Capral Limited (CAA) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Capral Limited H1 FY '24 Results Webinar. [Operator Instructions] I would now like to hand the conference over to Mr. Tony Dragicevich, Chief Executive Officer and Managing Director. Please go ahead.

Thank you. Good morning, and welcome to Capral's first half 2024 results presentation. I'm Tony Dragicevich, CEO and Managing Director of Capral. I'm joined on the call this morning with me by Tertius Campbell, our CFO. Today's agenda, which we will just turn to the next page. First of all, I'll start with an overview of the business, a brief introduction on Capral, who we are and what we do. And then I'll run into the first half highlights and a bit of background on the business and the markets in which we play. And I'll hand over to Tertius to run through in more detail the financial results for the half year. And then will come back to me for strategy and outlook and guidance. So let's turn to the next page, which is the overview of Capral. So for those of you who don't know, Capral is Australia's leading supplier of aluminum extrusion and rolled products. Aluminum is a strategically important material, it is strong, but lightweight and as a consequence, plays a key role in global decarbonization initiatives. In Australia, bauxite mining, our alumina refining and aluminum smelting make the aluminum industry Australia's largest value-add export earner. And combined with downstream operations, such as extrusion, which we are the major player and fabrication, it also makes the aluminum industry one of Australia's biggest employers. So very important to the Australian economy. Now let's turn to the next page and just describe our business in a little bit more detail. So Capral's core business is the extruding and distribution of aluminum. The 6 manufacturing plants, the 6 extrusion plants, a total of 8 extrusion presses 65,000 tonne a year of capacity. In addition to that, we have a large distribution network, which we own and sell through, 8 major distribution centers and 15 trade centers. The key markets in which we operate are residential commercial construction and a wide variety of industrial markets. Our overall market share is around 28% of the aluminum market in Australia, our turnover a bit over AUD 640 million for the last 12 months, our gross assets of AUD 455 million and in excess of 1,000 employees. So now turning to the first half highlights. So volume and earnings were in line with our expectations for the first half. Residential demand was weaker than prior year due to low commencements and a reduced pipeline of work. However, industrial demand remains solid. The margins were maintained through effective cost management and recovery through price increases. So now we'll turn to some more detail on the performance highlights. As said earlier, the first half results were in line with our expectations. Our volume in a down-turning market was off 6% to 33,500 tonne. And as a consequence, our sales revenue was down 5% to AUD 313 million. with our metal cost being reasonably stable through the first half of the year on average. Our underlying EBITDA, AUD 28.7 million was down 9% on the same period last year, albeit the first half last year. It was a beneficiary of a AUD 2 million credit claim reversal. So on a like-for-like basis, our earnings went too far off the same period last year. Just turning to NPAT, net profit after tax of AUD 14.7 million compared to AUD 16.6 million first half last year. Earnings per share, AUD 0.83, down 11% on the AUD 0.93 for the first half 2023. A really positive note on this, net cash position improved from December year-end to up by 14% to AUD 67.8 million at June 30, 2024. Our net tangible asset backing per share increased from AUD 9.89 to AUD 10.43 a share. In terms of capital management, as most of you will be aware, we announced in February an on-market buyback of up to 10% of our stock. And in the first half of the year, we bought back the equivalent of AUD 0.18 per year. And as a result, there's no interim dividend declared at this point. Our safety performance at 4.7 total reportable injury frequency rate was on par with last year and is industry leading for Australian building product manufacturing companies. So, overall, a very solid result for the first half of the year and in line with where we expected it to be more or less. So now turning to a little more discussion on our volume. Just the headline there is that our industry diversification does support our volume during the cyclical downturn in the housing market, which we're experiencing. So our volume, as I said earlier, it was down 6% on the first half last year. The residential was soft as commencements remained low for the second year in a row and the backlog of work dissipated. Resellers have returned to imports as the supply chain has normalized and that was partially -- both those 2 factors were partially offset by ongoing infrastructure investment and strength in our industrial sectors. I just want to talk about our channels to market first, and I'll talk about the industry exposure. So firstly, channels to market. As you can see by the graph on the bottom left-hand corner of the page, 50% of capital's volume is directly from our manufacturing sites to our large customers. The other 50% of our volume goes through our distribution centers and trade centers with extrusion making up 70% of that volume and rolled product, which is sheet and plate making up the other 30% that goes through our distribution center. So we're roughly 50-50 between mill direct and through our distribution centers. In terms of industry exposure, which is the other graph in the middle of the page there, as you can see, our largest single market remains residential building, 40%, but the industrial markets, which comprise a whole raft of markets, including transport, marine, general manufacturing, signage, facade work makes up drives around 48% of our total volume. Now the big change for our business over the last 5 or 6 years has been the less reliant on residential building. We go back to 2018, our exposure to the residential market was 44%, it's now down to 40%, and it's really as a result of us growing our market share in our industrial markets, our overall industrial markets, where we've lifted our exposure from 44%, up to 48% of our total volume. And clearly, all that means is that when we do hit the big downturn in the residential markets in particular, we're less exposed to what we were 5 years ago. On the right-hand side there, you can just see how our volume move each half year, so 6 monthly. Typically, historically, we've had stronger second half than first half. So we were in the last couple of years as the residential markets come off, that has stabilized. And as the pipeline has reduced, we've been the last couple of years, it's slightly lower second half of the year. So we'll see where this year pans out, but we're expecting it to be down slightly on the first half of this year at this point. Turning now to a bit more discussion on the residential housing market. So as you know, residential commencements have slowed. You can see from the bar chart on the right-hand side of the page there, [ 2003 ], 2024, housing starts, total commencements are low, the lowest they've been in over a decade, but have come off very high levels post-COVID and post government stimulus. So this year, 2024, the latest estimate from the HIA is 165,000 starts which is pretty much in line both with where it was in 2023. Obviously, the starts have been impacted by the significant rise in interest rates, the removal of government and centers, particularly around first homeowners and higher building costs. What we're anticipating or what the forecast is anticipating in the next couple of years is for housing starts to start to lift in 2025, but the bigger lift will be in 2026 and beyond to fulfill a growing demand for housing stock in Australia in the next couple of years. So let's now turn to some examples of some of the residential projects we recently completed. Just to give you some idea of where our products end up. So these are all projects that have been completed by our Capral's residential fabricators over the past 6 to 12 months. A terrace house in New South Wales, done by Fin Windows, one of our key fabricators in New South Wales. A beach house in WA using the Capral artisan framing systems completed by Busselton Aluminum Windows. And on the right-hand side, upmarket home in New South Wales completed by PCW Commercial Windows using our AGS Framing Systems. On the next slide, we will just show some examples of some commercial projects, Catherine McCawley College here in New South Wales using our Capral commercial framing systems, also completed by PCW, seem to be at the forefront here, also completing a community center in Monterrey in New South Wales using our commercial framing systems and Queensland Glass was the Gold Coast Airport using Capral's Curtain Wall Systems. So these are some examples of where Capral systems are used, proprietary systems that use both in residential and commercial projects around Australia. Now we turn to the industrial sector. So the industrial sector has really underpinned our volumes for the first half of the year as the residential sector has come off. The sector has remained solid. As you can see, it's quite a broad industry covering off transport, marine, solar, industrial construction, manufacturing and general fabrication and also through a number of other aluminum resellers. So firstly, transport, this sector, as you can see by the graph below on the left-hand side, is holding up at record highs and on the back of growing freight demand, and customer order books are healthy and most of our truck building customers have all the books out to 2025. In marine, commercial ferry builds, particularly locally have been solid. And it's good to see the local marine builders, ferry builders are now starting to win contracts in Australia. The Defense building is forecast to lift. The government has announced a number of initiatives, particularly around Border Patrol and other vessels, which we will be into supply over the next couple of years. However, the recreational vessel market demand is slowing with the downturn in the overall economy. In terms of solar demand for local solar rail remains steady. This is the main of imports primarily because it's typically very simple systems with only a small number of extrusions to make the solar required to make up the rails and the solar panel sit on, and we do have a small share of that market, and we are looking to grow it, but it's tough against import competition in that particular segment of the market. And we have the solar rail distributors importing directly. The one bright spot on the horizon, albeit it's going to be a few years away is the Government Solar Sunshot initiative. So under The Future Made in Australia program, the government has announced significant support and funding for the development of local solar panel manufacturing. And Capral has just announced a supply partnership in conjunction with Tindo Solar, who are the only local producer of solar panel at the moment. We're looking to build a mega factory over the next couple of years, we're looking to be there, partnership supply and that, albeit let's say, a few years away. In terms of industrial construction, the infrastructure investment remains steady. The trading sector continues to grow as there is more demand for aluminum, facades and sun-shading systems, which are certainly have grown in popularity as the buyer code has become more pronounced and more stringent in the Australian environment. Manufacturing and general fabrication markets have remained solid and held up in our market share gains against imports to our direct customers have held up very, very well. In terms of the reseller market, this is where we have seen some volume return to imports, as the supply chains have normalized. And as we've announced previously, we have been looking to expand Capral's footprint through acquisition and in the last 6 months, we've announced 2 small acquisitions, 1 in Victoria and 1 in Queensland. So you can see there that chart on the bottom right-hand side is an index of Capral's industrial volumes from 2012, from 2012, you can see that the last 10 years, our growth in our industrial business over that period as we're really focused on gaining market share against imports in this channel and also increasing our distribution footprint to support our customer base. So now we'll turn to some examples of recent projects in the industrial area and we'll have a short video to show at the end of this, which I think you'll find very interesting. So first of all, on the left-hand side here, Borcat Trailers is one of the largest trailer manufacturers in New South Wales based on Wetherill Park. We're a primary supplier of both aluminum extrusion and plate to Borcat. In the middle here, picture depicts a marina development that was built by Ciltech. So all the marina pontoons and pathways, you can see on that picture are aluminum and supplied by us to Ciltech in Western Australia. And on the right-hand side is a ferry build by Incat in Tasmania. And we're just going to show a shortened video in a minute. Before we do that, I just want to explain what we do with what we call our Crafted with Capral videos. So about 18 months ago, we decided we will develop in conjunction with our customers to showcase some key projects, Capral's supplier relationship with those customers and showcase the products and the products that they're building. So this helps us develop a much closer relationship with these customers. It provides them with some pretty classy marking material like a news in their own right, and it also allows us to show our customers what and where Capral products can be used. So I think we'll run straight into that video. It's been condensed down to, I think, a relatively short time this original video last for 4 or 5 minutes, but this is a bit of a condensed version of the one for Incat. [Presentation]

Okay. Well, I hope the audio on that is coming through reasonably well. I think we may have some transmission problems. But hopefully if you were able to see that video you an understanding of why we're developing these Crafted with Capral videos. So I'll now hand over to Tertius Campbell, who will run through the half year financial results. And can we just turn to the next page, please.

Thank you, Tony, and good morning to everyone. Amidst inflationary pressures and low volume, capital has produced yet another good performance. Our fully integrated value chain continues to reap the benefits of our reasonable volumes, good asset utilization, tight cost control and prudent capital expenditure practices. In summary, the key financial highlights for the first half of '24 encompasses healthy earnings, in line with our expectations, strong balance sheet and a very excellent cash position. So if we move to Page 14 of the presentation. In terms of the metal cost, you'll remember that during 2022, our total metal cost, which is metal prices, the LME plus the premiums we pay on it rose to record highs, placing enormous pressure on our working capital requirements. Over the past 18 months, the LME has moderated somewhat, but it has not get back to the pre-war in Ukraine levels or pre-COVID levels. So the alumina spiked yet again by 15% at the end of Q2 this year, but since have come down again. This increase hasn't really impacted on our working capital. Just turning to the P&L on Page 15. Capral's earnings for the first half were in line with our expectations. The underlying EBITDA amounted to AUD 28.7 million, which is only 3% or slightly lower than the previous year after taking into account the AUD 2 million claims provision that was released in the prior period, the non-recurring benefit that we've received in last year. The lower volume contributed to a 5% decline in revenue whilst the 6% lower sales volume had a AUD 1.1 million adverse effect on earnings, it was offset by solid margins and a favorable product mix. The AUD 2.5 million impact of inflation on non-metal cost impacted earnings. Nonetheless, some cost-saving initiatives and efficiency projects provided a measure of mitigation. Underlying EBIT at AUD 16.9 million was down on last year, predominantly driven by the volume, inflation and the prior year one-off benefit, as I mentioned earlier. No additional deferred tax asset was recognized at this stage. Net profit after tax of AUD 14.7 million lagged the previous year, primarily attributable to the items above, but partly offset by a AUD 1 million lower operating finance costs. Our earnings per share at AUD 0.83 is 11% lower than first half '23, but was positively impacted by the lower weighted number of shares on issue due to the share buyback scheme. If you look at Page 16, balance sheet. Capral's financial position remains really strong, with a net cash position just short of AUD 68 million at balance date, noting that no working capital loans were utilized during this half. The cash position allows Capral to continue the share buyback announced in February this year and also progress our CapEx program and potential future acquisitions. Our debtors days outstanding at 43 days is a very good result. Normal midyear higher stock levels and higher metal prices increased the inventory value. The average monthly working capital requirements fell by approximately AUD 20 million compared to the first half '23, and a further AUD 3 million since the second half of '23. Some further reduction is anticipated over the next 6 to 12 months, obviously contingent upon sales levels and the aluminum input costs. Capral has distributed all its franking credits or the remainder of its franking credits during the first half as part of the FY '23 final dividend. Additionally, there are still AUD 95 million in net accumulated tax losses eligible for recognition as a deferred tax asset in future periods. Next page is cash flow. Our cash generation remains strong, assisted by further release in working capital, especially driven by strong debtor collection and some timing of payments. This contributed to a free operating cash flow of AUD 17 million after outflows for the planned expenditure program as well as the acquisition of ATC in this half. An additional AUD 9 million was returned to shareholders through dividends and buybacks during the half. No unfranked interim dividend will be paid. However, the declaration of any final unfranked dividend will be evaluated by the Board at year-end, taking into account the return of capital through the buyback program. You can just look at Page 18, which is the Capral's return page. This graph shows the progress Capral has made in regards to cash return to shareholders over the last few years. Total cash return relating to first half '24 through on-market buybacks were equivalent of around AUD 0.182 per share. Since the start of the buyback in second half of '23, 704,000 shares or about 4% of the total issues have been bought back and canceled. The buyback of up to 10% of shares, as announced, will continue during the second half, recommencing next Monday, September 2. And Tony, that's the only comment I want to make on this. So I'll return back to you.

Okay. Thanks, Tertius. As you can see, the company's balance sheet is exceptionally strong with a significant positive cash balance, and we will talk a little bit about that when we get to the end of the outlook section. Okay. So in terms of strategy and outlook, we just turn to the next slide, please. We will continue to focus on increasing the return on invested capital, improving our competitive position and growing our presence in aluminum distribution. So we turn to the overall strategy of the business, and I won't go through this in detail. Most of you would have seen it before. But basically, what we do when we develop our strategic plans as we understand and build upon what our strengths are in the market range, our footprint, both in terms of manufacturing and distribution and our product development teams that we have within the business. We continually try to be better. One of our key values in capital is better every day, and that's about optimizing what we do with risk manufacturing, supply chain or investing in new technology and then looking to build upon that to grow for the future and leveraging our core capabilities into new opportunities. Okay. So let's go into a little bit more detail in the specific areas of the business on the next page. So first of all, manufacturing will continue process improvement programs that we have throughout our 6 manufacturing operations. We will spend maintenance capital to ensure the ongoing reliability and efficiency of our plants. We're currently progressively upgrading our shop floor control systems and by the end of this year. 4 out of our 6 plants will be upgraded to their systems to a common platform. We're also undertaking a big project to bring our Penrith plant back up to new standard. First stage of that was completed a bit over a year ago. And over the next 2 years, it sets Stage 2 and Stage 3 of the Penrith extrusion plant upgrade will be completed. In terms of aluminum distribution, we've had a big focus on growing our window and door, which we call building systems part of our business. This is a supply of capital systems to the small to medium side to window fabricators in the market. We've recently released new window and door range to market residential one and upgraded our system software. A new paintline is now operational in our New South Wales site. First time we've had a paintline in this part of Australia, and that's operating very well and enable us to grow our share into that sector. We continue to look to grow Capral's direct distribution channel, both organically and through acquisition. Over the last few years, we've made 4 acquisitions in this area of the small trade center business, and we'll continue to look for further growth by acquisition into the future where it makes sense. In terms of sales and marketing, we continually invest in technology to improve our sales effectiveness and service with customer interfaces and digital marketing and also embarking on how we can use AI within the business to assist both our staff training and access to technical data and also to give better information to our customers on a quicker basis. We've recently upgraded our website and our e-store, and that's been very successful. We continue the Crafted with Capral series and one of which you've just seen. And we've also developed what we call Capral Can Do videos, which showcase our extensive operational capabilities and our value-add capabilities. Just turning to the next slide. Looking at some market other market opportunities, specifically and touching on anti-dumping. So lower carbon, Capral is the only ASI-certified supplier of lower carbon aluminum to the market. We have undertaken a significant auditing process and certification to achieve that. And we now have an offer of both of LocAl Green and of LocAl Super Green to our customers, and we're looking to enhance and grow those sales into the market. The focus is on both the architectural, architectural homes in the architectural market, plus also the industrial markets and influencing the specification of lower carbon material when we're talking to architecture specifiers. In terms of solar, we've spoken about the solar rail market is a big market, over AUD 60 million worth of solar rail in Australia. Difficult to grow share against imports in this area. We do have some really not really good customers, but we typically have a modest share of their business because they're able to import at pretty low prices in this area despite the fact we have anti-dumping programs in place. Capitalize on the government funding programs for the solar Sunshot program, which is looking to develop solar panel manufacturing capability, and we're working very closely with the key players in that market. And as I said earlier, have recently signed a partnership with Tindo Solar in this regard, albeit the volumes won't start to come on stream for some time. Continue to work with cladding system suppliers to address the new fire standards and recladding opportunities, which has been a growing market for us. And just quickly talking about imports and anti-dumping. Retaining market share gains is a priority, and we've been very successful at doing that in our end customer markets. We continue to fight for fair trade. We're still very active in this area. We have measures in place currently against China and Malaysia and Vietnam. We are not the only country in the world, I mean almost U.S., Europe and even Canada as of last week and some countries in South America have announced and already have in place dumping measures against imports on aluminum extrusion particularly out of China. Our measures on Chinese imports come up for a review in late 2025, and we've begun the process to apply for the continuation of those measures. And last but not least, aluminum has been added to the Government Strategic Minerals list, which will give us some advantage going forward, particularly around carbon emission reduction, not so much for Capral as an extruder, but certainly for our upstream suppliers of smelter suppliers. So now turning to our ESG framework. I won't go through all the details here. We typically go through this in quite a bit more detail in our sustainability report, but just hitting the high points. This year, our integrated management system has been enhanced to align with the upcoming IFRS reporting standards. We're capturing all the data we need to be in a good position to comply with the new standards and also data capture for environmental product declarations or EPDs as they're known in the market. We've expanded our learning hub for our staff and to develop and enhance our employee skills and we've also enhanced the tracking of third-party freight to measure Scope 3 emissions more widely. So our vision in terms of waste management is to become a zero waste company. And our target is to reduce Capral's waste by 10% by 2030, and we're well on track to achieve that. So our overall commitment to sustainability, a big focus on increasing the circularity of aluminium and sourcing of lower carbon aluminum. We're looking to introduce some recycled content into our billet. We are working with the local spelters to develop and increase the level of aluminum recycled in this country, and we will be a recipient of that billet when it comes to us. Our target is net 0 by 2050, as we've already announced a couple of years ago with a 20% reduction by 2030, maintaining our ASI certification. And as I said, we're well placed for the IFRS reporting standards when they come into play in 2025. So now turning to the outlook. This is the final slide for us. We've left our earnings guidance unchanged for the year. We are starting to see the market softened, but we're still confident at this stage of our guidance for the full year with our underlying EBITDA between AUD 50 million and AUD 54 million, with net profit after tax between AUD 23 million and AUD 27 million. The industrial and commercial markets are expected to remain firm. Residential building commencements are forecast to remain soft for the remainder of 2024 and start recovering in 2025. So that part of the business will continue to be soft. LME, as we know, is highly volatile and subject to a number of global factors, but we do expect it to moderate in the second half of 2024 from the 15% peak we did see in the second quarter of this calendar year, so particularly over May and June. Inflationary cost pressures continue to impact, especially employees, wage demand, energy, continuing battle on that front, and packaging and freight costs will be [indiscernible] to moderate a little. Working capital are expected to remain close to current levels for the balance of this year, subject to, obviously, with the acquisition of the Capral Aluminum business, there was a slight lift in inventory as a result of the acquisition, which we announced last month. And on this basis, Capral we'll be in a position to continue the return to shareholders, firstly, in the form of the on-market share buyback program, which we currently are running. As you pointed out now, as you've seen through our balance sheet, we've got over AUD 60 million worth of cash, net cash position, albeit that is end of month. And we certainly are in a position to continue the share buyback through to the end of the year. And depending on where we get to later in the year, we'll decide whether we need to top that up, return of capital or return to shareholders with an unfranked dividend as may be required. So we'll be driving that share buyback program for the balance of the year. And hopefully, we'll see a lift in the buybacks as we are targeting them to be. All right. So that's the end of the presentation. I think we'll now hand over to see whether there's any questions.

Thank you. [Operator Instructions] Your first question is a phone question from Andrew Johnston from MST Financial.

I'll come back to the gross profit per tonne number. But first on volumes, you mentioned most of that was resi, but you also indicated that you lost -- there were some volume had gone to imports from product that normally that you would sell to the resellers. Did that have much impact on your overall volume? And secondly, can I assume that, that's a lower value product that you've lost to those imports?

Yes, Andrew. As you know, we supply a number of other aluminum distribution businesses, our resellers. There are quite a number in Australia. And we are a secondary supplier to those customers. Post-COVID and the years following COVID, when supply chains were dislocated, we saw a significant increase in demand from other aluminum resellers, which we were able to supply given our capacity at the time to a reasonable degree. We'll be with our focus on our direct end customers as a priority. Now that supply chains have normalized, we have seen those resellers return a portion of their business back to import in order to get better prices. And clearly, for us, that is our lowest margin part of our business, which is why our -- quite rightly say that we recognize that our average gross margin per tonne has lifted as a result of -- partially lifted as a result of more favorable sales mix.

Okay. And that's a good segue into the second question around gross products per tonne. That's up 25% since 2021 on my calculations. And you've already indicated part of the contribution was from perhaps losing some low-margin volume to imports. Where were the other contributors? And to what extent was your growth in your proprietary window systems contributing to that better gross margin?

The gross margin is certainly not up by 25%, Andrew, you will have to make check your numbers on there. But certainly, the gross margin per tonne did lift in the first half of the year. As I said earlier, it was where we did see some volume decline in the major residential fabricators and the other aluminum resellers. They tends to be a lower margin business. So in terms of the overall mix that was favorable leading to a higher average gross margin per tonne. Our Building Systems business and our distribution business overall tends to be at the higher end of the margins and we continue to focus and grow in that segment. And as a proportion of our total business, it continues to increase. However, the volumes in that sector were also impacted by the slowdown in the housing market, in particular. So the growth in that area was relatively modest in the first half of the year. However, we continue to focus on growing our share in what has been a bit of a softer market for building systems.

Okay. And just 1 final question around overheads. There were 2 significant moves -- there were 3 moves in overhead. First, your freight expense declined. And I think that probably declined on a per tonne basis as well, yet declined on a per tonne basis as well. Secondly, there was a large jump in other expenses from first half CY '23. And then the occupancy costs looked like they looked like they went down compared to the second half of 2023.

Okay. I don't mind Tertius help on this one. But freight costs were down because of the volume was off. Contributing to that was the fact that our plants were not running at capacity. So therefore, we're able to supply more plants on a local basis -- sorry, more regions. The plants were supplying more locally than transporting product into states. So there was a change in the freight mix to bring the freight cost down. And also as a result of the large increases in freight last year, we lifted our freight charges to our customers to help recover some of the additional freight costs we incurred last year. So those were the key factors in bringing the freight number down. In terms of the other costs, the big increase here is the fact that, that's where, I think the AUD 2 million in credit claims, last year's numbers benefited by AUD 2 million, the AUD 2 million credit reversal of that provision, which is why that increased so much. And I can't comment on the other one.

The occupancy cost, also remember Andrew that after AASB 16, the actual rent cost is not in that occupancy. So rent cost is -- so that is just overall other costs like outgoings and so on in terms of the -- so there's not really a significant movement on that number. It is just a kind of an annual small decline in some reductions. So overall, it's basically the same as last year. But the actual rent number will not be included in there.

And you commented on the impact of rents earlier on in the call.

Yes.

[Operator Instructions] Thank you. There are no further phone questions at this time. I'll now hand the conference back to your speakers to address your webcast questions.

Thanks, Ramani. So we've got a question from Peter and Sheila Duffy. Considering future demand for copper, is aluminum wire extrusion an alternatives in the future. And does Capral have any research in this area.

Well, that's a question I'm unable to answer. But too technical for me. And certainly, if aluminum was able to take over from wire in terms of the conductor of, we wouldn't be in a position to supply because we only supply extruded aluminum, so that would be drawn aluminum, which we don't manufacture, so that will be an overseas import. So no, I'm not able to comprehensively answer that question, I'm sorry.

Okay. And then there are quite a few questions with the same basic questions. I'll just consolidate that. So the answer is, with net cash of over AUD 60 million and the share buyback very low at the moment, would the Board consider paying dividends for full year or will we execute on acquisitions?

Right. Yes, quite rightly, one of the standouts for -- if we look at our results for this year apart from the earnings being where we thought they would be, is the improved cash position of the business, we have been generating cash as our working capital levels have fallen and our profits have been very solid. So that resulted in half year and probably excess cash. As we said at the full year results, our first priority will be returned via share buyback. The trading of our stock in the first half of the year was relatively low and our buyback program was relatively non-aggressive in terms of buying back shares, but we will be improving that within our acceptable market guidelines to lift the level of buyback in the second half of the year would start. I think next Monday. So we do expect providing us adequate liquidity in the stock, but the buyback rates will improve in the second half of the year. The Board would be in a position, given our cash position to add to that buyback with dividends that was required at year-end with however, we must recognize as Tertius mentioned that any dividends that we now pay will be unfranked certainly for the medium term. So that's taking into account the needs and requirements of our shareholders overall. We believe that buyback is our first priority. And if we're unable to meet the distribution ratios that we normally -- as part of our capital allocation policy, then we would look if required to unfrank dividends. However, as we have done in the last 2 years, we have made some strategic acquisitions, albeit relatively small, and we will continue to seek those out where it makes sense, as I mentioned during the presentation. So that's where we are. I think that hopefully answers that question as comprehensively as we can.

Next question is, how much are you spending on anti-dumping each year?

Okay. That's a good question. Well, I can't give you the exact number, but I'll give you an approximate number. We take the anti-dumping cases on behalf of the whole aluminum extrusion industry. Because we are the largest player, and we have the share of the market what we do have, which is a bit over 40% of the local extrusion local market, that 40%, 45% of the local extrusion market. Given our market share of that, we're able to take the cases in our own name rather than have to bring other extruders locally into those cases. But the other extruders do financially support the initiatives. The net cost of capital is around about, because I'm talking about between AUD 100,000 and AUD 200,000 a year. So it's not huge. We do have an external consultant specialist assisting us with the taking of cases and it does depend on the activity levels. And this year will be -- certainly this year and the next 12 months will be more intensive with the -- looking to continue the duties on China.

Next question is, how far are you along your 20% reduction by 2030 of Scope 1 and Scope 2 emissions?

We're on target. Our target, we have to reduce by 1.5% per annum. We provided that information at our full year results, and we were running ahead of that target as at the end of December 2023. We recalibrate on every 12 months. So update on that will be provided at our year-end results and the sustainability report, but we believe we're well on track to achieve that.

Next question is, will we still have a tax payment to the ATO for the calendar year '25 and '26? I can maybe just answer it. Yes, we will. We still have around AUD 200 million of assessed losses, which will be available for us. And it will take, as Tony mentioned earlier, it will take in the medium term should be all tax-free.

So probably current earnings rate maybe somewhere between about 5 to 8 years, something around there. Yes.

Next question is, have you considered having an annual meeting on site as PWR in Queensland does? Meetings are online.

Our annual meetings are online. We do have Investor Days, where we do invite people to visit our sites. So we do those every second year. And so any investor wanted to visit our sites and our Investor Relations company, reach out to them, but happy to put you on the invite list for one of our site visits.

Last question from Peter and Sheila Duffy is, does the company currently supply Austal?

Yes. We do supply Austal. Austal is and has been for many years and still is one of our largest industrial customers. Austal has shipyards, as you probably know, in the Philippines and Vietnam and obviously, in Perth, Fremantle. We are the primary aluminum supplier to the Austal's Fremantle site, shipyard. Yes.

I don't have more questions here? Ramani, back to you?

Thank you. There are no further phone questions at this time. I'll now hand back for closing remarks.

Okay. Well, thank you for your attendance on the call today. It's been a solid first 6 months of the year. Clearly, we're at the bottom of a housing cycle. And while we are not as reliant upon it as we once was, it still is the largest part of, it drives 40% of our volume, so it is going to impact upon our business. We're working very hard to diversify our sales and volume base. And it's going to be a pretty tough year in next 6 to 12 months, but very confident the company is well positioned to take advantage of what will be a growing market in demand for residential windows and doors and commercial windows and doors and industrial aluminium products over the next 3 to 5 years. So thank you for your attendance, and we'll look forward to doing this again in 6 months' time.