a
product to a customer, which is the point in time that the
customer obtains control of the goods being on acceptance
of the goods by the customer.
Revenue is measured at the fair value of the consideration
received or receivable. Sales revenue comprises sales of
goods and services at net invoice values less returns, trade
allowances and applicable rebates.
Royalty income is recognised on an accrual basis in
accordance with the substance of the relevant agreement.
Royalties are recognised on the subsequent sale or usage,
and the performance obligation to which the royalty has
been allocated has been satisfied.
Rental income
The Group’s policy for recognition of income from operating
leases is described in note 1c (o).
Interest income
Interest income is accrued on a time basis, by reference to
the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount.
(s) Goods and Services Tax
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST) except:
(i) where the amount of GST incurred is not recoverable
from the taxation authority, it is recognised as part of
the cost of acquisition of an asset or as part of an item
of expense; or
(ii)
for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or
payables. Cash flows are included in the cash flow
statement on a gross basis. The GST component of cash
flows arising from investing and financing activities which
is recoverable from, or payable to, the taxation authority, is
classified as operating cash flows.
(t) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit/
(loss) attributable to equity holders of the Group, excluding
any costs of servicing equity other than ordinary shares, by
the weighted average number of ordinary shares
outstanding during the year, adjusted for bonus elements in
ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account the weighted average number of shares assumed
to have been issued for no consideration in relation to
dilutive potential ordinary shares.
Notes to the Financial Statements Annual Report 2021
59
1D. CRITICAL ACCOUNTING JUDGEMENTS
AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Group’s accounting policies, which
are described in note 1, management is required to make
judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent
from other sources. The estimates and associated
assumptions are based on historical experience and
various other factors that are believed to be reasonable
under the circumstances, the results of which form the
basis of making the judgements. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if
the revision affects only that period, or in the period of the
revision and future periods if the revision affects both
current and future periods.
Critical judgements in applying the Group’s
accounting policies
The following are the critical judgements (apart from those
involving estimations which are dealt with above), that
management has made in the process of applying the
Group’s accounting policies and that have the most
significant effect on the amounts recognised in the financial
statements.
Inventories
Note 9 sets out the categories of inventory carried. The net
realisable value of inventories is the estimated selling price
in the ordinary course of business less estimated costs to
sell which approximates fair value less cost to sell. The key
assumptions require the use of management judgement
and are reviewed annually.
These key assumptions are the variables affecting the
estimated costs to sell and the expected selling price. Any
reassessment of cost to sell or selling price in a particular
year will affect the cost of goods sold.
Goodwill
Goodwill and indefinite life intangible assets are tested for
impairment at each reporting period or more frequently if
events or changes in circumstances indicate that goodwill
or other intangibles might be impaired. This is performed
through a value‑in‑use discounted cash flow model.
There is a degree of estimation uncertainty in the estimates
and judgements used in the preparation of value‑in‑use
models. The key assumptions applied includes margin,
sales tonnes, terminal growth rate and WACC.
Indicators of impairment and reversal of impairment
Note 14 and Note 17 sets out the categories of property,
plant and equipment held and right of use assets. In
assessing whether there is any indication that property,
plant and equipment and right of use assets may be
impaired, or whether a reversal of previous impairment
losses should be recognised, management has used,
among others, the following key assumptions:
(i)
the cyclical nature of both residential and commercial
building activity,
(ii) aluminium prices which impact margins to the extent
that price variations are passed onto customers or
not, and
(iii) anti‑dumping outcomes in relation to import duties
imposed on overseas suppliers.
The key assumptions required the use of management
judgement and are reviewed biannually. If there are
indicators of impairment or reversal of impairment, a
value‑in‑use discounted cash flow model is prepared to
assess the extent of impairment or reversal of impairment.
Employee benefits
Key assumptions used in the calculation of leave benefit
provisions at balance date:
(i)
future on‑cost rates,
(ii) experience of employee departures and period of
service, and
(iii)
future increase in wages and salaries.
Provision for customer claims
Provision for customer claims are measured at the present
value of management’s best estimate of the expenditure
required to settle the present obligation at the statement of
the financial position date based on claims assessors report.
Useful lives of property, plant and equipment
The Group reviews the estimated useful lives of property,
plant and equipment at the end of each annual reporting
period. During the financial year, the directors determined
that there were no revisions to the useful lives of property,
plant and equipment.
Lease renewal
The Group reassess whether it is reasonably certain to
exercise an extension option, or not to exercise a termination
option, upon the occurrence of either a significant event or a
significant change in circumstances that:
is within the control of the Group; and
»
» affects whether the Group is reasonably certain to
exercise an option not previously included in its
determination of the lease term, or not to exercise an
option previously included in its determination of the
lease term.
1E. COMPARATIVE INFORMATION
The sub‑lease rental income of $2,680,000 previously
classified as part of Occupancy Costs has been
re‑classified to Other Income. This leads to a change of
$2,948,000 between receipts from customers and
payments to suppliers and employees in the Consolidated
Statement of Cash Flows.
60
Annual Report 2021 Notes to the Financial Statements
1D. CRITICAL ACCOUNTING JUDGEMENTS
AND KEY SOURCES OF ESTIMATION
UNCERTAINTY (CONTINUED)
Critical judgements in applying the Group’s
accounting policies (continued)
Incremental borrowing rate (AASB 16)
The rate is defined as the rate of interest that the lessee
would have to pay to borrow over a similar term and with a
similar security the funds necessary to obtain an asset of a
similar value to the right‑of‑use asset in a similar economic
environment.
Deferred taxation
The recognition of deferred tax assets is based upon
whether it is more likely than not that sufficient and suitable
taxable profits will be available in the future against which
the reversal of temporary differences can be deducted and
unrecognised tax losses utilised. To determine the future
taxable profits, reference is made to the latest available
profit forecasts. Relevant tax law is considered to
determine the availability of the losses to offset against the
future taxable profits. Recognition of deferred tax assets
therefore involves judgement regarding the future financial
performance of the particular legal entity or tax group in
which the deferred tax asset has been recognised.
Photo courtesy of Incat
– Hull 093 – 111m
catamaran
Notes to the Financial Statements Annual Report 2021
61
2. PROFIT FOR THE YEAR
NOTE
CONSOLIDATED
2021
$’000
2020
$’000
(A) OTHER EXPENSES
Profit before tax includes the following specific net expenses:
Inventory:
Write‑down of inventory to net realisable value
9
Reversal of write‑down of inventory
Cost of Sales
Amortisation of intangibles assets
Total amortisation
Depreciation – owned assets
Buildings
Leasehold improvements
Plant and equipment
Total depreciation – owned assets
Depreciation – right of use assets
Buildings
Plant and equipment
Total depreciation – right of use assets
Total depreciation and amortisation
Occupancy costs
Site costs
Expense relating to leases of low value assets
Other charges against assets
(Decrease)/increase in impairment of trade receivables
Employee benefit expense
Post‑employment benefits:
– defined contribution plans
Equity‑settled share‑based payments
Termination benefits
Other employee benefits
Restructuring costs
Redundancy costs
Finance costs
Interest and finance charges paid/payable
– third party financier
Net finance costs are comprised of:
Interest and fees on bank overdrafts and loans
Interest component of lease liabilities
Impact of discounting on long‑term provisions
Total interest expense
(B) GAINS AND LOSSES
Net (loss)/gain on foreign exchange
Net gain on disposal of property, plant and equipment
1,321
(117)
1,089
(71)
465,881
333,688
189
189
175
399
5,904
6,478
11,523
1,980
13,503
20,170
4,087
4,087
88
280
6,848
590
58
89,399
96,895
–
–
5,262
878
4,382
500
5,760
(159)
109
131
131
175
323
5,093
5,591
10,360
2,270
12,630
18,352
3,249
3,249
89
(51)
6,148
445
20
68,789
75,402
(173)
(173)
5,512
908
4,604
518
6,030
1,035
17
62
Annual Report 2021 Notes to the Financial Statements
3. REVENUE AND OTHER INCOME
Revenue from continuing operations
Sales revenue – sale of goods(i)
Other revenue
Scrap revenue(i)
Interest – other
Total other revenue
Other income
Royalties
Sub‑lease rental income
Other miscellaneous income
(i) Recognised at a point in time.
4.
INCOME TAX EXPENSE
CONSOLIDATED
2021
$’000
2020
$’000
550,854
406,721
42,607
–
42,607
–
2,721
2
2,723
25,286
2
25,288
303
2,680
2
2,985
(A) RECONCILIATION OF INCOME TAX BENEFIT TO PRIMA FACIE TAX BENEFIT
Profit from continuing operations before income tax benefit
33,313
22,872
Income tax calculated @ 30% (2020:30%)
9,994
6,862
Tax effect of non‑assessable / non‑deductible items:
Effect of items that are temporary differences for which deferred tax assets have not
been previously recognised
(214)
1,064
Effect of items that are not deductible or taxable in determining taxable profit
481
154
Effect of tax losses utilised
(10,261)
(8,080)
Effect of tax losses not recognised as deferred tax assets
Previously unrecognised and unused tax losses now recognised as deferred tax assets
Income tax benefit
(B) TAX LOSSES
–
9,430
9,430
–
3,048
3,048
Accumulated unused gross tax losses for which no deferred tax asset has been
recognised
194,2611
259,896
Potential tax benefit @ 30% (2020:30%)
58,278
77,969
(C) TEMPORARY DEDUCTIBLE DIFFERENCES
Temporary deductible differences for which no deferred tax asset has been recognised
Potential tax benefit @ 30% (2020:30%)
All unused tax losses were incurred by Australian entities.
79,486
23,846
80,669
24,201
1 Subject to income tax recoupment rules in subsequent years
Notes to the Financial Statements Annual Report 2021
63
5. CHANGES IN ACCOUNTING ESTIMATES
There were no significant changes in accounting estimates other than the recovery of deferred tax assets during the
Financial Year (2020: none). Deferred tax assets are recognised for deductible temporary differences and tax losses as
management considers that it is probable that future taxable profits will be available in the foreseeable future. Significant
management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the
likely timing and the level of future taxable profits.
6. SEGMENT INFORMATION
The information reported to the Managing Director, as the Group’s chief operating decision maker, for the purposes of
resource allocation and assessment of performance is focused on the type of goods supplied, being aluminium products.
As such, in 2020 and 2021, the Group operated in one reportable segment under AASB 8 Operating Segment.
Major Products and Services
The Group produces a wide range of extruded aluminium products and systems. It distributes those manufactured
products in addition to a small number of bought‑in products through two distribution channels.
The Group supplies to three market segments through each of its distribution channels:
» Residential – supply of aluminium and other components for windows and doors, showers and wardrobes and
security products,
» Commercial – supply of aluminium and other components for windows and doors, internal fit outs and other
commercial building related products, and
Industrial – supply of aluminium extrusions and rolled products for industrial uses.
»
Management does not report on the revenues from external customers for each of the market segments.
Geographic Information
The Group operates in one geographical area, Australia.
Information About Major Customers
There are no individual major customers who contributed more than 10% of the Group’s revenue in either the Financial Year
or in 2020.
7. CURRENT ASSETS–CASH AND CASH EQUIVALENTS
Cash at bank and cash in hand
CONSOLIDATED
2021
$’000
50,132
2020
$’000
49,396
64
Annual Report 2021 Notes to the Financial Statements
8. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
CONSOLIDATED
Trade receivables – at amortised cost
Loss allowance(i)
Other receivables
Disclosed in the financial statements as:
Current trade and other receivables
Non‑current other receivables
The average credit period on sales of goods is approximately 50 days
(2020: 49 days). No interest is charged on trade receivables.
Balance at beginning of the financial year
Amounts written off during the financial year
Decrease/(increase) in allowance recognised in profit or loss
Balance at end of the financial year
(i) Movement in the loss allowance.
2021
$’000
91,151
(425)
90,726
5,564
96,290
96,290
–
96,290
(145)
112
(392)
(425)
2020
$’000
63,815
(145)
63,670
2,580
66,250
66,250
–
66,250
(311)
115
51
(145)
The Group always measures the loss allowance for trade receivables at an amount equal to lifetime ECL. The expected
credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the
debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general
economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the
forecast direction of conditions at the reporting date. Allowances are made for known doubtful debts at the time of
appointment of administrators, liquidators, or other formal insolvency events.
Included in the Group’s trade receivables are debtors with balances in 61 days and over of $530,000 (2020: $560,000), refer
to note 31(h). The Group has not provided all of these balances as the Group believes that these past due balances are still
recoverable. In relation to some of the balances the Group holds personal property securities registrations and/or personal
guarantees and/or trade indemnity insurance for 90% of the amount outstanding (after applying the deductible).
The average age of these receivables is 92 days (2020: 82 days).
Trade receivables risk profile:
Current
1–30 days past due
31–60 days past due
61+ days past due
Total
CONSOLIDATED
2021
$’000
72,261
16,411
1,706
449
90,827
2020
$’000
51,377
10,327
1,483
548
63,735
Notes to the Financial Statements Annual Report 2021
65
8. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES (CONTINUED)
Included in the loss allowance is the expected credit loss for individually impaired trade receivables with a balance of
$324,000 (2020: $80,000). The impairment recognised represents the difference between the carrying amount of these
trade receivables and the present value of the expected proceeds.
Current
1–30 days past due
31–60 days past due
61+ days past due
Total
CONSOLIDATED
2021
$’000
–
243
–
81
324
2020
$’000
–
–
68
12
80
Major concentrations of credit risk are in the construction, transport, consumer durable and electrical industries in Australia.
Furthermore, the Company has credit insurance cover which requires ongoing management of credit accounts with
monthly reports provided to the Insurer. Accordingly, there is no further credit provision required in excess of the loss
allowance. The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery.
9. CURRENT ASSETS – INVENTORIES
Raw materials and stores
Work in progress
Finished goods
CONSOLIDATED
2021
$’000
21,659
3,875
104,973
130,507
All inventories are net of allowance for obsolescence and are expected to be recovered within 12 months.
Included in the inventories balance is inventories in transit of $36.513 million (2020: $11.231 million).
10. CURRENT ASSETS – PREPAYMENTS
Prepayments
11. DEFERRED TAX ASSETS
Balance at beginning of the financial year
Amounts recognised during the financial year
Balance at end of the financial year
CONSOLIDATED
2021
$’000
723
CONSOLIDATED
2021
$’000
5,905
9,430
15,335
2020
$’000
16,010
2,136
60,984
79,130
2020
$’000
2,517
2020
$’000
2,857
3,048
5,905
The Group has recognised deferred tax assets with respect to tax losses carry forward of $15,335,000 (2020: $5,905,000)
(the Company $15,128,000–2020: $5,698,000) based upon the forecasted operational performance the recovery of these
prior year losses in the short term is probable. The forecasted operational performances is based on recent performances.
66
Annual Report 2021 Notes to the Financial Statements
12. NON‑CURRENT ASSETS – INVESTMENTS
Details of subsidiaries
The financial statements incorporate the assets, liabilities and results of the following subsidiaries:
EQUITY HOLDING
2021
%
100
2020
%
100
COUNTRY OF
INCORPORATION
Australia
ENTITY NAME
Austex Dies Pty Limited
13. RELATED PARTIES
Parent entities
The ultimate parent entity within the Group is Capral Limited.
Equity interests in controlled entities
Interests in controlled entities are set out in Note 12.
Transactions with key management personnel
Refer to Note 38 in relation to securities granted and forfeited during the Financial Year under the Long Term Incentive Plan
that include rights granted and shares issued, to Capral’s Managing Director and Chief Financial Officer (who are key
management personnel).
Details of the compensation of, and transactions with, each Director of the Company and key management personnel of the
Group are set out in the Directors’ Report and in particular, the Remuneration Report.
Transactions with other related parties
In 2021, the parent entity has settled a non‑interest‑bearing loan of $700,000 (2020: $5,150,000) advanced from a
controlled entity, Austex Dies Pty Limited. The loan was payable on demand.
The Company has entered into the following transactions with controlled entities:
» Purchase of dies of $4,891,151 (2020: $4,097,473) – Austex Dies Pty Limited
These transactions were conducted on arm’s length commercial terms and conditions at market rates.
During the Financial Year, the Company received a dividend of $700,000 (2020: $5,150,000) from Austex Dies Pty Limited.
Notes to the Financial Statements Annual Report 2021
67
14. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
Freehold land
At valuation(i)
Accumulated depreciation
Net book amount
Buildings
At valuation(i)
Accumulated depreciation
Net book amount
Leasehold improvements
At cost
Accumulated depreciation
Accumulated impairment
Net book amount
Total land and buildings
Plant, machinery and equipment
At cost
Accumulated depreciation
Accumulated impairment
Net book amount
Capital work in progress at cost
Net plant, machinery and equipment
Total property, plant and equipment – net book value
The following useful lives are used in the calculation of depreciation:
Buildings
Leasehold improvements
Plant and equipment
(i) Valuations of land and building:
2021
$’000
1,700
–
1,700
5,628
(436)
5,192
12,925
(8,159)
(1,970)
2,796
9,688
2020
$’000
1,200
–
1,200
3,520
(727)
2,793
12,321
(7,760)
(1,970)
2,591
6,584
223,387
210,141
(153,397)
(147,641)
(32,099)
(32,099)
37,891
5,616
43,507
53,195
30,401
1,829
32,230
38,814
20–33 years
5–25 years
3–25 years
An independent valuation of the Group’s land and buildings was performed in December 2021 using Capitalisation and Direct
Comparison approaches to determine the fair value of the land and buildings. The valuations, which conform to International Valuation
Standards, were determined by reference to recent market transactions on arm’s length terms at the time. The fair value of the Land
and Buildings is $1,700,000 and $5,000,000 respectively.
68
Annual Report 2021 Notes to the Financial Statements
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the
current and prior financial year are set out below:
FREEHOLD
LAND AT
FAIR VALUE
$’000
BUILDINGS
AT FAIR
VALUE
$’000
LEASEHOLD
IMPROVE‑
MENTS
AT COST
$’000
PLANT &
EQUIPMENT
AT COST
$’000
CAPITAL
WORK IN
PROGRESS
AT COST
$’000
CONSOLIDATED
2021
Opening net book amount
1,200
2,793
Additions
Business acquisition
Disposals
Transfers
Revaluation
Depreciation charge (Note 2(a))
–
–
–
–
500
–
Net book amount at 31 December 2021
1,700
2020
–
–
–
–
2,574
(175)
5,192
2,591
589
–
–
15
–
(399)
2,796
30,401
7,921
4,508
(22)
987
–
(5,904)
37,891
Opening net book amount
1,200
2,948
2,681
32,436
Additions
Disposals
Transfers
Depreciation charge (Note 2(a))
–
–
–
–
Net book amount at 31 December 2020
1,200
–
–
20
(175)
2,793
31
–
202
(323)
2,591
2,338
(2)
722
(5,093)
30,401
1,829
5,016
–
–
(1,229)
–
–
5,616
1,166
1,617
(10)
(944)
–
1,829
TOTAL
$’000
38,814
13,526
4,508
(22)
(227)
3,074
(6,478)
53,195
40,431
3,986
(12)
–
(5,591)
38,814
Impairment of non‑current assets inclusive of right of use assets and goodwill
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash‑
generating unit (CGU) to which that asset belongs. Management views the Group as representing one CGU.
If there is an indication of impairment, the recoverable amount of property, plant & equipment and intangible assets will be
determined by reference to a value in use discounted cash flow valuation of the Group, utilising financial forecasts and
projections.
Goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might
be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a post‑tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted. Cash flows that may result from prior period tax losses are not taken into account. If the
recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset
(CGU) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.
Notes to the Financial Statements Annual Report 2021
69
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Impairment of non‑current assets inclusive of right of use assets and goodwill (continued)
The result of Impairment assessment as at 31 December 2021
As a result of the non‑current assets recoverable amount assessment performed, Capral has determined that no
impairment write‑down of non‑current assets as at 31 December 2021 was necessary. The recoverable amount of the CGU
estimated by management exceeded the carrying amount of assets by $51,216,000. This indicates reversal of impairment
however management view that no reversal of impairment is required due to the uncertainty of the performances of the
construction industry and its impact on margins.
The key assumptions used in preparing the value in use cash flow valuation as at 31 December 2021 are as follows:
The table below shows key assumptions in the value in use calculation as at 31 December 2021 and value of the input to
which the key assumption must change in isolation for the estimated recoverable amount to be equal to its carrying value.
WACC (Post‑tax)
Average volumes increase 2022–25 p.a.
Long‑term growth rate
INPUT TO THE MODEL
BREAKEVEN INPUT
10.00%
1.00%
1.00%
12.33%
0.06%
‑5.31%
The valuation is based on forecast and projected cash flows for a 5‑year period commencing January 2022 with a terminal
value being applied at the end of this period. The cash flow assumptions are based on management approved budgets for
the period from January 2022 to December 2022. Beyond this date cash flow projections until 31 December 2026 are based
on projected volume growth and expected improvements in EBITDA per tonne (refer below). Sales volumes are projected to
grow at 1.0% per annum. This growth rate corresponds with the average long‑term growth rate based on external
economic sources.
The value in use cash flow valuation is very sensitive to price and the discount rate or WACC changes.
Margins
In setting price and margin assumptions, historical performance trends and the impact of previous price increases were
reviewed in assessing the timing and quantum of future price increases.
Recent history in relation to direct costs and the impact of changing volumes on manufacturing variances were assessed in
setting assumptions on absorbed conversion costs.
In forecasting the margin, Management has considered the production capacity of Capral compared to current volumes and
concluded that increase in production volumes to satisfy demand expected by independent market predictions can be
attained by predominately increasing variable cost with very limited additional fixed cost expenditure. This is reflected in the
resultant average EBITDA per tonne increase of 1.0% per annum from 2023 to 2026.
Volumes
In determining assumptions in relation to sales volumes into the commercial and residential/domestic market, Capral have
based these on reputable third‑party long term economic forecast reports with reference to historical performance and
seasonal trends. The volume projections estimate the sales volumes at around 80,000 tonnes at the end of the
5‑year period.
Working Capital and Capital Expenditure
These assumptions were set in light of strategic initiatives and approved maintenance and safety capital expenditure of an
average around $5,500,000 per annum, with working capital flexed in relation to the assumed production capacity for
volumes throughout the forecast period and historical performance and considering revisions to trading terms with key
suppliers and customers.
Discount rate
A discount rate of 10.0%, representing the Company’s post‑tax weighted average cost of capital has been applied to the
cash flow projections.
70
Annual Report 2021 Notes to the Financial Statements
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Impairment of non‑current assets inclusive of right of use assets and goodwill (continued)
Economic Factors
Assumptions including Gross Domestic Production (GDP), the Consumer Price Index (CPI), expected wage and salary
increases, foreign exchange and the future impact of aluminium prices have been made with reference to third party
economic forecasts and the Company’s strategic plans and budgets.
Prior Period Tax Losses
Cash flows that may result from prior period tax losses are not taken into account in determining the recoverable amount
of assets.
15. OTHER INTANGIBLES ASSETS
CONSOLIDATED
2021
Cost
Accumulated amortisation
Accumulated impairment
Net book value
2020
Cost
Accumulated amortisation
Accumulated impairment
Net book value
Reconciliations
OTHER INTELLECTUAL PROPERTY
$’000
SOFTWARE
$’000
TOTAL
$’000
15,927
(8,367)
(7,560)
–
15,927
(8,367)
(7,560)
–
24,932
(21,766)
(2,466)
700
24,364
(21,577)
(2,466)
321
40,859
(30,133)
(10,026)
700
40,291
(29,944)
(10,026)
321
Reconciliations of the carrying amounts of each class of intangibles at the beginning and end of the current Financial Year
are set out below:
CONSOLIDATED
2021
Opening net book amount
Additions
Disposals
Transfers
Amortisation
Net book amount at 31 December 2021
2020
Opening net book amount
Additions
Disposals
Transfers
Amortisation
Net book amount at 31 December 2020
OTHER INTELLECTUAL PROPERTY
$’000
SOFTWARE
$’000
TOTAL
$’000
–
–
–
–
–
–
11
–
–
–
(11)
–
321
341
–
227
(189)
700
441
–
–
–
(120)
321
321
341
–
227
(189)
700
452
–
–
–
(131)
321
Notes to the Financial Statements Annual Report 2021
71
16. GOODWILL
CONSOLIDATED
COST
At 31 December 2020
Business acquisition–Note 40
At 31 December 2021
ACCUMULATED DEPRECIATION
At 31 December 2020
Amortisation
At 31 December 2021
2021
$’000
–
3,070
3,070
–
–
–
Impairment assessment is performed based on assumptions and estimates as disclosed in Note 14.
17. RIGHT‑OF‑USE ASSETS
CONSOLIDATED
COST
At 31 December 2020
Additions
Disposals
At 31 December 2021
ACCUMULATED DEPRECIATION
At 31 December 2020
Disposals
Depreciation charge
At 31 December 2020
NET BOOK VALUE
At 31 December 2021
At 31 December 2020
BUILDINGS
$’000
PLANT &
EQUIPMENT
$’000
83,592
20,213
–
103,805
(21,264)
–
(11,523)
(32,787)
71,018
62,328
12,705
1,848
(5,000)
9,553
(4,257)
979
(1,980)
(5,258)
4,295
8,448
2020
$’000
–
–
–
–
–
–
TOTAL
$’000
96,297
22,061
(5,000)
113,358
(25,521)
979
(13,503)
(38,045)
75,313
70,776
The Group leases several assets including buildings and plant and equipment, with average lease term of 4.4 years
(2020: 4.2 years) and 4.0 years (2020: 4.0 years) respectively.
18. ASSETS PLEDGED AS SECURITY
In accordance with the security arrangements of liabilities disclosed in Note 27, all assets of the Group have been pledged
as security. The holder of the security does not have the right to sell or repledge the assets other than in the event of default
under the principal finance agreement where the security is enforced.
72
Annual Report 2021 Notes to the Financial Statements
19. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
Trade payables(i)
Goods and services tax payable
Other payables
CONSOLIDATED
2021
$’000
119,489
1,996
17,552
139,037
2020
$’000
63,017
1,500
12,725
77,242
(i) The average credit period on purchases is 89 days from the end of the month (2020: 74 days). No interest is charged on the trade
payables. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.
20. LEASE LIABILITIES
CONSOLIDATED
Current
Non‑current
MATURITY ANALYSIS
Within one year
Later than one year but not later than five years
Later than five years
2021
$’000
15,810
87,730
103,540
15,810
50,993
36,737
103,540
21. PROVISIONS
CONSOLIDATED
CURRENT
Employee benefits
Make good on leased assets1
Other2
NON‑CURRENT
Employee benefits
Make good on leased assets1
Other
2021
$’000
13,241
809
4,748
18,798
2,254
4,231
–
6,485
2020
$’000
13,528
82,948
96,476
13,528
43,743
39,205
96,476
2020
$’000
13,609
555
656
14,820
1,580
3,059
–
4,639
1 Provision for make good on leased assets comprises obligations relating to site closure and other costs associated with lease
rental properties.
2 Other current provisions include provisions for insurance claims and provisions for customer claims including metal returns net of
scrap and pricing adjustments.
Notes to the Financial Statements Annual Report 2021
73
21. PROVISIONS (CONTINUED)
Consolidated
MOVEMENTS IN CARRYING AMOUNTS
Carrying value at the beginning of the financial year
Provision utilised/released in the year
Additional amounts provided
Carrying value at the end of the financial year
22. DEFERRED INCOME – CURRENT
Deferred income – other
23. ISSUED CAPITAL
(A) SHARE CAPITAL
Ordinary shares: fully paid
MAKE GOOD ON
LEASED ASSETS
$’000
3,614
(29)
1,455
5,040
OTHER
$’000
656
(1,691)
5,783
4,748
CONSOLIDATED
2021
$’000
213
213
2021
$’000
2021
NO. 000
2020
NO. 000
TOTAL
$’000
4,270
(1,720)
7,238
9,788
2020
$’000
127
127
2020
$’000
17,193
16,563
430,588
426,965
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
(B) MOVEMENT IN ORDINARY SHARE CAPITAL
DATE
DETAILS
NO. OF SHARES
ISSUE PRICE
January 2020
Balance at the beginning of the financial year
484,390,895
–
March 2020
Shares issued pursuant to a dividend
reinvestment plan
12,468,294
$0.0979
November 2020
Shares consolidation 30:1
(480,296,520)
December 2020
Balance at the end of the financial year
16,562,669
January 2021
Balance at the beginning of the financial year
16,562,669
–
–
–
March 2021
Shares issued pursuant to a dividend
reinvestment plan
March 2021
Shares issued against performance rights
March 2021
Shares issued–deferred STIP
September 2021
Shares issued pursuant to a dividend
reinvestment plan
330,733
$6.2854
92,427
31,130
–
$4.14
176,300
$8.0251
$’000
425,744
1,221
–
426,965
426,965
2,079
–
129
1,415
December 2021
Balance at the end of the financial year
17,193,259
–
430,588
On 3 November 2020, Capral consolidated its shares at a ratio of 30:1. The share consolidation does not impact the value of
the total issued capital and was undertaken to establish a more appropriate and effective capital structure.
74
Annual Report 2021 Notes to the Financial Statements
24. RESERVES AND ACCUMULATED LOSSES
CONSOLIDATED
Asset revaluation reserve
Equity‑settled compensation reserve
Employee share reserve
Dividend reserve
Accumulated losses
24A. MOVEMENTS IN RESERVES WERE:
Equity‑settled compensation reserve
Balance at the beginning of the financial year
Expense recognised
Shares acquired on conversion of vested rights
Balance at the end of the financial year
Asset revaluation reserve
Balance at the beginning of the financial year
Revaluation increase
Balance at the end of the financial year
Employee share reserve
Balance at the beginning of the financial year
Funding provided
Balance at the end of the financial year
Dividend reserve
Balance at the beginning of the financial year
Net profit attributable to members of Capral
Dividends paid
Balance at the end of the financial year
24B. ACCUMULATED LOSSES
Balance at the beginning of the financial year
Net profit for the year
Balance at the end of the financial year
2021
$’000
4,088
11,909
(225)
54,116
69,888
2020
$’000
1,014
11,319
–
31,673
44,006
(343,351)
(273,463)
(352,781)
(308,775)
11,319
10,874
590
–
445
–
11,909
11,319
1,014
3,074
4,088
–
(225)
(225)
31,673
33,313
(10,870)
54,116
1,014
–
1,014
–
–
–
23,130
10,965
(2,422)
31,673
(352,781)
(367,736)
9,430
14,955
(343,351)
(352,781)
25. DIVIDENDS
Ordinary shares:
FRANKING CREDITS
Notes to the Financial Statements Annual Report 2021
75
CONSOLIDATED
2021
$’000
10,870
2020
$’000
2,422
Franking credits available for subsequent financial years based on a tax rate of 30%
(2020:30%)
13,293
17,952
26. EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
CONSOLIDATED
2021
$
2.52
2.42
2020
$
1.57
1.51
Net profit after tax used in the calculation of basic and diluted profit per share for 2021 was $42,743,000 (2020:
$25,920,000). The weighted average numbers of ordinary shares on issue used in the calculation of basic and diluted
earnings per share were 16,961,049 and 17,691,815 (2020: 16,458,199 and 17,138,897) respectively.
EPS calculations in both current year and prior year were based on post 3 November 2020 share consolidation,
30 shares to 1 share.
27. STAND BY ARRANGEMENT AND CREDIT FACILITIES
CONSOLIDATED
Secured facilities
Facilities used:
Trade loan
Cash loan
Bank guarantees
Trade finance – drawn letters of credits
Trade finance – open letters of credits
Asset finance – in the form of finance lease
Total facilities utilised
Total available facilities
2021
$’000
60,000
–
–
4,495
35,868
15,716
–
56,079
3,921
2020
$’000
41,128
–
–
3,833
14,244
9,046
1,128
28,251
12,877
Each trade instrument is approved individually and may result in temporary facility over utilisation due to timing of release
of instruments already expired.
The original expiry of the facilities is 30 April 2022. On 29 September 2021, the facilities have been restructured to align
more closely to Capral’s requirements and renewed for another term to 30 April 2023.
76
Annual Report 2021 Notes to the Financial Statements
27. STAND BY ARRANGEMENT AND CREDIT FACILITIES (CONTINUED)
The renewed ANZ facilities consist of:
Secured:
» $60 million Multi‑option Facility which includes a Trade Finance Loan Facility, Bills Negotiated Not under Documentary
Credit Facility and Documentary Credit Issuance/Documents Surrendered Facility; and
» $5 million Standby Letter of Credit or Guarantee Facility
Unsecured:
» $2.5 million Electronic Payaway Facility; and
» $0.5 million Commercial Card Facility.
The following facilities with ANZ has been cancelled:
» $5 million Cash Loan Facility; and
» $5 million reducing Asset Finance Facility.
28. COMMITMENTS FOR EXPENDITURE – CAPITAL
CONSOLIDATED
2021
$’000
2020
$’000
Commitments for the acquisition of plant and equipment contracted for at the
reporting date but not recognised as liabilities payable:
Within one year
3,895
866
29. COMMITMENTS FOR EXPENDITURE – LEASES
The recognition of a right‑of‑use asset and a lease liability at commencement for all leases, except for short‑term leases
and leases of low value assets. Refer to note 20 for maturity analysis of lease liabilities at 31 December 2021.
At 31 December 2021, the Group is committed to $342,547 (2020: $27,154) for low value leases and has no short‑term
lease commitments.
Non‑cancellable lease receivable
Within one year
Later than one year but not later than five years
Later than five years
CONSOLIDATED
2021
$’000
2,862
12,331
9,080
24,273
2020
$’000
2,778
11,972
12,301
27,051
Lease receivables relate to the sublease of office and plant premises with a lease term of 10 years, with an option to extend
for a further term of 5 years.
Notes to the Financial Statements Annual Report 2021
77
30. FAIR VALUE MEASUREMENT
Some of the Group’s assets and liabilities are measured at fair value at the end of each reporting period. The following table
gives information about how the fair values of these assets and liabilities are determined (in particular, valuation
technique(s) and input(s) used).
FAIR VALUE AS AT
ASSETS /
LIABILITIES
31/12/21
$
31/12/20
$
FAIR VALUE
HIERARCHY
VALUATION TECHNIQUE(S)
& KEY INPUT(S)
Foreign currency
forward
contracts (see
note 31(f))
Assets: nil
Assets: nil
Level 2
Liabilities:
66,807
Liabilities:
1,575,137
Discounted cash flow.
Future cash flows are
estimated based on
forward exchange rate
(from observable forward
exchange rates at the end
of the reporting period) and
contract forward rates,
discounted at a rate that
reflects the credit risks of
various counterparties.
Land and
buildings
Land:
1,700,000
Land:
1,200,000
Level 3
Capitalisation and Direct
Comparison approaches.
Buildings:
5,192,000
Buildings:
2,793,000
SIGNIFICANT
UNOBSERVABLE
INPUT(S)
RELATIONSHIP OF
UNOBSERVABLE
INPUT(S)
n/a
n/a
Comparable to
recent market
transactions on
arm’s length terms
at the time.
The higher/(lower)
the comparable
market net rental
amount and the
higher/(lower) the
comparable
market sales
transactions, the
higher the fair
value.
31. FINANCIAL INSTRUMENTS
(a) Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while
maximising the return to shareholders through the optimisation of the debt and equity balance.
The Group’s overall strategy remains unchanged from 2020.
The capital structure of the Group consists of debt, as disclosed in Note 27, cash and cash equivalents, and equity holders
of the parent, comprising issued capital, reserves and accumulated losses, as disclosed in Notes 7, 23 and 24 respectively.
The Directors review the capital structure on a regular basis, and at least annually. As a part of this review the Directors
consider the cost of capital and the risks associated with each class of capital. Based on the determinations of the
Directors, the Group will balance its overall capital structure through the payment of dividends, new share issues and share
buy‑backs as well as the issue of new debt or the redemption of existing debt.
The Group prepares monthly management accounts, comprising Balance Sheet, Profit and Loss Statement and Cash Flow
Statement updates for the current financial year and the current year forecast. The forecast is used to monitor the Group’s
capital structure and future capital requirements, taking into account future capital requirements and market conditions.
The Group complied with its borrowing financial covenants under its current facility detailed in Note 27 as at 31 December
2021 and 31 December 2020 as follows:
78
Annual Report 2021 Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED)
(a) Capital risk management (continued)
FINANCIAL COVENANT DESCRIPTION
EBITDA Interest Cover Ratio
(A ratio of EBITDA to Interest Expense)
Minimum Tangible Net Worth
(Tangible Net Worth – Total Tangible Assets Less Total
Liabilities)
Borrowing Base Ratio
(A ratio of Aggregate Facility Amount Owing to Eligible Debtors
owing up to 90 days)
Distributions
(Any payment or distribution of money or other assets to
shareholders)
Security Cover Ratio
(A ratio of Facility Amount Owing to Security Cover Property
Value specified by the Financial Institution)
REQUIRED
VALUE
> 3.00:1
2021
ACTUAL
VALUE
45.61:1
2020
ACTUAL
VALUE
33.56:1
2021: > AUD 100.0m
AUD 168.4m
AUD 139.4m
2020: > AUD 50.0m
2021: < 0.70:1
0.62:1
0.47:1
2020: < 0.80:1
Variable*
AUD 10.87M
AUD 1.2M
<1.00:1
Removed
0.46:1
Inventory Cover Ratio
>0.8:1
0.87:1
0.87:1
*
lower than the lowest of profit or free cash flow of prior year
(b) Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in Note 1(c).
(c) Categories of financial instruments
Financial Assets
Trade and other receivables
Cash and cash equivalents
Other financial assets
Financial Liabilities
Trade and other payables
Lease liabilities
Other financial liabilities1
CONSOLIDATED
2021
$’000
96,290
50,132
–
139,037
103,540
67
2020
$’000
66,250
49,396
–
77,242
96,476
1,615
1 Foreign exchange contract mark‑to‑market $67,000 (2020: foreign exchange contract mark‑to‑market $1,575,000 and capitalised
borrowing costs $40,000).
Notes to the Financial Statements Annual Report 2021
79
31. FINANCIAL INSTRUMENTS (CONTINUED)
(d) Financial risk management objectives
The Group’s treasury function monitors and manages the financial risks relating to the operations of the Group through
internal risk reports. These risks include market risk (including currency risk, interest rate risk and equity price risk), credit
risk and liquidity risk. These risks are analysed below.
(e) Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (refer note
31(f)) and interest rates (refer note 31(g)). From time to time, the Group enters into a variety of derivative financial
instruments to manage its exposure to interest rate and foreign currency risk, including foreign exchange forward contracts
to hedge the exchange rate risk arising on the purchase of aluminium log and rolled product from overseas in US dollars.
At a Group and Company level, market risk exposures are measured using a sensitivity analysis. There has been no material
change to the Group’s exposure to market risks or the manner in which it manages and measures the risk during the
Financial Year.
(f) Foreign currency risk management
The Group undertakes certain transactions in foreign currencies, resulting in exposures to exchange rate fluctuations.
Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.
It is the policy of the Group to enter into forward foreign exchange contracts from time to time to manage any material risk
associated with anticipated foreign currency sales and purchase transactions.
The carrying amount of the Group’s and Company’s foreign currency denominated monetary assets and monetary liabilities
at the reporting date is as follows:
USD (cash)
EURO (cash)
USD (trade payables)
EURO (trade payables)
JPY (trade payables)
USD (trade receivables)
CONSOLIDATED
2021
$’000
20,423
98
2020
$’000
10,388
209
(18,205)
(10,684)
632
(23)
2,292
355
(24)
1,182
Foreign currency sensitivity
The Group is exposed to EUR, JPY and USD (2020: EUR, JPY and USD).
To mitigate foreign currency risk at reporting date, the Group entered into foreign exchange forward contracts. The Group’s
exposure to foreign exchange rate fluctuations was primarily limited to cash, trade payables and trade receivables
outstanding at reporting date denominated in currencies other than Australian dollar (AUD). The total value of trade
payables denominated in currencies other than the AUD at reporting date was $17,596,000 (2020: $13,354,000).
The total value of trade receivables denominated in currencies other than the AUD at reporting date was $2,292,000
(2020: $1,182,000).
80
Annual Report 2021 Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED)
(f) Foreign currency risk management (continued)
The following table details the Group’s sensitivity to a 10% increase and decrease in the AUD against the relevant unhedged
foreign currency. 10% represents management’s assessment of the possible change in foreign exchange rates.
The sensitivity analysis includes only foreign currency denominated monetary items outstanding at 31 December 2021 and
31 December 2020 and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive
number indicates an increase in profit.
CONSOLIDATED
Profit or loss (after tax)
–AUD strengthens by 10% against USD
–AUD weakens by 10% against USD
–AUD strengthens by 10% against EUR
–AUD weakens by 10% against EUR
–AUD strengthens by 10% against JPY
–AUD weakens by 10% against JPY
Forward foreign exchange contracts
2021
$’000
1,447
(1,768)
(57)
70
2
(3)
2020
$’000
864
(1,056)
(32)
39
2
(3)
It is the policy of the Group to enter into forward foreign exchange contracts to cover specific material foreign currency
payments and receipts.
The following table details the forward foreign currency (FC) contracts outstanding at the end of the reporting period:
OUTSTANDING CONTRACTS
Buy EUR
Buy JPY
Buy CNH
Buy USD
FOREIGN CURRENCY
FAIR VALUE
31/12/21
FC$’000
31/12/20
FC$’000
31/12/21
$’000
GAIN/(LOSS)
31/12/20
$’000
GAIN/(LOSS)
1,763
4,145
240
716
3,900
240
40,356
16,164
(81)
–
1
14
(43)
(2)
(3)
(1,527)
(g) Interest rate risk management
The Group interest rate risk arises from borrowings, cash and derivatives.
The Group is exposed to interest rate risk as the Group borrows funds at floating interest rates. Hedging activities are
evaluated regularly to align with interest rate views and defined risk appetite, ensuring optimal hedging strategies are
applied, by either positioning the balance sheet or protecting interest expense through different interest rate cycles. The
Group’s exposure to interest rate risk at the reporting date was considered insignificant and as a result the Group did not
enter into interest rate options.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed below.
Interest rate sensitivity
The sensitivity analysis below shows the effect on profit or loss after tax for the Financial Year if there is a change in interest
rates with all other variables held constant. This is determined by applying the change in interest rates to both derivative and
non‑derivative instruments at the reporting date that have an exposure to interest rate changes. A 1‑basis point (0.01%)
increase and a 1 basis point (0.01%) decrease represents Management’s assessment of the possible change in interest
rates (2020: 6bp or 0.06% increase and 6bp or 0.06% decrease). A positive number indicates an increase in profit.
Notes to the Financial Statements Annual Report 2021
81
31. FINANCIAL INSTRUMENTS (CONTINUED)
(g) Interest rate risk management (continued)
Interest rate sensitivity (continued)
Profit or loss (after tax)
Impact of a 1bp (2020: 6bp) increase in AUD interest rates
– Cash and cash equivalents
Impact of a 1bp (2020: 6bp) decrease in AUD interest rates
– Cash and cash equivalents
(h) Credit risk management
CONSOLIDATED
2021
$’000
2020
$’000
4
(4)
21
(21)
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has exposures to credit risk on cash and cash equivalents, receivables and derivative financial assets.
The credit risk on financial assets of the Group which have been recognised on the statement of financial position, other
than investments in shares, is generally the carrying amount, net of any allowances for doubtful debts.
The Group does not have any significant exposure to any individual customer or counterparty. Major concentrations of
credit risk are in the construction, transport, consumer durable and electrical industries in Australia. The Company has credit
insurance cover which requires ongoing management of credit accounts with monthly reports provided to the Insurer.
Experienced credit management and associated internal policies ensure constant monitoring of the credit risk for
the Company.
There is no concentration of credit risk with respect to receivables as the Group has a large number of customers.
The aging of trade receivables is detailed below:
Current
1–30 days
31–60 days
60+ days
CONSOLIDATED
2021
$’000
72,262
16,653
1,706
530
91,151
2020
$’000
51,377
10,327
1,551
560
63,815
(i) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who ensure there is an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long‑term funding and liquidity
management requirements. The Group manages liquidity risk by maintaining adequate banking facilities and reserve
borrowing facilities, complying with covenants, monitoring forecast and actual cash flows, and matching the maturity
profiles of financial assets and liabilities. Included in Note 27 is a list of additional undrawn facilities that the Group has at its
disposal to further reduce liquidity risk.
Liquidity and interest risk tables
Financial assets are made up of cash of $50,132,000 (2020: $$49,396,000) and trade and other receivables of $96,290,000
(2020: $66,250,000). Cash is liquid and trade and other receivables are expected to be realised on average within 50 days
(2020: 49 days). Cash balances earn 0.00% interest per annum (2020: 0.00%). Trade and other receivables are interest‑free.
82
Annual Report 2021 Notes to the Financial Statements
31. FINANCIAL INSTRUMENTS (CONTINUED)
(i) Liquidity risk management (continued)
Liquidity and interest risk tables (continued)
The following table details the Group’s remaining contractual maturity for its non‑derivative financial liabilities. The table has
been prepared based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group
can be required to pay. The table includes both interest and principal cash flows. The contractual maturity is a fair
representation of management’s expectations of actual repayments.
WEIGHTED AVERAGE
EFFECTIVE INTEREST RATE
%
LESS THAN
1 YEAR
$’000
1–3
YEARS
$’000
3–5
YEARS
$’000
GREATER
THAN 5 YEARS
$’000
CONSOLIDATED
2021
Trade and other payables
2020
Trade and other payables
–
77,242
77,242
–
139,037
139,037
–
–
–
–
–
–
–
–
–
–
–
–
(j) Fair value of financial instruments
The fair values of financial assets, financial liabilities and derivative instruments are determined as follows:
(i)
(ii)
the fair value of financial assets and financial liabilities (excluding derivative instruments) are determined in
accordance with generally accepted pricing models based on the discounted cash flow analysis using prices from
observable market data; and
the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available,
the discounted cash flow analysis is employed using observable market data for non‑option derivatives. For option
derivatives, option pricing models are used with key inputs sourced from observable market data.
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in
the financial statements approximate their fair values.
32. CONTINGENT LIABILITIES
Capral has received customer claims relating to the supply of non‑conforming marine grade plate. The plate was
manufactured by a third party, independently certified, imported and distributed by Capral. As stated in the 2020 Annual
Report and 2021 Managing Director’s AGM address, Capral supplied replacement plate to affected customers and this plate
was fully provided for in Capral’s 2020 accounts.
Some claims include a property damage and consequential loss component which have been submitted to Capral’s insurer.
Capral do not believe that it is liable for any of these claims and as such Management is in ongoing discussions with the
insurer, supplier, and certifier (DNV‑GL) in this regard. These claims, together with potential liability and recourse against
third parties, are currently being assessed. Based on assessments done and legal advice obtained, the directors have made
provision for what the Board believe Capral’s resulting liability could be. Any contingent liability in excess of the amounts
already provided is not able to be reliably estimated. The information usually required by AASB 137 (Provisions, Contingent
Liabilities and Contingent Assets) is not disclosed on the grounds that it can be expected to seriously prejudice the outcome
of negotiations and legal proceedings.
Separate from the item above, claims and possible claims, arise in the ordinary course of business against Capral entities.
Capral has fully provided for all known and determinable material claims.
Based on legal advice obtained, the Directors believe that any residual liability will not materially affect the financial position
of the consolidated entity.
Notes to the Financial Statements Annual Report 2021
83
32. CONTINGENT LIABILITIES (CONTINUED)
The Company’s bankers have granted guarantees in respect of rental obligations on lease commitments, use of utilities
infrastructure and international trade facilities. At 31 December 2021 these guarantees totalled $4,494,942
(2020: $3,833,087).
Capral’s bankers have issued letters of credit in respect of Capral’s purchases internationally. At 31 December 2021,
these open letters of credit totalled $15,715,119 (31 December 2020: $9,046,552).
33. REMUNERATION OF AUDITORS
CONSOLIDATED
2021
$
2020
$
During the year the auditor of the Group and parent entity and its related practices
earned the following remuneration:
Auditor of the Group and parent entity
Audit or review of financial reports of the entity or any entity in the consolidated entity
327,100
285,400
Other services:
– tax compliance
– tax consulting
– ATO combined assurance review
Total remuneration
31,500
32,550
–
391,150
31,500
39,945
166,588
523,433
It is the Group’s policy to employ the Company’s auditors, Deloitte Touche Tohmatsu, on assignments additional to their
statutory duties where their expertise and experience is considered invaluable to the assignment.
34. JOBKEEPER PAYMENT SCHEME
In response to the economic impact from the COVID‑19 pandemic crisis, the Australian Government introduced the
JobKeeper payment scheme to assist eligible employers with payroll subsidy. As trade and travel restrictions were imposed
in Australia, Capral self‑assessed the eligibility criteria and enrolled in the JobKeeper payment scheme on 14 May 2020.
Capral nominated around 730 eligible employees under the scheme. JobKeeper benefit of $11.9 million was included in
2020 profit and was received by 31 December 2020. The receipts have been accounted as a reduction to the employee
benefits expense in the statement of profit or loss and other comprehensive income.
35. EVENTS AFTER REPORTING DATE
The directors consider that prolonged general economic impacts arising from COVID‑19 may have a negative impact on
Capral’s operations. In the unlikely event of an extended general shutdown of the economy throughout the Australian States
and Territories, it may impact the recoverability of Capral’s carrying value of assets going forward.
No other matter or circumstance has arisen since the end of the Financial Year that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations or the Group’s state of affairs in future
financial years.
84
Annual Report 2021 Notes to the Financial Statements
36. NOTES TO THE CASH FLOW STATEMENT
(i) Reconciliation of cash and cash equivalents
Reconciliation of cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes
cash on hand and at bank and short term deposits at call net of bank overdrafts.
Cash as at the end of the financial year as shown in the Statement of Cash Flows
is reconciled to the related items in the Statement of Financial Position as follows:
Cash at bank and on hand
CONSOLIDATED
2021
$’000
2020
$’000
50,132
50,132
49,396
49,396
(ii) Reconciliation of profit for the year to net cash flows from operating activities
Profit for the year
Non‑cash items:
Depreciation and amortisation – owned assets
Depreciation and amortisation – right of use assets
Gain on sale of property, plant and equipment
Income tax benefit
Share‑based payments expense
Interest income reclassified to investing activities
Change in assets and liabilities:
Increase in current receivables
Decrease in financial assets
Increase in inventories
Decrease/(increase) in prepayments
Increase in trade and other payables
(Decrease)/increase in employee benefit provisions
Increase in other provisions
Increase in deferred income
(Decrease)/increase in other financial liabilities
Net cash provided by operating activities
42,743
25,920
6,667
13,503
(109)
(9,430)
590
–
5,722
12,630
(17)
(3,048)
445
(2)
(30,040)
(3,686)
–
(48,406)
1,794
61,049
(470)
5,300
86
(1,548)
41,729
10
(179)
(893)
12,707
965
1,022
24
529
52,149
(iii) Details of finance facilities are included in note 27 to the financial statements.
Notes to the Financial Statements Annual Report 2021
85
36. NOTES TO THE CASH FLOW STATEMENT (CONTINUED)
(iv) Movement in financial activities
The following table details changes in the Group’s liabilities arising from financial activities, including both cash and
non‑cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will
be, classified in the Group’s statement of cash flows as cash flows from financing activities.
MOVEMENTS IN FINANCING ACTIVITIES
Lease liabilities
Opening balance
Financing cash flows
New leases
Retired or changes to leases
Closing balance
(v) Non‑cash financing activities
There were no non‑cash financing activities during the Financial Year or the 2020 year.
CONSOLIDATED
2021
$
2020
$
96,476
(14,951)
26,039
(4,024)
103,540
104,531
(15,092)
8,783
(1,746)
96,476
86
Annual Report 2021 Notes to the Financial Statements
37. PARENT ENTITY DISCLOSURES
FINANCIAL POSITION
Assets
Current assets–third parties
Total assets
Liabilities
Current liabilities – third parties
Total liabilities
Equity
Issued capital
Accumulated losses
Equity‑settled compensation reserve
Asset revaluation reserve
Employee share reserve
Dividend reserve
Total Equity
FINANCIAL PERFORMANCE
Profit for the year
Other comprehensive income
Total comprehensive profit for the year
Contingent liabilities of the parent entity
Refer note 32
COMPANY
2021
$’000
2020
$’000
277,343
423,578
174,204
267,765
197,962
312,687
107,844
195,304
430,588
426,965
(343,649)
(352,574)
11,909
3,074
(225)
54,116
155,813
42,239
3,074
45,313
11,319
–
–
31,673
117,383
30,280
–
30,280
Commitments for the acquisition of property, plant and equipment by the parent entity
Commitments for the acquisition of property, plant and equipment by the parent entity
Within one year
3,895
866
Notes to the Financial Statements Annual Report 2021
87
38. SHARE‑BASED PAYMENTS
Performance Share Rights
Executive and Senior Management
Refer to section 2 of the Remuneration Report for details of rights issued under the Long Term Incentive Plan.
The following share‑based payment arrangements were in existence during the current reporting period:
PERFORMANCE RIGHT SERIES
(LTIP)
NUMBER AS AT
31 DEC 21
GRANT DATE
LAST TESTING
DATE
EXERCISE PRICE
$
Issued 22 March 20191
Issued 22 March 20191
Issued 3 March 20202
Issued 3 March 20202
Issued 3 March 20213
Issued 3 March 20213
70,830
70,830
90,325
90,325
82,350
82,350
22/03/2019
31/12/2021
22/03/2019
31/12/2021
3/03/2020
31/12/2022
3/03/2020
31/12/2022
3/03/2021
31/12/2023
3/03/2021
31/12/2023
–
–
–
–
–
–
FAIR VALUE AT
GRANT DATE
$4
2.250
3.150
2.100
2.820
4.180
5.490
1
2
3
In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2019
have an average vesting date of 1 March 2022.
In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2020
have an average vesting date of 1 March 2023.
In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2021
have an average vesting date of 1 March 2024.
4 Shown as post 3 November 2020 share consolidation equivalent fair value.
The following share‑based payment arrangements were in existence during the comparative reporting period:
Issued 6 March 20181
Issued 6 March 20181
Issued 22 March 20192
Issued 22 March 20192
Issued 3 March 20203
Issued 3 March 20203
NUMBER AS AT
31 DEC 20
GRANT DATE
LAST TESTING
DATE
EXERCISE PRICE
$
FAIR VALUE AT
GRANT DATE
$4
61,680
61,680
70,830
70,830
90,325
90,325
6/03/2018
31/12/2020
6/03/2018
31/12/2020
22/03/2019
31/12/2021
22/03/2019
31/12/2021
3/03/2020
31/12/2022
3/03/2020
31/12/2022
–
–
–
–
–
–
3.600
3.900
2.250
3.150
2.100
2.820
1
2
3
In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2018
have an average vesting date of 1 March 2021.
In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2019
have an average vesting date of 1 March 2022.
In accordance with the terms of the LTIP arrangement, performance rights issued during the financial year ended 31 December 2020
have an average vesting date of 1 March 2023.
4 Shown as post 3 November 2020 share consolidation equivalent fair value.
88
Annual Report 2021 Notes to the Financial Statements
38. SHARE‑BASED PAYMENTS (CONTINUED)
Performance Share Rights (continued)
INPUTS INTO THE MODEL
03 MARCH 2021
03 MARCH 2020
22 MARCH 2019
06 MARCH 2018
PERFORMANCE RIGHTS (LTIP)
Grant date
Dividend yield
Risk free yield
Expected volatility
Last testing date
Exercise price
Share price at grant date^
Performance right life
3/03/2021
3/03/2020
22/03/2019
6/03/2018
6.5%
0.3%
55%
9.5%
0.5%
47.5%
7.7%
1.4%
45%
6.3%
2.15%
55%
31/12/2023
31/12/2022
31/12/2021
31/12/2020
n.a
$6.670
3 years
n.a
$3.750
3 years
n.a
$3.900
3 years
n.a
$4.800
3 years
^ Shown as post 3 November 2020 share consolidation equivalent share price.
Managing Director
During the Financial Year, 86,300 rights were issued to Mr A. Dragicevich.
During the comparative financial year, 102,670 rights were issued to Mr A. Dragicevich.
The following rights were in existence during the current reporting period, subject to the achievement of performance
conditions and have been independently valued as follows:
SHARE RIGHTS
Issued 16 April 20191
Issued 16 April 20191
Issued 29 April 20202
Issued 29 April 20202
Issued 28 April 20213
Issued 28 April 20213
NUMBER AS
AT 31 DEC 21
GRANT DATE
LAST TESTING
DATE
EXERCISE
PRICE
$
FAIR VALUE AT
GRANT DATE
$4
39,165
39,165
51,335
51,335
43,150
43,150
16/04/2019
31/12/2021
16/04/2019
31/12/2021
29/04/2020
31/12/2022
29/04/2020
31/12/2022
28/04/2021
31/12/2023
28/04/2021
31/12/2023
–
–
–
–
–
–
$2.100
$3.000
$1.560
$2.040
$5.170
$6.430
1
2
3
In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2019
have an average vesting date of 1 March 2022.
In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2020
have an average vesting date of 1 March 2023.
In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2021
have an average vesting date of 1 March 2024.
4 Shown as post 3 November 2020 share consolidation equivalent fair value.
Notes to the Financial Statements Annual Report 2021
89
38. SHARE‑BASED PAYMENTS (CONTINUED)
Performance Share Rights (continued)
Managing Director (continued)
The following rights were in existence during the comparative reporting period, subject to the achievement of performance
conditions and have been independently valued as follows:
SHARE RIGHTS
Issued 19 April 20181
Issued 19 April 20181
Issued 16 April 20192
Issued 16 April 20192
Issued 29 April 20203
Issued 29 April 20203
NUMBER AS
AT 31 DEC 20
GRANT DATE
LAST TESTING
DATE
EXERCISE
PRICE
$
FAIR VALUE AT
GRANT DATE
$4
36,665
36,665
39,165
39,165
51,335
51,335
19/04/2018
31/12/2020
19/04/2018
31/12/2020
16/04/2019
31/12/2021
16/04/2019
31/12/2021
29/04/2020
31/12/2022
29/04/2020
31/12/2022
–
–
–
–
–
–
$3.000
$3.600
$2.100
$3.000
$1.560
$2.040
1
2
3
In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2018
have an average vesting date of 1 March 2021.
In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2019
have an average vesting date of 1 March 2022.
In accordance with the terms of the LTIP arrangement, performance rights issued during the Financial Year ended 31 December 2020
have an average vesting date of 1 March 2023.
4 Shown as post 3 November 2020 share consolidation equivalent fair value.
INPUTS INTO THE MODEL
28 APRIL 2021
29 APRIL 2020
16 APRIL 2019
19 APRIL 2018
Grant date
Dividend yield
Risk free yield
Expected volatility
Last testing date
Share price at grant date^
Performance right life
28/4/2021
29/4/2020
16/4/2019
19/4/2018
5.8%
0.3%
55%
12.2%
0.2%
47.5%
8.0%
1.5%
45%
6.7%
2.25%
55%
31/12/2023
31/12/2022
31/12/2021
31/12/2020
$7.580
3 years
$2.880
3 years
$3.750
3 years
$4.500
3 years
^ Shown as post 3 November 2020 share consolidation equivalent share price.
The following table reconciles the outstanding securities granted to the Managing Director and senior management at the
beginning and end of the Financial Year:
PERFORMANCE RIGHTS
Number of share performance rights:
Balance at the beginning of the financial year
Granted during the financial year
Forfeited during the financial year
Vested during the financial year
Lapsed during the financial year
Share consolidation 30:1
Balance at the end of the financial year
2021
2020
700,000
18,500,000
251,000
8,500,000
–
(350,000)
(92,427)
–
(104,263)
(5,650,000)
–
(20,300,000)
754,310
700,000
The performance rights outstanding at the end of the Financial Year were 754,310 (2020: 700,000), with a weighted average
remaining contractual life of 1.0 years.
90
Annual Report 2021 Notes to the Financial Statements
39. KEY MANAGEMENT PERSONNEL COMPENSATION
The aggregate compensation made to directors and other members of key management personnel of the Company and the
Group is set out below:
Short‑term benefits
Post‑employment benefits
Other long‑term benefits
Termination benefits
Share‑based payments
CONSOLIDATED/COMPANY
2021
$
2020
$
1,894,750
1,842,352
84,840
76,635
–
–
–
–
689,032
512,595
2,668,622
2,431,582
40. BUSINESS COMBINATIONS
Capral Limited acquired certain assets and employee entitlements of the G James Extrusion Smithfield Business from
G James Extrusion Co. Pty. Ltd on 1 February 2021 for a total consideration of $10,302,000.
Consideration
Cash at Completion
Cash post Completion
Total Consideration
CONSOLIDATED
2021
$’000
7,100
3,202
10,302
2020
$’000
–
–
–
Acquisition‑related costs amounting to $48,000 have been excluded from the consideration transferred. Further cost
relating to the integration of the acquired business for the year was $65,000 (2020: nil). Both these have been recognised as
an expense in the period, within the ‘Other expenses’ line item in the Consolidated Statement of Comprehensive Income.
Smithfield Extrusion Facility was primarily acquired to provide additional extrusion capacity in key New South Wales market
and reduce freight costs due to interstate production. In addition, the acquisition also facilitates better utilisation of other
production facilities and reducing occasional reliance on third party producers.
Notes to the Financial Statements Annual Report 2021
91
40. BUSINESS COMBINATIONS (CONTINUED)
Fair value of assets acquired and liabilities assumed at the date of acquisition:
CONSOLIDATED
Current assets
Inventory
Non‑current assets
Fixed assets
Current liabilities
Employee benefits
Total
Goodwill:
Consideration
Less: fair value of identifiable net assets acquired
Goodwill
Net cash outflow on purchase of a business:
Consideration paid in cash
Net cash outflow on purchase of a business
2021
$’000
3,194
4,508
(470)
7,232
10,302
(7,232)
3,070
(10,302)
(10,302)
2020
$’000
–
–
–
–
–
–
–
–
–
The goodwill of $3,070,000 arising from the acquisition consists mostly of the synergies and economies of scale expected
from combining the operations of Smithfield and Capral Group.
Impact of acquisition on the results of the Group
The acquired business contributed revenue of $22,275,000 and a profit for the year of $626,000 to the group for the period
from 1st February 2021 to 31 December 2021.
Had the business combination been effected at 1st January 2021, the revenue of the Group would have been $595,303,000
and the profit for the year would have been $42,868,000.
92
Annual Report 2021 Directors’ Declaration
DIRECTORS’ DECLARATION
The directors declare that:
(a)
(b)
in the directors’ opinion, there are reasonable grounds to believe that Capral will be able to pay its debts as and when
they become due and payable;
in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and
performance of Capral and the consolidated entity;
(c)
in the directors’ opinion, the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board; and
(d)
the directors have been given declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the directors
R. L. Wood‑Ward
Chairman
Sydney
25 February 2022
A. M. Dragicevich
Managing Director
Independent Auditor’s Report to the Members of Capral Limited Annual Report 2021
93
INDEPENDENT AUDITOR’S REPORT
to the Members of Capral Limited
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Eclipse Tower
60 Station Street
Parramatta
Sydney, NSW, 2150
Australia
Tel: +61 2 9840 7000
www.deloitte.com.au
Independent Auditor’s Report to the
Members of Capral Limited
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
Opinion
We have audited the financial report of Capral Limited (the “Company”) and its subsidiaries (the “Group”) which
comprises the consolidated statement of financial position as at 31 December 2021, the consolidated statement
of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
· Giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its financial
performance for the year then ended; and
· Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report for the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Liability limited by a scheme approved under Professional Standards Legislation.Member of Deloitte Asia Pacific Limited and the Deloitte organisation.Deloitte Touche TohmatsuABN 74 490 121 060Eclipse Tower60 Station StreetParramattaSydney, NSW, 2150AustraliaTel: +61 2 9840 7000www.deloitte.com.auIndependent Auditor’s Report to theMembers of Capral LimitedRReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrttOpinionWe have audited the financial report of Capral Limited (the “Company”)and its subsidiaries (the “Group”) whichcomprises the consolidated statement of financial position as at 31 December 2021,the consolidatedstatementof profit or loss and other comprehensive income, the consolidated statement of changes in equity and theconsolidated statement of cash flows for the year then ended, and notes to the financial statements, including asummary of significant accounting policies and other explanatory information, and the directors’ declaration.In our opinion, the accompanying financial report of the Group is in accordance with theCorporations Act 2001,including:·Giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its financialperformance for the year then ended; and·Complying with Australian Accounting Standards and the Corporations Regulations 2001.Basis for OpinionWe conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section ofour report. We are independent of the Group in accordance with the auditor independence requirements of theCorporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’sAPES 110Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that arerelevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities inaccordance with the Code.We confirm that the independence declaration required by theCorporations Act 2001, which has been given tothe directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’sreport.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit ofthe financial report for the current period. These matters were addressed in the context of our audit of thefinancial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion onthese matters. 94
Annual Report 2021 Independent Auditor’s Report to the Members of Capral Limited
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr
CCaarrrryyiinngg vvaalluuee ooff ttaannggiibbllee aanndd iinnttaannggiibbllee
aasssseettss,,
iinncclluuddiinngg ggooooddwwiillll aanndd ootthheerr
iinnttaannggiibbllee aasssseettss,, pprrooppeerrttyy,, ppllaanntt aanndd
eeqquuiippmmeenntt aanndd rriigghhtt--ooff--uussee aasssseettss
As at 31 December 2021, the Group had
goodwill of $3.070m, other intangible
assets of $0.7m, property, plant and
equipment of $53.195m (net of previously
recognised
of
impairment
$34.069m) and right-of-use assets of
$75.313m.
losses
Goodwill and indefinite life intangible
assets are required to be tested for
impairment annually and whenever an
impairment indicator exists. As a result,
management
impairment
completed
testing at 31 December 2021 to assess the
recoverability of the carrying value of
tangible and intangible assets, including
intangible assets,
goodwill and other
property, plant and equipment and right-
of-use assets. This is performed through a
value-in-use discounted cash flow model
(“impairment model”).
Note 1d outlines the determination of the
goodwill as well as the carrying value of the
property, plant and equipment and right of
use assets which requires significant
judgement by management in assessing for
any indicators of impairment and preparing
a value-in-use discounted cash flow model,
including;
·
·
·
estimating future growth rates,
discount rates, and
the expected cash flows and capital
expenditure.
RReeccooggnniittiioonn aanndd rreeccoovveerraabbiilliittyy ooff ddeeffeerrrreedd
ttaaxx aasssseettss
As disclosed in Note 11, at 31 December
2021, the Group has recognised deferred
tax assets of $15.335m and as disclosed in
Note 4, the Group has unrecognised and
temporary
unused
differences of $58.278m and $23.846m
respectively.
losses and
tax
Our procedures included, but were not limited to:
§ Assessing the process undertaken and conclusions
reached by management in determining indicators of
impairment or reversal of impairment;
§ Reviewing the FY22 budget, the basis on which it has
been prepared, and assessing the historical accuracy of
forecasting by management;
§ Assessing other key assumptions in the impairment
model including:
o discount rate;
o forecasted cash flows and capital expenditure;
o lease payments and sustaining capital
expenditures on leases;
o growth rates, in particular with reference to
historic growth rates and forecast macro-
economic conditions impacting demand in the
industry; and
o terminal growth rate.
§ Engaging our valuation specialists to assist with
evaluating the appropriateness of the discount rate
adopted;
§ Recalculating the mathematical accuracy and integrity
of the impairment model;
§ Performing sensitivity analysis on the key assumptions
and inputs in the impairment model, to assess the
extent of change in those assumptions that either
individually or collectively would result in impairment or
reversal of impairment; and
§ Assessing the headroom in the impairment model and
whether it is indicative of a requirement to reverse
previously recorded impairment losses.
We also assessed the appropriateness of the disclosures in Notes
1c(k), 1d, 14, 16 and 17 to the financial statements.
Our procedures included, but were not limited to:
§ Engaging our tax specialists to assist us in assessing the
availability of tax losses and temporary differences to
the Group;
§ Reviewing management’s forecasts in respect of the
Group’s taxable income;
§ Assessing the key assumptions in management’s
calculations including:
Independent Auditor’s Report to the Members of Capral Limited Annual Report 2021
95
o Comparing the consistency of the assumptions
used to the inputs and assumptions in
management’s impairment model;
o Assessing whether the period used to forecast
taxable profits is appropriate;
o Assessing the likelihood of the Group achieving
these forecasts.
We also assessed the appropriateness of the Group’s disclosure
in respect of the deferred tax assets including tax losses and
temporary deductible differences in the notes to the financial
statements.
Deferred tax assets in respect of tax losses
and temporary differences are recognised
when it is probable that the Group will have
future taxable profits against which such
losses and temporary differences will be
utilised.
is
judgement
The Group’s ability to recognise deferred
tax assets in relation to tax losses and
temporary differences
is assessed by
management at each reporting period.
Significant
required by
management in their assessment of the
quantum of available tax losses and
deductible
temporary differences, and
whether it is probable that some or all of
these tax losses and temporary differences
can be utilised in the foreseeable future.
This assessment includes estimating the
Group’s future shorter term taxable income
and the probability of those forecasts being
met.
Management’s assessment resulted in the
recognition of an additional $9.430m of
deferred tax assets as at 31 December 2021
as disclosed in Note 11.
Other Information
The directors are responsible for the other information. The other information comprises the Chairman’s Report,
Managing Director’s Operations and Financial Review, Sustainability Report and Directors’ Report, which we
obtained prior to the date of this auditor’s report, and also includes the following information which will be
included in the Group’s annual report (but does not include the financial report and our auditor’s report thereon):
Members Details and Corporate Directory, which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not and will not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial report
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we
have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
When we read the Members Details and Corporate Directory, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and use our professional judgement to
determine the appropriate action.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
96
Annual Report 2021 Independent Auditor’s Report to the Members of Capral Limited
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
·
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
· Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
Independent Auditor’s Report to the Members of Capral Limited Annual Report 2021
97
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 25 to 41 of the Directors’ Report for the year ended
31 December 2021..
In our opinion, the Remuneration Report of Capral Limited, for the year ended 31 December 2021, complieswith
section 300Aof the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
X Delaney
Partner
Chartered Accountants
Parramatta, 25 February 2022
98
Annual Report 2021 Member Details
MEMBER DETAILS
Top Holders (Grouped) as of 28 February 2021
1. TWENTY LARGEST HOLDERS
Details of Capral’s twenty largest shareholders were as follows:
RANK
NAME
UNITS
UNITS (%)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CITICORP NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
PRUDENTIAL NOMINEES PTY LTD
MR ANTHONY MATTHEW DRAGICEVICH
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMS (NZ) LTD
MR ANDREW ROY NEWBERY SISSON
MR JOHN GEORGE WHITING + MRS DIANA PATRICIA WHITING
AGO PTY LTD
BNP PARIBAS NOMINEES PTY LTD
RAVENSCOURT PROPRIETARY LIMITED
SOUTHERN STEEL INVESTMENTS PTY LIMITED
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
CS FOURTH NOMINEES PTY LIMITED
MRS ANTONIA CAROLINE COLLOPY
MRS GLENDA CLAIRE ORGILL
DEBUSCEY PTY LTD
MR JORIS ARJEN LUGTENBURG + MRS ADRIANE LUGTENBURG
3,385,507
2,880,800
2,104,828
1,344,429
600,000
337,902
246,714
169,496
153,764
133,334
130,276
116,342
115,442
109,820
108,489
105,673
102,847
96,442
91,687
87,118
19.69
16.76
12.24
7.82
3.49
1.97
1.43
0.99
0.89
0.78
0.76
0.68
0.67
0.64
0.63
0.61
0.60
0.56
0.53
0.51
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
12,420,910
4,772,349
72.24
27.76
Member Details Annual Report 2021
99
2. SUBSTANTIAL SHAREHOLDERS
Substantial shareholders as notified to Capral in accordance with the Corporations Act 2001:
NAME
Allan Gray Australia
Perpetual Limited
First Sentier Investors Holdings Pty Limited / Mitsubishi UFC
Financial Group Inc
Superannuation and Investment HoldCo Pty Ltd / KKR Entities
Commonwealth Bank of Australia / Colonial First State
Investments Limited
Castle Point Funds Management Ltd
Total
3. NUMBER OF HOLDERS
NO. OF SHARES % OF SHARES HELD
AS NOTIFIED ON
3,320,039
1,671,494
1,107,774
1,028,431
916,599
883,182
8,927,519
20.56
3/25/2020
6/10/2021
5/27/2021
12/3/2021
5/28/2021
12/23/2020
9.82
6.51
5.98
5.39
5.33
53.59
(a) Quoted equity securities: There were 2,088 holders of ordinary shares.
(b) Unquoted equity securities – options: There were Nil unquoted options.
(c) Unquoted equity securities – performance rights: There were 754,310 unquoted performance rights issued to
18 holders under the Capral Long Term Incentive Plan. There is 1 holder who holds 20% or more performance
rights under this plan.
4. VOTING RIGHTS
(a) Voting rights attaching to the fully paid ordinary shares are, on a show of hands, one vote per person present
as a member proxy, attorney, or representative thereof and on a poll, one vote per share for every member present
in person or by proxy or by attorney or by representative.
(b) Holders of options and performance rights do not have any voting rights on the equity securities held by them.
Ordinary shares issued on exercise of options or vesting of performance rights will carry the same voting rights
as all other fully paid ordinary shares of Capral.
100
Annual Report 2021 Member Details
MEMBER DETAILS
Top Holders (Grouped) as of 28 February 2021
5. DISTRIBUTION OF EQUITY SECURITIES
(a) Quoted ordinary shares
RANGE OF SHARES
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
NUMBER OF HOLDERS
1,412
461
100
98
17
2,088
(b) Unquoted performance rights
Performance rights granted under the Capral Long Term Incentive Plan
(including to the Managing Director) with various vesting and expiry dates
and a nil exercise price:
RANGE OF RIGHTS
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
NUMBER OF HOLDERS
0
0
0
17
1
18
6. MARKETABLE PARCELS
The number of shareholders holding less than a marketable parcel* of shares
is 384 holders.
(* Minimum parcel size of shares: 54)
7. ON‑MARKET BUY BACK
There is no current on‑market buy back.
Corporate Directory Annual Report 2021
101
CORPORATE DIRECTORY
CAPRAL’S REGISTERED OFFICE
71 Ashburn Road
Bundamba QLD 4304
Telephone +61 (0)7 3816 7000
Fax +61 (0)7 3816 7111
CAPRAL’S PRINCIPAL ADMINISTRATION
OFFICE / INVESTOR ENQUIRIES
15 Huntingwood Drive
Huntingwood NSW 2148
Telephone +61 (0)2 9682 0710
Email InvestorRelations@capral.com.au
SHARE REGISTRY
Computershare Investor Services Pty Limited
ABN 48 078 279 277
Level 2, 60 Carrington Street
Sydney NSW 2000
Telephone 1800 855 080
Fax +61 (0)3 9473 2118
AUDITOR
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Eclipse Tower
Level 19, 60 Station Street
Parramatta NSW 2150
SECURITIES EXCHANGE LISTING
Capral’s shares are quoted on the Australian Securities
Exchange (Code: CAA)
COMPANY SECRETARY
Ms Kim Bradley‑Ware (Joint)
Mr William Joseph Campbell (Joint)
CORPORATE GOVERNANCE STATEMENT
http://www.capral.com.au/
under Corporate / Investors /
Corporate Governance
Photo courtesy of Con‑form Group
Capral Limited ABN 78 004 213 692
71 Ashburn Road, Bundamba QLD 4304
Telephone 07 3816 7000 Fax 07 3816 7111
capral.com.au