CAPRAL LIMITED — AGM Information 2004

Capral Aluminium Limited ABN 78 004 213 692 Unwin Street, Granville NSW 2142 PO Box 12, Granville NSW 2142 Tel [02] 9682 0711 Fax [02] 9682 0777

20 April 2004

CAPRAL ALUMINIUM LIMITED - ANNOUNCEMENT CHAIRMAN'S ADDRESS TO ANNUAL GENERAL MEETING

In 2003 your company made further progress towards the achievement of our goal of transforming Capral Aluminium into a truly world class, low cost manufacturer of quality aluminium extruded products. Unfortunately, as we have reported to the market in the 2003 Annual Report, the year was also marked by delays in execution of that strategy and in particular the establishment of a new state-of-the-art extrusion and finishing facility.

I am pleased to report that construction of that facility is progressing well and our Managing Director Greg L'Estrange will provide more details of this shortly in his address to this meeting.

However for the 2003 year, the delays and higher costs associated with the continuing restructuring process were reflected in the company's financial performance, resulting in a net loss after tax of \$4.3 million for the year.

As well as higher prevailing costs, revenue from operating activities of \$382.3 million, represented a 13.2% reduction on sales achieved in 2002. Overall tonnage shipped of 74,512 tonnes was 8.4% down on the previous year.

There are two main reasons for the decline in revenue and tonnage.

Firstly, the 2002 number included Capral Aluminium NZ Limited for the first 6 months. The NALCO results are now equity accounted. Secondly, the average London Metal Exchange price for Aluminium from 2002 to 2003 moved approximately \$284 per tonne, generating a notional decline in revenue of \$17.0 million. If the comparison is adjusted for these factors, revenue from operating activities was down 4.4% and tonnage was down 3.7% in 2003 compared with 2002.

While general trading conditions remained favourable during much of the year, the sales performance was adversely affected by de-stocking by major fabricator and distributor customers in the first half of the year. The appreciation of the Australian dollar during

the course of the year also had an adverse impact on the price competitiveness of the company's output.

Notwithstanding the impact on the revenue side of the business, undoubtedly the main cause of the disappointing financial performance was the prevailing high costs of production. Put simply, all production in 2003 was conducted from the company's existing higher cost facilities.

Overhead costs of \$53.5 million in 2003 continued to be far too high, representing 13% of total revenue. This is around double the mark that the company needs to achieve in order to be considered a truly low cost producer.

As Bremer Park comes on stream, we will start to see some cost benefits, although all of the benefits of the new facility, as well as other improvements that have and are still being made to our business systems and procedures, will not take full effect until 2005.

As shareholders would be aware, in order to reduce the risk of delays affecting the development of Bremer Park, the Board resolved to take a direct equity stake in Bremer Business Park (C) P/L, the company responsible for developing the land and buildings for Capral's new facility.

This investment was underwritten by a placement of 10.5 million shares at \$2.40 per share in November 2003. A total of \$25.2 million was raised. The share placement is considered an efficient and relatively low cost method of raising the required funds in a short period of time. The shares were placed with existing shareholders who are considered professional investors, able to accept the offer of shares without the need for a prospectus.

The placement enabled the company to fund its investment in Bremer Business Park (C) P/L while maintaining a strong balance sheet. The balance of funds not required for the Bremer Park investment were used to address further development opportunities in the areas of value adding, increase working capital and to repay debt.

Pursuant to ASX Listing Rule 7.1, the Board today seeks shareholder approval of the placement, as detailed in the Explanatory Memorandum accompanying the Notice of Meeting.

In 1995 the shareholders approved a Directors' Lump sum Retirement Scheme that accrued an amount equal to 30% p.a. of the directors fee up to a maximum of 3 times the annual fee. That meant that at the end of 10 years a retiring director could receive no more than 3 times their final year's fee.

Times change and so in December the Board closed that fund and returned the accrued amount to profit. In its place it was agreed that the directors would receive an increase of 30%. It is to be noted that total directors fees will still be less than the amount agreed to by the shareholders in 1999.

However, in recognition of the company's poor profitability of late the directors, at a recent Board Meeting, have agreed to forego any increase until the company returns to profitability. Dr Weiss took the opportunity to say he would forego any fees from January 2004 until profitability had returned.

As you know Capral has only paid 4 cents per share since the last AGM and the reduced amount is in recognition of the company's financial performance. However, the directors believed its shareholders support needed to be rewarded and the company's strong Balance Sheet and cash flow allowed for it.

I would like to thank shareholders for your continuing commitment to the company and your patient support of the Board and management as we put in place the changes needed to fully realise the great potential of this company.

I would also like to thank the employees of the company both past and present for their hard work and understanding in what has been a tremendously difficult time.

What we have embarked on at Capral Aluminium over the last few years is nothing short of a complete re-engineering of the company. This has taken some time and unfortunately we have also encountered some frustrating delays along the way. However by consolidating our manufacturing and warehousing facilities, investing in the very latest technology and adopting more streamlined systems, processes and procedures, I am pleased to report that we are now on the way to achieving our goal.

For and on behalf of the Board.

m Makk

John Crabb Chairman

For more information please contact:

Alan Schliemann Company Secretary Telephone: (02) 9682 0693 Mobile: 0404 818 317

Grea L'Estrange Managing Director Telephone: (02) 9682 0655 Mobile: 0404 818 000