ACN 010 441 666
MAGONTEC LIMITED
2024
Annual
Report
Bottrop
Santana
Xi’an
Production
Sales
Office
Technology
Centre
Charlotte
Rhode
Island
Global Locations and Activities
A summary of the Group’s corporate governance practices including the Corporate
Governance Statement discussing adherence to the Australian Securities Exchange’s
Fourth Edition “Corporate Governance Principles and Recommendations” can be
located at www.magontec.com under the Investor Centre section.
Authorisation:
Nicholas Andrews, Executive Chair of Magontec Limited has authorised
the release of this document to the ASX on 26 February 2025.
Contents
4
Executive Chairman’s Letter
6
Chief Financial Officer’s Report
10
Letter from the Chair of the Remuneration Committee
12
Magnesium Metals
16
Cathodic Corrosion Protection (CCP – anodes)
19
Business Risks
22
Environmental, Social and Governance (ESG)
28
Board of Directors
30
Executive Management
32
Directors’ Report
51
Lead Auditor’s Independence Declaration
52
Consolidated Statement of Profit & Loss and Other Comprehensive Income
53
Consolidated Balance Sheet
54
Consolidated Statement of Changes in Equity
55
Consolidated Cash Flow Statement
56
Notes to the Financial Statements
56
1.
Summary of Accounting Policies
61
2.
Results from Operations
64
3.
Income Taxes
66
4.
Key Management Personnel Remuneration
66
5.
Remuneration of Auditors
67
6.
Current Trade and Other Receivables
67
7.
Current Inventories
67
8.
Other Current Assets
67
9.
Non Current Trade and Other Receivables
68
10. Property Plant & Equipment
69
11.
Intangibles
69
12. Current Trade and Other Payables
70
13. Borrowings
70
14. Current Provisions
70
15. Non-Current Provisions
72
16. Share Capital
73
17. Reserves
74
18. Accumulated Losses
74
19. Earnings/(Loss) Per Share
74
20. Contingent Assets and Liabilities
75
21. Capital and Leasing Commitments
76
22. Controlled Entities
77
23. Segment Information
79
24. Related Party Disclosures
80
25. Financial Instruments
85
26. Parent Entity Information Magontec Limited
87
27. Subsequent Events
87
Consolidated Entity Disclosure Statement
88
Directors’ Declaration
89
Independent Auditor’s Report to the Members of Magontec Limited
92
Shareholder Information
Sydney
Melbourne
Headquarters
1
Magontec Limited
Annual Report 2024
Company
Water storage
& Management
Magnesium & Metals
Corrosion & Rust
Input
Sourcing of primary alloys
Participation in projects
to promote green
magnesium
Material
Purchase of primary alloys
Recycling scrap
Experience
Knowledge about
magnesium, alloys and
metals
Knowledge of water, wa-
ter treatment and analysis
Knowledge about
preventing corrosion
Re- and Upcycling
Deep
knowledge
and 70+ years
of experience
are the core
foundation of
our businesses.
Deep
knowledge
and 70+ years
of experience
are the core
foundation of
our businesses.
2
Magontec Limited
Annual Report 2024
Output
Primary magnesium
alloys
Recycled magnesium
alloys
Magnesium
Secondary raw
materials and
by-products
Magnesium and
titanium anodes to
prevent corrosion
in hot water tanks
Electronic products
to prevent corrosion
in hot water tanks
CCP services
& products
Project consulting
for companies,
organisations and
institutions in the
areas of metals,
magnesium, water
and corrosion
Product consulting
for companies,
organisations and
institutions in the
areas of metals,
magnesium, water
and corrosion
Knowledge
Input
Customers
Automotive
Aerospace
Power tools
Die casting
Defense
Steel industry
Magnesium business
HVAC & Plumbing
Industry
HVAC & Plumbing
Wholesale
Handyman
CCP business
Companies
Organisations
Institutions
Consulting services
3
Magontec Limited
Annual Report 2024
Executive Chairman’s Letter
In 2024 earnings
tracked below
expectations as
prices for magnesium
products fell steadily
while energy prices rose
through the year. Our
balance sheet, however,
remains strong with net
cash of $5.5 million as
of 31 December 2024.
Magontec’s businesses have a high
reliance on European economic
activity. Over the last two years GDP
growth across the EU of 0.4% and
0.7% has delivered reduced levels
of consumer demand, particularly
in the more advanced and larger
economies. In Germany growth has
been negative in each of the last
two years (2023 and 2024) while
in France and Italy the rate of GDP
growth slowed in 2024, turning
negative in France in the final
Over the last
three years
Magontec has
experienced the
highs and lows
of magnesium
markets.
quarter of the year. In the Chinese
housing sector, where Magontec
has a substantial exposure through
its supply of magnesium anodes to
hot water appliance manufacturers,
new home building activity fell 23%
in 2024 and is now down 65% from
its peak in 2019.
In addition to these challenging
market conditions, one-off legal
and administrative costs as well
as non-cash write-offs and staff
retrenchment costs associated with
a business closure, have all added
to a difficult year that delivered a
headline EBITDA loss of $2.7 million
from Continuing Businesses. Line-
item contributions to Magontec’s
profit and loss through 2024 are set
out in the CFO’s report
Operating cash generation in the
year was negative $0.99 million.
This included a significant tax paid
amount of $5.9 million mostly
related to prior year earnings
and positive contributions from
lower receivables and inventory
of $8.4 million.
The 12 months to 31 December
2024 was a disappointing and
difficult year by any measure.
Most impactful was the loss of our
key project after over a decade
of diligent effort by our Chinese
and Australian executives. In July
our magnesium alloy cast house
project in Qinghai came to a halt
as our partners, a Chinese state-
owned enterprise (SOE), abruptly
cancelled the project agreements.
As the junior partner, Magontec had
little option other than to seek an
exit on the best terms possible.
When this project was established
in 2014, part of the original
cooperation agreement included
a 30% shareholding (reduced to
28.5% over the intervening period)
to be held by the SOE in Magontec
Limited. Under an agreement struck
in November, those shares were
bought back by Magontec for nil
cash consideration and cancelled
on 5 February 2025. This gave
all the remaining shareholders of
Magontec a 40% uplift in ownership
of the Group.
Nicholas
Andrews
4
Magontec Limited
Annual Report 2024
In this first half of 2025, senior
management and the Board will
review all strategic alternatives and
update shareholders at the May
Annual General Meeting.
As usual I would like to take the
opportunity to thank my fellow
Board members for their efforts in
2024. The Board played an essential
role in providing advice and counsel
in the many difficult discussions and
decisions that were made as our
partnership in Qinghai foundered.
We are fortunate to have a group of
Directors with germane experience
in the law, in business, in our
industry and in China.
As part of the re-structuring that
has already taken place we have
reduced staff numbers, particularly
in China, over the last few months.
This was an unsettling time for all
staff, and I am pleased to report that
the Group has emerged from this
process without a loss of focus.
In past years the Magontec
team and its collection of assets
have returned higher margins
and profitability. In 2024 the
ebb of economic activity and an
unexpected major event have
undermined profitability. In 2025
your management and Board will
work to stabilise the overall business
and effectively leverage Magontec’s
portfolio of high-quality assets.
Following the share buyback and
cancellation, NTA per share for
remaining Magontec shareholders
rises from $0.58 to $0.81 per share
based on the financial position as at
31 December 2024.
The agreements between
Magontec and the Chinese SOE
provided for a different settlement
process, but considering all options,
including pursuing the SOE through
the Chinese courts under the terms
of the agreements, the Board came
to the decision that an agreement
to cancel the SOE’s shares and
withdraw from any further claims
against the SOE was the best course
of action. Advisers to Magontec
provided an in-depth analysis of
this transaction in an Independent
Expert’s Report that accompanied
the Notice of Extraordinary
General Meeting and declared the
transaction as fair and reasonable.
It remains the case that China is the
centre of the magnesium world. For
Magontec to operate in this industry
it must engage with Chinese
magnesium producers. Since the
middle of 2024 we have been
engaged in building relationships
with qualified partners and seeking
to establish alternative primary
magnesium alloy supply lines that
will replicate the business structure
that we anticipated with the Qinghai
project.
Magontec continues to make world
leading magnesium products
including anodes and alloys.
There is a detailed description of
our products and processes in
this report. Our magnesium alloy
recycling facilities in Germany and
Romania are class leading assets
both in terms of operating efficiency
and environmental footprint.
Executive Chairman’s Letter (continued)
Our magnesium and electronic
anodes are also leading suppliers to
hot water appliance manufacturers
all over the world. Our challenge
in 2024 has been to sustain
margins in a falling price, lower
volume and higher energy cost
environment. The benchmark
Chinese magnesium price fell 21%
through the year playing a key role
in reducing margins. Combined
with weak consumer demand, low
levels of new home building and
renovation as well as continuing low
levels of automotive sales in many
markets, Magontec’s two main
products, anodes and magnesium
alloys, struggled to make headway.
In other products there was
progress in growing customers and
volumes. Magontec’s specialist
metals business, based at Bottrop in
Germany, enjoyed a more buoyant
year and we commenced sales of
non-class one materials to other
magnesium industry participants
that we expect to grow in 2025.
Pivoting Magontec from a focus on
its Qinghai magnesium alloy cast
house requires the development
of a new strategy and new
relationships. Our firm view is that
the magnesium industry continues
to have many growth opportunities.
As a leading business within the
global magnesium alloy sector,
Magontec can revitalise its alloy
business and develop through
2025 a more profitable short-term
strategy and a longer-term vision.
There are several magnesium
companies both inside and outside
of China, that have approached
Magontec to take on collaboration
roles in new projects and in activities
where we have demonstrated
capabilities.
Net Tangible Assets (NTA) = Net Assets excluding Intangible Assets and Rights of Use Lease Assets
Nicholas Andrews
Executive Chairman
5
Magontec Limited
Annual Report 2024
Financial Overview
Key financial overview
12 months to
31 Dec 2024
$’000
12 months to
31 Dec 2023
$’000
Net tangible assets and dividends
Net tangible assets per share (cents) post QSLM share cancellation
81
95
Net tangible assets per share (cents)
58
68
Dividend per share (cents, unfranked)
–
1.2
Borrowings
Net debt/(net cash)
(5,486)
(8,717)
Net debt to net debt + equity (%)
(12.3%)
(18.2%)
Earnings and cashflow
Gross Profit
10,762
19,224
Gross Margin (%)
14.9%
18.8%
Reported EBITDA (continuing operations)
(2,740)
3,854
Underlying NPAT* (continuing operations)
(5,098)
958
Reported Operating Cashflow
(996)
11,396
Underlying Operating Cashflow**
(2,185)
6,145
Chief Financial Officer’s Report
*
Underlying NPAT = Reported NPAT excluding unrealised FX
**
Underlying Operating Cashflow = Operating Cashflow excluding working capital movements, interest and tax paid
Net Tangible Assets (NTA) = Net Assets excluding Intangible Assets and Rights of Use Lease Assets
Derryn
Chin
Net tangible assets
as at 31 December
2024 of $46.2
million represented
81 cents per share
after adjusting for
the cancellation of
the QSLM holding.
6
Magontec Limited
Annual Report 2024
Earnings and cashflow
Reconciliation of significant items in earnings
12 months to
31 Dec 2024
A$’000
12 months to
31 Dec 2023
A$’000
Reported Net Profit After Tax
(9,517)
466
Add back unrealised FX losses
89
1,280
Net Profit After Tax excluding unrealised FX (underlying NPAT*)
(9,428)
1,746
Add back tax expense
179
1,519
Net Profit Before Tax excluding unrealised FX
(9,249)
3,265
Significant Items Before Tax
Add back non-cash equity (expense)/writeback
673
555
Add PRC Metals depreciation (non cash)
454
918
Less PRC Metals EBITDA contribution (discontinued) excluding staff redundancies
and impairment charge
(308)
(1,615)
Add PRC Metals impairment loss
3,482
–
Add PRC Personnel closure costs
429
–
Add QSLM legal costs
248
–
Subtotal - Significant Items Before Tax
4,978
(142)
Net Profit Before Tax, unrealised FX and significant items
(4,271)
3,123
*
Underlying NPAT = Reported NPAT excluding unrealised FX
Highlights
Balance sheet and capital
management
–
The balance sheet remains
in a net cash position of
$5.5m as at 31 December
2024 (31 December 2023:
$8.7m) This comprised cash
of $7.8m less borrowings of
$2.3m on the balance sheet.
Trading
–
Underlying earnings in
2024 for both Anodes and
Metals was down on the prior
corresponding period as
both segments faced weak
trading conditions.
Net tangible assets per share and impact
of QSLM selective share buyback
–
Following an Extraordinary General
Meeting on 5 February 2025, the
QSLM shareholding in Magontec
totalling 22.7 million shares was bought
back and cancelled in accordance
with the Memorandum of Settlement
announced to the ASX.
–
This reduced Magontec’s total shares
on issue by 28.48%.
–
Net tangible assets as at 31 December
2024 of $46.2 million represented
81 cents per share after adjusting for
the cancellation of the QSLM holding.
Chief Financial Officer’s Report (continued)
7
Magontec Limited
Annual Report 2024
Chief Financial Officer’s Report (continued)
Balance Sheet
Summary (A$000)
31 Dec 2024
31 Dec 2023
% chg
Net cash/(net debt)
5,486
8,717
(37.1%)
Working capital
36,978
42,630
(13.3%)
Pension liability
(10,311)
(10,048)
2.6%
Fixed and intangible assets
17,208
20,763
(17.1%)
Income tax liability
–
(5,448)
(100%)
Other net assets
635
34
nmf
Net assets
49,996
56,647
(11.8%)
$56.6 m
$50.0 m
+$5.4m
+$0.8m
($5.7 m)
($3.6m)
($3.2m)
($0.3m)
31 Dec 23
Working
capital
Net cash/
(net debt)
Pension
liability
Other net
assets
Income tax
liability
Fixed and
intangible
assets
31 Dec 24
Magontec Limited Net Asset Bridge Analysis
12 months to 31 December 2024
–
The Net Result Before Tax was
a loss of $4.3 million excluding
unrealised FX and the significant
items in the table above for
the year to 31 December 2024
(31 December 2023: $3.1 million).
Underlying trading in both
Anodes and Metals was down on
the prior corresponding period.
–
During the year to 31 December
2024 significant items of
$5.0 million included $4.6
million of non-cash charges.
These included the PRC
Metals segment impairment
of $3.5 million in addition to
depreciation of $0.5 million
following the closure of the
Magontec Qinghai Mg Alloy
facility. There were also
additional non-cash expenses
related to the LTI scheme.
–
Operating cashflow for the year
to 31 December 2024 was a
cash outflow of $0.99 million,
with working capital inflows,
mostly from the closure of the
PRC Metals segment offset by
lower cashflow from earnings.
There was also a large income
tax payment in Germany that
related to historical profits.
This had been accrued in the
accounts through the prior
period.
Balance Sheet and
Working Capital
During the 12 months to
31 December 2024, net assets
decreased to $50.0 million.
Significant items included $5.7
million related to the reduction in
working capital and $3.6 million
related to the reduction in fixed
and intangible assets offset partly
by the reduced income tax liability.
Gross Profit (A$m) by Segment and GP margin (%)
0
10
20
30
40
50
2017
2018
2019
2020
2021
2023
2024
2022
0
5
10
15
20
25
71%
47%
78%
80%
60%
57%
60%
67%
29%
53%
22%
20%
40%
43%
40%
33%
10.0
11.0
10.0
13.0
24.0
17.0
19.0
14.9
Gross Margin
Metal Anodes Gross profit margin (%)
8
Magontec Limited
Annual Report 2024
Chief Financial Officer’s Report (continued)
Working capital
Working capital (as shown in
the table) fell to $37 million as at
31 December 2024. The closure of
the PRC Metals Business was the
major cause of this decline.
The inventory balance remains
relatively high due to elevated
stock levels in our European
business (which makes up most
of the inventory) as weak demand
persisted through to year end.
Having said that, the cash and
banking position is sufficient to
support this inventory level.
Banking
The weighted average interest
rate as at 31 December 2024
for the group increased to 5.4%
(31 December 2023: 4.4%). A key
factor impacting this calculation
is that the relatively low cost
Magontec Xi’an bank facility from
Zheshang Bank was completely
undrawn at 31 December 2024
due to the lower working capital
requirement in China.
In Germany, the Borrowing Base
Facility from Commerzbank remains
in place until 30 November 2026 to
the extent of EUR 10 million (total
limit). The Romanian (Unicredit) and
Xi’an (Zheshang) bank facilities are
available on 12-month terms.
It is anticipated the Magontec
Romania Unicredit Facility will be
extended for a further 12 months
in early March 2025 on the basis of
our prior working relationship with
the bank and positive discussions
to date. Similarly, our expectation
is that the Magontec Xi’an will also
be renewed in 2025.
Working Capital
Summary (A$000)
31 Dec 2024
31 Dec 2023
% chg
Trade and other receivables
12,635
16,043
(21.2%)
Prepayments
1,474
532
176.9%
Inventory
29,270
32,805
(10.8%)
Trade and other payables
(6,402)
(6,751)
(5.2%)
Net assets
36,978
42,630
(13.3%)
Commerzbank
Borrowing Base
Commerzbank Term Loan
Unicredit Romania Borrowing Base
Zheshang Bank Facility
Total weighted average
4.26%
3.91%
7.10%
2.35%
5.40%
5.49%
5.14%
7.34%
3.00%
4.38%
Bank Borrowing Interest Rate Profile
(%)
31 Dec 2023 31 Dec 2024
Bank Borrowings Maturity Profile (Years)
0.0
0.5
1.0
1.5
2.0
Commerzbank
Borrowing
Base
Commerzbank
Factoring
Unicredit
Romania
Borrowing Base
Zheshang
Bank Facility
Total
weighted
Average
0.6
0.2
0.2
1.9
0.7
9
Magontec Limited
Annual Report 2024
Robert
Kaye, SC
On behalf of
the Magontec
Limited Board
of Directors, I
am pleased to
present the 2024
Remuneration
Report.
Dear Shareholders,
On behalf of the Magontec Limited
Board of Directors, I am pleased to
present the 2024 Remuneration
Report.
2024 Group Performance
The 2024 year was extremely
challenging. Global geopolitical
disruption, the continued
transition to lower green house
gas emissions and the termination
of the agreements with QSLM
which resulted in the closure of our
Qinghai operations all significantly
impacted our financial targets and
performance for the year. Despite
these distractions, the management
team rose to these challenges
and focused on managing and
mitigating the impact of these
events.
Importantly, the Group was able
to complete the selective share
buyback of the 28.5% of MGL
shares on issue previously held by
QSLM for zero cash consideration
as part of the settlement detailed
in the 2025 EGM post balance
date. This gave rise to a 40% rise
in net tangible assets per share
for all remaining shareholders, a
significant achievement especially
given the difficult circumstances.
Our governance approach
The Remuneration & Nominations
Committee (REM) was unchanged
from 2023. It comprises of 3
Independent Directors and is
Chaired by me as Lead Independent
Director.
2024 AGM
At the 2024 AGM, the
Remuneration Report resolution
was passed with 98.62% of the votes
received in favour of adopting the
remuneration report. In addition,
the adoption of the new Magontec
Long Term Incentive Plan (LTIP) was
passed with 98.3% of votes received
voting in favour of the new plan.
Letter from the Chair of the Remuneration
& Nominations Committee
Remuneration and
Incentives approved by
the Board for the year
were:
CY24 Executive reward
outcomes: Fixed
During 2024, continuing from
CY23, no fixed increases in
remuneration were provided to the
KMP. In 2024 the Group started to
transition towards a remuneration
mix which is more weighted
towards variable pay.
CY24 Executive reward
outcomes: STI
The 2024 short-term incentive was
based on the new Remuneration
Policy implemented at the
beginning of 2024. The Short-Term
Incentive was calculated according
to a formula which measures the
extent of performance between
actual financial performance
compared with budget and certain
KPIs. Whilst no STI payment was
made for financial performance,
it was pleasing to see that the
management team remained
focussed on adding business
value through achievement of
their personal KPIs.
10
Magontec Limited
Annual Report 2024
Letter from the Chair of the Remuneration Committee (continued)
CY24 Executive reward
outcomes: LTI
Performance Rights issued in
January 2022 for the 3-year period
to 31 December 2024 failed to
reach their share vesting hurdle,
and subsequently 3,125,212
Performance rights were cancelled.
The Board authorised the issue
of 3,742,227 performance rights
(PRs) during 2024. This covered
the period 1 January 2024 to
31 December 2026. These
performance rights were granted
prior to the 2024 AGM approval
of the new Magontec LTI Plan and
were issued in accordance with
the previous Magontec Global
Incentive Plan.
LTIs remain integral to attracting
and retaining high calibre
employees and KMP to support
Magontec’s efforts in leading the
magnesium industry.
As of 31 December 2024,
6,763,269 PRs were on issue to
the Global Management Group.
Details of the LTI Performance
Rights on issue are contained in
the Remuneration Report.
Non-executive director fees
The Board reviewed the fees
payable to the non-executive
directors having regard to
benchmark data, market position
and relative fees. Following
consideration, no changes were
made to the main Board fee or any
of the Board committee fees for
the 2024 financial year.
In Summary
The events of 2024, particularly
the termination of the Group’s
operating agreements with
QSLM and subsequent actions by
Management have laid a clearer
pathway for 2025.
This will allow Management to focus
on developing a new strategy and
transitioning the business to deliver
on these new objectives.
The Group’s remuneration
framework is structured to ensure
the team are retained and remain
motivated during this transition
period.
I would like to take this opportunity
to thank shareholders for their
ongoing support.
Robert Kaye SC
Lead Independent Director
Chair - Remuneration
& Nominations Committee
11
Magontec Limited
Annual Report 2024
For Magontec as a magnesium alloy
manufacturer and recycler servicing
the European and North American
automotive industries, there were
additional hurdles.
While the automotive industry has
fared relatively well inside China,
with sharply rising EV sales, demand
for magnesium alloy applications
among automotive OEMs and
Tier 1s in other regions has been
less robust. Metals Chart 1 shows
both the steep decline in Mg
prices through 2022 and 2023 that
continued through 2024, and the
slow deflation in export volumes
from China.
Managing the magnesium metal
supply chain through 2024 in a
declining price environment, where
all material comes from China
at several weeks delay, has been
particularly challenging. Over the
past three years the magnesium
price has fallen 40% and Mg
alloy export volumes from China,
which supplies close to 96% of
traded magnesium products, has
dropped by 31%.
Magontec’s metals businesses
in Asia and Europe had varying
fortunes in 2024. Specialist
metals saw further growth
in volumes and profitability
while other magnesium
product categories were
more challenging.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
¥0
¥5,000
¥10,000
¥15,000
¥20,000
¥25,000
¥30,000
¥35,000
¥40,000
¥45,000
¥50,000
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
Nov-23
Jan-24
Mar-24
May-24
Jul-24
Sep-24
Nov-24
Export Volumes (tonnes)
Mg Price (RMB)
Metals Chart 1: Monthly PRC Mg Alloy. Exports and Monthly
Average Pure Mg Price (1 January 2022 – 31 December 2024)
Magnesium Metals
Mg Alloy Exports, mt (RHS)
PRC average monthly pure Mg price (LHS)
12
Magontec Limited
Annual Report 2024
It is difficult to assert that the
magnesium price has reached an
inflection point, or that there will
be a shake-out in producers in
China given market conditions,
particularly as prices for underlying
raw materials, such as dolomite and
ferro silicon as well as coal have
also fallen heavily. However other
important costs, particularly labour,
which remains a major input for
Pidgeon process magnesium, have
risen, and financial breakeven for
Chinese magnesium production
is estimated to be around
current levels.
While raw material prices have been
important price drivers, demand
has also played a large role. The
decline in export demand reflecting
the travails of the European and
US automotive industries as well
as generally weaker economic
growth, has also contributed to
price weakness. The expansion of
Chinese automotive exports or the
further development of Chinese
automotive manufacturing in
Europe and the US, following the
pattern of Japanese automotive
companies in the 1980s and 1990s,
are likely drivers of a recovery
in global magnesium prices
and volumes.
Global automotive sales peaked
through 2017 and 2018 when over
90 million vehicles were sold. The
only region to outperform a global
downtrend over the last 7 years
has been India where sales are
now over 5 million per annum and
growing strongly. While the growth
trajectory in India over the last
5 years has been less dramatic than
in China in the early part of this
century, it is developing momentum
as a consumer and producer
of motor vehicles.
Through 2024 Magontec produced
magnesium alloys in both China
and Europe. As we have explained
to shareholders in previous
communications, our project in
Qinghai has come to an end. This
was not an event of Magontec’s
choosing and was imposed upon
us by the owner of the Qinghai Salt
Lake magnesium project.
While we have retreated from
Qinghai and severed our trading
and equity relationship with that
project and its owner, we are in
the process of formulating a new
metals strategy that will address the
future requirements of Magontec’s
magnesium alloys business and
address the changing dynamics
of the global automotive and
magnesium industries.
-20
-15
-10
-5
0
5
10
15
20
25
30
0.0 mil
10.0 mil
20.0 mil
30.0 mil
40.0 mil
50.0 mil
60.0 mil
70.0 mil
80.0 mil
90.0 mil
100.0 mil
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024 (e)
2025 (e)
Rest of World
Asia ex-China ex-India
Europe
North America
China
India
Global Automotive Sales (2000 – 2025 (e))
Magnesium Metals (continued)
Automotive Sales Growth Rates
– China V India
China India
2017
2021
2019
2023
2018
2022
2020
2024(e)
2025(e)
13
Magontec Limited
Annual Report 2024
die casters, the most common
automotive application made from
magnesium alloy, operate their
largest facilities in Romania close to
the Magontec plant in Santana.
Magontec’s central strategy
has been to source primary
magnesium alloy material in China
for sale to European die casting
companies. We expect the scrap
that is generated by those primary
volumes (between 40% and 50%
of input material) to be recycled at
one of the two Magontec plants.
Having control of primary sales
is an important part of securing
secondary recycling business.
Without that flow over the last few
years, as we have waited on the
commencement of the Qinghai
facility, our European recycling
assets have struggled to find
sufficient scrap volumes.
In the last few months we have
begun the task of building new
relationships in China that will allow
us to replicate the primary supply
anticipated from Qinghai. We are
also examining other opportunities
in other regions that will allow us
to diversify supply and address
one of the critical issues in the
wider industry, the extraordinary
concentration of productive
capacity in just one country.
Our remaining magnesium alloy
assets are two recycling plants at
Bottrop in Germany and at Santana
in Romania. These are two of
just four major magnesium alloy
recycling facilities in Europe and
sit at either end of the European
industrial belt stretching from
northwest Germany to western
Romania. Within this region sit
most of the continent’s automotive
OEM and Tier 1 magnesium alloy
die casting manufacturers. Europe’s
three largest steering wheel
Image: Magontec Mg alloy recycling factory, Santana, Romania
Magnesium Metals (continued)
14
Magontec Limited
Annual Report 2024
Mg is 100%
recyclable
Recycling adds just 0.59 kg
CO² equivalent of Mg
Installed
capacity 24k mtpa
Europe’s largest Mg recycler Germany & Romania
An essential part of the European and North American die casting industry.
Magontec
Magnesium
scrap
Automotive
Steering wheel, Cross and seat
beam, Door frame, Front end
{
Mg alloy
recycling
process
Customer
Die cast part
manufacturer
40-70%
recycled
Power
tools
Medical
devices
Performance
industries
Air and
space travel
Defense
Future tech
Robotics,
drones, air
taxis
*German Aerospace Institute of Vehicle Concepts survey on CO2 emissions from magnesium smelters around the World
Magnesium (Mg) alloys – material of the future
Mg alloys are 36% lighter than Aluminium and 78% lighter than iron.
U N I Q U E P R O P E R T I E S
Low density
Light and strong
structural metal
S P E C I F I C A P P L I C A T I O N S
Stress
resistance
Thermal
conductivity
Corrosion
C O M P A R I S O N W I T H O T H E R M E T A L S
Aluminium
Iron
2.70g/cm³
7.87g/cm³
Mg 36% lighter
Mg 78% lighter
15
Magontec Limited
Annual Report 2024
Cathodic Corrosion Protection (CCP – anodes)
Global hot water
manufacturers had
a challenging year in
2024 with demand
levels lower in all
regions. Reduced
subsidies for heat
pump water heater
products in western
markets added to the
economic gloom.
Magontec’s magnesium and
electronic anode sales into Europe,
the Middle East, North America
and Asia were all impacted by these
trends and delivered returns below
prior years.
Magnesium anodes have also had
to contend with a sharply falling
magnesium price, down 40% over
the last three years. This reduced
margins and presented other
challenges in managing raw material
and finished goods inventory.
While falling levels of new home
construction were particularly
impactful, Magontec’s most
challenging issue in China has
been the uneven distribution of
subsidies to magnesium anode
producers. As the Chinese economy
contracts, regional authorities have
been supportive of high labour
employers, particularly in parts
of the country most affected by
a slower economy.
The home construction industry
in China continued to decline
through 2024. Measured in
millions of square metres, building
completion has fallen by another
23% in 2024 and is now down over
65% since 2019, the year of peak
Chinese housing.
This rapid decline in Chinese home
building is happening at the same
time as home prices are falling with
declines in each month since the
middle of 2022.
For the magnesium anode and hot
water appliance manufacturing
sectors, who supply products into
the Chinese home construction
industry, the underlying economics
of this sector have been poor.
Home building levels are now
back to levels last experienced in
2006. A recovery in 2025 will most
likely be driven by further PRC
government financial support for
this critical sector.
Metals
Primary and recycled
magnesium alloys
Mg alloy ingots
Generic + Specialist
Pure Mg and
other alloying
elements
Scrap
returns
Knowledge base
Magnesium
& Metals
Consulting Services
Generic + Specialist
Corrosion
& Rust
Water storage
& Management
Anodes
Magnesium and
electronic anodes
Cathodic Corrosion Protection
CCP
Electronic
components
Mg alloy and
components
16
Magontec Limited
Annual Report 2024
Magontec’s Chinese magnesium
anodes business has had a strong
share of the domestic Chinese
market over many years, but in
2024 pricing for new contracts
was extremely tight. Our Chinese
factory also supplies to other
regions in Asia and North America
where conditions have been
more stable.
European and Middle Eastern
markets for magnesium anodes,
which are supplied by Magontec’s
Romanian facility, have also
encountered slower economic
conditions. Revenues for products
sold into these regions declined
by 22% in 2024 on volumes down
15%. Revenues were impacted by
raw material price as well as volume
declines.
Overall construction industry
activity in Europe is depressed
by higher interest rates and a
slower overall economy. Our major
customers continue to report
that they have excess inventory
following the fall in building permits
in 2023.
Published data from the EU
only extends to the end of 2023,
but forecasts indicate further
weakness in 2024, which aligns with
Magontec’s experience.
Our third CCP product is the
Impressed Current Anode System
(ICAS), an electronic anode
comprising a titanium rod and
a proprietary PCB board that
intelligently manages corrosion
through the application of an
electrical pulse.
Cathodic Corrosion Protection (CCP – anodes) (continued)
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
0
200
400
600
800
1,000
1,200
1,400
2018
2019
2020
2021
2022
2023
2024
Chinese Housing Statistics
Housing Starts in China (Millions of sq Metres) LHS
Annual Percentage Change
-10.0%
-5.0%
0.0%
5.0%
10.0%
Jul-19
Dec-19
May-20
Oct-20
Mar-21
Aug-21
Jan-22
Jun-22
Nov-22
Apr-23
Sep-23
Feb-24
Jul-24
Dec-24
Chinese Newly Built House Prices
YOY Change
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
0
500
1,000
1,500
2,000
2,500
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
FY2022
FY2023
EU Building Permits 2014 -2023
EU Building Permits ($’000’s)
% Change
17
Magontec Limited
Annual Report 2024
Magontec’s ICAS product has
applications in commercial and
new technology heat pumps in hot
water appliances. A driving force
behind heat pump uptake has been
a demand for environmentally
cleaner home heating applications.
Heat pumps are low energy and
high efficiency heating devices
compared with oil and gas heaters.
The initial capital cost of a heat
pump is the major barrier to mass
market acceptance. This has been
addressed in many countries
through government subsidies
over many years (particularly in
Europe), however, over the last two
years these subsidies have been
withdrawn as governments have
halted and reviewed, or simply not
renewed, existing subsidy schemes.
Slower economies have also
presented challenges to the uptake
of this technology in the home
heating environment.
The industry view is that electronic
ICAS CCP products will recover
lost ground in the coming years and
experience further periods of strong
growth. In 2024 Magontec’s North
American and European ICAS
revenues and profitability were
below the prior year, mostly driven
by lower European sales and slow-
moving inventory.
Falling selling prices, falling raw
material prices, excessive inventory
and a weak economy in the key
European, Chinese and North
American markets presented
a formidable combination of
challenges for Magontec’s CCP
products. The Group’s volumes
and revenues were lower in all
areas in 2024.
Looking forward to 2025 it is
likely that demand levels will
recover, driven by lower interest
and mortgage rates. Consumer
confidence and government
actions to bolster demand, again
particularly in Europe, will likely
have to wait for 2025 elections
to be settled. In the meantime a
re-stocking of inventory, which
has been allowed to reduce to
historically low levels, should
improve overall volumes.
Cathodic Corrosion Protection (CCP – anodes) (continued)
18
Magontec Limited
Annual Report 2024
Magontec continues
to operate in a volatile
global market with the
biggest impacts coming
from global changes
in demand, pricing
and costs.
Magontec and the global magnesium market are not
alone in these challenging times as we adapt to the
impacts of geopolitical changes occurring in Europe
and the USA, the transition to electric vehicles and
the transition to cleaner energy required to combat
climate change.
In last year’s report, we stated that Magontec had
reviewed and enhanced its risk management processes
to ensure its ability to effectively combat and mitigate
these business risks. This heightened awareness of
risk and more robust risk management framework,
assisted in being able to manage the Qinghai major
project risk. Following the termination of the QSLM
contracts during 2024 and the closure of the Qinghai
plant, Magontec was able to mitigate the impact of the
contract termination and closure on the business.
Our Material Risks
Magontec’s risks remain complex because of the
wide spread of its operations and geographical
locations, requiring a practical and straightforward
risk management approach that is regularly
reviewed, assessed, and where necessary, adjusted
on a continual basis. Our risk management
framework guides our approach to managing risks.
We think about our risks in the following way:
–
Strategic: risks that should they materialise
could impact our ability to deliver our
strategic goals.
–
Operational: risks we manage as part of our
daily business activities.
–
Future: risks that could materialise over time.
Magontec’s risk management practices are
embedded into all processes and operations.
The table below outlines the material risks that can
impact the Group’s achievement of its financial
objectives. These risks are identified through a
robust risk management framework, prepared
by management with independent oversight
by the Business Risk Committee and the Board
of Directors.
Our most significant risks, those that if not managed
effectively would have significant impact on our
financial performance, form our material risks.
These material risks are monitored formally by
our oversight committees and the executive
management teams responsible.
Business Risks
19
Magontec Limited
Annual Report 2024
Material Risk
Mitigated Risk
Assessment
Risk
Movement
Risk in detail
Risk Management Approach
Geopolitical
changes
Moderate
Increasing
Geopolitical changes pose a
significant risk by disrupting supply
chains and markets. Key risks
include expanded conflicts (e.g.
Russia/Ukraine) trade disputes
(e.g. US and EU imposition of
tariffs on trade) and regulatory
shifts (e.g. taxation, climate change
compliance).
Mitigations include diversification
and management of localised
supply chains (i.e. reducing
dependence on offshore supply)
and shifting operations closer
to markets to minimise global
instability.
Automotive
Industry
changes
Moderate
Increasing
The automotive industry
is undergoing significant
transformation due to the
electrification of vehicles
(EV), advancements in battery
technology and government
intervention through imposition
of tariffs.
Risk is mitigated by improving
supply chain resilience, localising
supply chains, improving
manufacturing processes
and efficiency, developing
sustainable supply initiatives and
development of new products.
Supply chain
Moderate
Neutral
There is a risk that the Group may
not be able to source key raw
materials on an ethical and carbon
neutral basis, of a quality and at the
price required, within the required
period.
Risk addressed through use
of multiple suppliers, a diverse
geographic base and multiple
distribution routes. Our
European supply chain process
has implemented additional
measures because of the conflict
in Ukraine and the increase in
energy prices.
People skill
retention
Low
Neutral
As part of a specialised industry,
employee retention is critical to
our success. We must attract,
retain and develop team members
with diverse skills, capabilities and
backgrounds.
Risk addressed through reward
and recognition programs,
talent management strategies,
employee value propositions and
ongoing compliance monitoring
of employment laws (including
wage compliance).
Refer to the Remuneration
Report for further detail.
Employee
Safety
Low
Neutral
There is a risk that the Group
does not provide a safe working
environment for its people,
contractors and the community.
An unsafe working environment
may result in injury, harm or illness
to our employees. If we are unable
to meet our requirements, we may
be subject to regulatory impacts,
claims and reputational damage.
Risk addressed through robust
internal work health and safety
practices, the implementation
of initiatives and education
programs with a focus on
preventative measures with
enhanced dedicated support
in high-risk areas to ensure the
wellbeing of our employees.
Privacy
and data
management
Low
Increasing
The quality of data is critical
for investment, strategic, and
operational decision making. There
is a risk that confidential or sensitive
information can be accessed and
disclosed by unauthorised parties.
Risk addressed through
increasing external assurance
activities and continually
enhancing cyber control
framework, technology processes
and employee awareness,
supported by investment in
systems and infrastructure.
Business Risks (continued)
20
Magontec Limited
Annual Report 2024
Our Governance structure
to manage business risks
Magontec continues to operate 3 levels of defence
to manage business risks. The overall enterprise risk
management is aligned with International Standards
Organisation ISO 31000:2018 with a strong focus on
management accountability.
The first line of defence is at the local level, where
management take responsibility for all day-to-day
operational risks and ensure compliance with all local
environmental and safety obligations. During the year,
internal reviews were completed on risk management,
with increased awareness raised on identification and
management of risks with improved reporting and
transparency.
Material Risk
Mitigated Risk
Assessment
Risk
Movement
Risk in detail
Risk Management Approach
Financial
Balance
Sheet
Management
Low
Reducing
There is a risk that working capital
and cash is not efficiently managed.
This may result in insufficient
funds to support future growth
opportunities and dividend
payments.
Risk addressed by monitoring
and working with the regional
teams adjusting working capital
to demand and ensure that no
excess or surplus inventory is in
existence.
Sustainability
Moderate
Neutral
Environmental, Social and
Governance risks, if not managed
appropriately, could impact
business operations, and fall
short of stakeholder and societal
expectations.
Risk addressed by increasing
governance and risk management
processes, supported by regular
reporting and inspections.
Refer Sustainability commentary
for further detail.
Compliance
Low
Neutral
We are subject to a global range of
legal and regulatory requirements,
in relation to health and safety,
employment and corporate
regulation, that require regular
monitoring and updating.
Risk addressed by monitoring
regulatory changes and their
impacts on the group and
obtaining advice from external
lawyers where required.
These local risks are shared across regions and
reviewed by the executive management team where
the strategic approach is assessed to manage risk on
a consistent basis.
Business Risks are overseen by the Board through the
Business Risk Committee, chaired by an Independent
Non-Executive Director. The committee is
responsible for monitoring the enterprise framework,
assessing risk appetite, and ensuring the adequacy of
the enterprise framework to manage risk. During the
year, the Business Risk Committee met twice.
Business Risks (continued)
21
Magontec Limited
Annual Report 2024
Risk Committee. This is chaired
by Independent Non-Executive
Director Andre Labuschagne.
The Magontec Sustainability
Roadmap project commenced
in 2024 to determine a detailed
plan to net-zero which will include
clear milestones and methods,
with explanations of any built-
in assumptions. Magontec’s
Sustainability plan is to develop
a foundation that is integrated
across the group, compliant with all
jurisdictions and transparent to all
stakeholders.
Over the next 2-3 years this will
be a major project for the Group.
To emphasise this priority, KPIs
have been incorporated within the
2025-2027 Strategic Plan and 2025
annual budget for the leadership
team.
Magnesium recycling benefits
The magnesium industry has an
inherent environmental deficit as
the vast majority (more than 90%)
of its global production base relies
on off-gas from coal derivatives.
Sustainability
During 2024 regulators have
continued to place importance
on global climate change issues.
The Australian government
passed legislation in August 2024
which mandated climate related
disclosures commencing on 1
January 2025 for large companies
and a phased approach for others
through to 2027.
In Australia, Magontec has no
sustainability reporting obligations
for 2024 or 2025, and falls into
“Group 3” commencing in 2027.
Reporting for our European
operations will likely commence
from 2026.
Legislation in both Europe and
Australia continues to evolve and
is being monitored to identify any
changes that are relevant and could
impact compliance by Magontec’s
operations.
The Sustainability working group
responsible for the roadmap
development and implementation
reports through to the Business
Pidgeon process magnesium
plants (silica-thermic reduction)
that produce pure magnesium in
China, and the coal and ferro silicon
industries that supply raw materials
to that process, are high CO2
emission activities.
Magontec’s Mg Alloy business
is based on the recycling of
magnesium alloy, sourcing
magnesium alloy scrap from our
customers and returning it to them
in the form of ingots for re-use
in their production process. As a
result of our operations being close
to our customers, Magontec has a
significantly lower carbon footprint
compared to the mass production
of magnesium sourced from China.
Magontec’s most salient
environmental contribution is in
its commitment to and focus on
magnesium, the lightest structural
metal. Magnesium is 2/3rds the
weight of aluminium and 1/3rd
the weight of steel. Unlike plastics
and carbon fibre, it is also 100%
recyclable.
Magontec is committed to developing
a sustainable global business model
aimed at minimising its impact
on the environment through a
socially responsible approach that is
effectively and efficiently monitored
and governed for our customers and
their end consumers.
Environmental, Social and Governance (ESG)
22
Magontec Limited
Annual Report 2024
Environmental, Social and Governance (ESG) (continued)
At all Magontec operations we use
electricity as the key power source
rather than gas. This gives us the
ability to access renewable power
and preference energy suppliers
that source power from renewable
technologies where available. This
is particularly important in Europe
where we recycle magnesium alloy
scrap and manufacture magnesium
anodes, and has provided some
protection against higher gas prices
through 2023 and 2024.
Magontec’s manufacturing
operations at Santana in Romania
and Bottrop in Germany, have
significant non-carbon energy
inputs and actively seek to grow
the proportion of power sourced
from renewable energy.
Environmental
Magontec’s processing operations
continue to pursue a continuous
improvement strategy. The re-
processing of waste products from
magnesium alloy recycling and the
reduction of energy inputs through
the implementation of efficiency
programmes continued through
2024 are now part of our business
culture.
It was unfortunate that the key
Green House Gas (GHG) reduction
plan centering around Magontec’s
involvement with the Qinghai Salt
Lake Magnesium Co Ltd (QSLM)
and its access to high levels of
renewable energy was terminated.
All production has now ceased at
Magontec’s Qinghai plant.
This resulted in a re-think in the
GHG reduction strategy and
specifically carbon neutral energy
sources used for production and
will be an ongoing project for the
respective teams over the next
2 years.
Reviews of our current business
operations identified opportunities
to reduce the impact of GHG
on the environment. The Group
implemented a number of
successful trials to further refine and
reduce waste from our processes.
Magontec’s energy sources
Magontec solely utilises electric
arc furnaces in its Mg Alloy
recycling process, providing the
advantage of flexibility to utilise
and source clean carbon-neutral
energy from its energy providers.
Many in the industry continue to
utilise traditional gas furnaces,
limiting flexibility and having higher
GHG emissions compared to the
Magontec manufacturing process.
Much of the electricity consumption
supply source is determined by
the respective energy supplier’s
strategy and the respective
countries’ plans to become net-
zero, with significant government
investments occurring in Europe.
- Germany
Germany’s electricity grid has been
transitioning away from carbon-
based energy sources (largely
gas) and remains in this transition
phase. A number of government
initiatives are available to assist
businesses better understand their
GHG emissions which Magontec
actively participates in. The data
from Germany is published annually
in arrears and current data disclosed
in the report reflects 2023 usage.
- Romania
Our Romanian plant energy supplier
provides energy that is net-zero
impact on the environment. This is
achieved through the use of carbon
credits by the energy supplier.
- China
With the closure of the Qinghai
plant, our energy mix shifted
substantially. Whilst overall
consumption kWhs reduced
(aligned with the closure of
Qinghai), without the Qinghai
renewable source, the ratio
of carbon sourced electricity
increased from our sole Chinese
production facility in Xi’an.
Energy Supply data
Overall kWhs consumed decreased
by 16% across the Magontec
business, largely due to the closure
of Qinghai in August and lower
production in Romania. The lower
kWhs were incurred in locations
which had high renewable energy
supplies, resulting in an overall
% mix change in energy sources.
This resulted in the proportion of
renewable energy utilised dropping
from 69.2% to 63.1%.
Nuclear sourced energy continued
to decline in Europe representing
just 0.5% of overall energy sources.
23
Magontec Limited
Annual Report 2024
Environmental, Social and Governance (ESG) (continued)
Magontec energy supply by source
(%)
0
20
40
60
80
100
Renewable Nuclear Carbon
36.7
36.6
35.0
36.6
29.6
36.4
8.5
8.1
9.1
6.0
1.2
0.5
54.8
55.3
55.9
57.4
69.2
63.1
Magontec energy by supply source
(kW hours)
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Renewable Nuclear Carbon
2021
2019
2023
2022
2020
2024
2021
2019
2023
2022
2020
2024
24
Magontec Limited
Annual Report 2024
Environmental, Social and Governance (ESG) (continued)
While all accidents are distressing,
particularly where there is an injury
to a staff member, remedial action
and changes to work processes and
oversight are quickly introduced.
We continue to seek to make our
workplaces safer and to avoid any
repeat accidents.
Retention and Satisfaction
Magontec continues to achieve
a strong record of staff retention
among its operations employees
and in administrative and
management roles. The Group’s
senior management team, the
global executive management
group and the regional leadership
teams in operations and sales,
have an average tenure of over 15
years. While this length of service
endows the Group with deep
experience across our business
activities, it also requires a focus on
communication from factory and
office staff to our long serving senior
management team.
Social
Health & Safety
The Group continues to maintain
a rigorous system of workplace
management. This system allows
Magontec operations managers to
closely oversee critical employee
actions and habits, particularly
in magnesium alloy cast house
operations where molten metal
is stored, alloyed, or otherwise
processed and transferred between
one activity and another.
A task of management is to
continually review and challenge
the processes and structures that
are in place to ensure that accidents
are avoided wherever possible.
In 2024 there was one lost-time
injury (LTI) sustained among 242
Magontec employees of whom 146
work in manufacturing operations
and 96 in administrative and
management roles.
Following the termination of the
QSLM agreements, 2024 saw
the closure of our Qinghai plant
and the subsequent redundancy
of employees. Whilst this was a
difficult situation, all employees
were terminated in accordance
with their employment conditions
and PRC employment regulatory
requirements.
Total Accidents and Lost Time Injuries - 2015 to 2024
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total Accidents
16
12
7
8
17
9
1
5
1
1
Lost Time Injuries (RHS)
4
5
1
2
3
4
1
4
1
1
0
1
2
3
4
5
6
0
2
4
6
8
10
12
14
16
18
Total Accidents
Lost Time Injuries (RHS)
Linear (Lost Time Injuries (RHS))
Linear (Lost Time Injuries (RHS))
25
Magontec Limited
Annual Report 2024
Environmental, Social and Governance (ESG) (continued)
Diversity
The Metals industry is orientated
around a central function that
requires the application of
relatively heavy physical labour.
The management of cast house
processes including metal melting,
the loading of metal scrap and
ingots into furnaces, is labour
intensive and has not historically
attracted a gender diverse labour
force.
In early 2025, Magontec’s Board
approved a Diversity Policy
providing a clear position on the
diversity framework, responsibilities
and reporting obligations for all our
subsidiaries and people.
The Group’s Code of Conduct
further details the manner in
which employees are expected
to behave and how employees
should be treated by the Group, by
management and by each other
without discrimination in any form.
As a multi-national organisation
there is a high level of geographic
and ethnic diversity with Magontec,
but a more modest level of
gender diversity. Our published
Code actively promotes equality,
diversity and inclusion within
the organisation for employees
of all ages, ethnic or national
origins, sexual orientation, marital
and parental status, physical
impairment, disability and
religious beliefs.
Pay equality
In Europe we evaluate the
specific function of a job based on
established criteria. Fixed salary
levels are assigned to a range of
points for 13 salary levels. Through
this mechanism we seek to ensure
that there is no difference in
pay between employees based
on gender or other perceived
differences.
Gender Diversity
(%)
Male Female
2024
85.0
15.0
2023
83.2
16.8
Geographic Diversity
(%)
Asia Europe Australia
2024
51.7
47.0
1.3
2024
37.8
60.5
1.7
2023
51.7
47.0
1.3
In China, recruitment, promotion
and salary levels are based on
market benchmarks and an internal
position ranking system designed to
remove gender discrimination.
These processes are regularly
reviewed and will incorporate
changing industry standards and
regulatory requirements in each
of the regions in which Magontec
operates.
Global supply chains
The Magontec business structure
is designed so that our plants are
in close proximity to our customers
and suppliers, with our customers
supplying magnesium from their
manufacturing process for recycling
and sale back. This business
model reduces logistics costs and
complexity associated with global
supply chains. This approach also
reduces risks of modern slavery and
avoids increased GHG emissions
from transportation.
26
Magontec Limited
Annual Report 2024
Environmental, Social and Governance (ESG) (continued)
We continued with additional
risk protection for our European
and US subsidiaries through
cyber insurance policies. These
policies offer protection against
identity and reputation theft
(blackmailing), bank account and
credit card fraud, hardware and data
breaches, business interruption
and compensation in liability cases
and data protection incidents.
Based on our experience, this type
of insurance policy is not easily
accessible to Magontec in China.
Governance
Magontec’s Board of Directors
and management are committed
to maintaining the highest ethical
standards in our business activities.
The Group’s Code of Conduct
outlines the standards of behaviour
expected from all Magontec’s
employees and is aligned with
values that are essential to our
continued success in the short,
medium and long term.
The BRC undertakes a twice-yearly
review of the Group’s trading
relationships in the context of
regional, United Nations and other
sanctions. Magontec trades with
customers and suppliers in 23
different countries.
Through the BRC and management
initiatives, policies have been
introduced at regional levels
so that the Group can more
transparently manage its exposure
to sanctioned regimes or companies
and understand the associated
regulatory and supply risks.
Cyber, data privacy,
Information Technology
and Fraud
In 2024, a full review of the Group’s
IT strategy commenced, beginning
with a review of Magontec’s IT
infrastructure. This review identified
a number of opportunities to
update and improve existing
systems that were near end of life,
or not technically up to current
IT standards. A number of these
opportunities were implemented
with a key focus on standardisation
of systems, employee productivity
and system monitoring and security.
Cyber security and data protection,
as for all companies, continues to
present unique challenges for the
Magontec business and is a critical
metric in all locations. As part of
the annual security review, external
testing was performed in 2024 with
recommended actions following the
review implemented.
As an ASX-listed corporation, we
respect and support the integrity
of our shareholders and key
stakeholders critical to our success.
Other governance policies relating
to whistleblowers, securities trading,
how and when we communicate
externally with our stakeholders
(continuous disclosure),
remuneration, risk management,
modern slavery, diversity and
inclusion and the protection of
personal information are also
available at www.magontec.com.
To support successful oversight and
management of our Governance
policies, Magontec operates three
independently chaired committees
that provide Governance oversight
of the Group’s operating activities.
An overview of Magontec’s
Corporate Governance is set out
in the Corporate Governance
statement published at
www.magontec.com.
27
Magontec Limited
Annual Report 2024
Nicholas Andrews
Executive Chair
Member of the Business Risk
Committee (BRC)
B Ec.(Syd)
Mr Andrews serves as the Executive Chair
of Magontec Limited. From 2007 to 2009
Mr Andrews served as a Non-Executive
Director of Advanced Magnesium Limited
prior to the acquisition of Magontec
GmbH and the company name change to
Magontec Limited.
Mr Andrews has a financial services
background in investment management
and investment banking. From 1996 to
2005 he was a Managing Director at UBS
Investment Bank and responsible for
global distribution of Australian and New
Zealand Equity products.
From 1989 to 1996 Mr Andrews was
the Chief Investment Officer at LGT
Investment Management in charge of
the group’s investment portfolios for the
Australasian region.
Mr Andrews is a Member of the Executive
Committee and serves on the Board of
the International Magnesium Association.
Since 2017 he has also served as Honorary
Treasurer of the IMA.
Mr Andrews serves as a Non-Executive
Director and Chair of the Finance & Audit
Committee of CarbonXT Group Limited.
Andre Labuschagne
Independent Director
(re-appointed 25 May 2022)
Chair of the Business Risk
Committee (BRC)
Member of the Finance, Audit and
Compliance Committee (FAC)
B. Comm (Potchefstroom
University)
Mr Labuschagne is the Executive Chair of
Aeris Resources Limited. Mr Labuschagne
is an experienced mining executive with
a career spanning more than 30 years,
primarily in the gold industry, and has held
various executive roles in South Africa,
PNG, Fiji and Australia for a number
of leading gold companies, including
Emperor Gold Mines, DRD Gold and
AngloGold Ashanti. Mr Labuschagne
was previously Managing Director of ASX
listed gold company, Norton Gold Fields
Limited.
Board of Directors
Robert Kaye SC
Lead Independent Director
(re-appointed 11 May 2023)
Chair of the Remuneration and
Nominations Committee (REM)
Member of the Finance, Audit and
Compliance Committee (FAC)
LLB (Syd), LLM (Cambridge) (Hons)
Mr Kaye was admitted to legal practice in
1978 and employed as a solicitor at Allen,
Allen & Hemsley Solicitors. Thereafter
he pursued his legal career at the NSW
Bar and was appointed Senior Counsel in
2003, practising in commercial law.
He has been involved in an array of
commercial matters both advisory and
litigious in nature and served on a number
of NSW Bar Association committees
including the Professional Conduct
Committee.
In the conduct of his practice as a
barrister, he has acted for many financial
institutions and commercial enterprises,
both public and private and given both
legal and strategic advice. He has had
significant mediation experience and
been involved in the successful resolution
of complex commercial disputes.
Mr Kaye is currently Chair and a Non-
Executive Director of Collins Foods
Limited and a Non-Executive Director at
FAR Limited. Mr Kaye was previously the
Chair of Spicers Limited, the Chair of the
Macular Disease Foundation Australia
and was formerly a Non-Executive
Director with UGL Limited, Electro Optic
Systems Holdings Limited and HT&E
Limited.
28
Magontec Limited
Annual Report 2024
Atul Malhotra
Independent Director
(re-appointed 25 May 2022)
Chair of the Finance, Audit and
Compliance Committee (FAC)
Member of the Remuneration and
Nominations Committee (REM)
Member of the Business Risk
Committee (BRC)
MBA (Delhi University)
Mr Malhotra has an extensive
professional background
in Procurement, Supply
Management, Strategy,
Business Development and
other functions. During his
career spanning over 40
years, he has held executive
roles at ABB, Bombardier
Transportation, Adtranz and
Continental with responsibility
for projects and operations in
Europe, Asia and Australia.
For over 10 years till October
2013, Mr Malhotra was the
Head of Purchasing and
a Member of the Group
Management at Georg
Fischer Automotive Group,
Schaffhausen, Switzerland, a
leading global supplier of cast
metal (including magnesium)
parts with an annual turnover
of approximately 1,200m
Euro and 11 production units
located in Europe and China.
As Head of Purchasing, his
main responsibilities included
establishing procurement
strategy and managing the
procurement function. As
part of the Group’s senior
management team, he
also held co-responsibility
for providing strategic
direction to, and oversight
of, the business units with
reporting responsibilities to
the Corporate division. Since
January 2014 he has been
acting as an independent
adviser to various corporate
clients and businesses.
Zhong Jun Li
Independent Director
(re-appointed 15 May 2024)
Member of the Remuneration and
Nominations Committee (REM)
Graduate of Wuhan University
of Technology
Mr Li is the owner of Tianjin
Keweier Metal Material Co Ltd
(KWE (TJ)) in China. He is a
graduate of Wuhan University
of Technology and spent 10
years at Tianjin Auto Industry
Company Ltd. For more than
10 years, Mr Li has built a
trading and manufacturing
business that specialises in
magnesium products. KWE
(TJ) has facilities located in
Hong Kong and Tianjin and a
broad experience of the global
magnesium industry.
Mr Li is associated with Yuan
Yuan Li, who in February
2025 became a substantial
shareholder of Magontec Ltd
following the transfer of shares
into her name.
Board of Directors (continued)
29
Magontec Limited
Annual Report 2024
Christoph
Klein-Schmeink
President Magontec
Europe, North America
and Middle East
MBA (Münster University)
Derryn Chin
Chief Financial Officer
B Com (University of New South
Wales) CA, CFA
Mr Klein-Schmeink joined
Magontec Limited (then
Hydro Magnesium) in 2000 as
Sales and Marketing Manager
responsible for global sales of
the Group’s anode products.
He was appointed Head of
Sales and Marketing in 2007
and Vice-President of Global
Sales and Marketing in 2011.
In 2012 Mr Klein-Schmeink
was appointed President of
Magontec GmbH and has
responsibility for the Group’s
activities in Europe, North
America and the Middle East.
Prior to joining Magontec,
Mr Klein- Schmeink held the
position of Sales Director Asia
Pacific with the global mining
services company Terex
Mining Corp.
Mr Klein-Schmeink holds
a Master’s of Business
Administration degree from
Münster University.
Mr Chin joined Magontec
Limited in 2014 and was
appointed as the Chief
Financial Officer in 2016.
Prior to joining Magontec, Mr
Chin was an equity research
analyst at Macquarie Group in
Australia and prior to that held
roles in both the audit and
financial advisory divisions
of KPMG.
He is a member of Chartered
Accountants Australia
and New Zealand, a CFA
charterholder and speaks
Mandarin.
He holds a Bachelor of
Commerce from the
University of New South
Wales with a double major in
Accounting and Finance.
Patrick Look
Vice President, Finance & HR
Business Economist VWA
Tong Xunyou
President, Magontec Asia
B Chem (Dalian University),
MBA (Hong Kong Polytechnic
University)
Mr Tong joined Magontec
Limited (then Hydro
Magnesium) in 2003 in the
role of Production Manager,
Finance Manager and Deputy
General Manager. In 2006
Mr Tong was appointed
General Manager and
assumed responsibility for all
of Magontec’s Chinese metal
and anode activities.
Prior to joining Magontec
Limited Mr Tong spent
eight years with the Henkel
Adhesive Company Limited
where he was Production and
Branch Manager.
Mr Tong holds a Bachelor’s
degree in Chemistry from
Dalian University of Science
and Engineering and an MBA
from Hong Kong Polytechnic
University.
Mr Look is the Vice-President
of Finance & HR, with primary
finance and operating
oversight responsibilities
for the Group’s divisions
in Europe, North America
and the Middle East. Mr
Look started his career at
Magontec GmbH (then Hydro
Magnesium) in 1998.
Over the last 20 years, after
assuming various finance
roles in the Group including
accounting, purchasing and
logistics and graduating as a
Business Economist (VWA)
he was appointed Finance
Manager in 2009 and Vice-
President Finance & HR in
2012.
Executive Management
30
Magontec Limited
Annual Report 2024
Professor Abbott completed
his PhD in 1987 and has
extensive experience in the
metals industry including
aluminium alloys (PhD topic),
steel (BHP in Melbourne and
Wollongong throughout the
1990’s) and magnesium alloys
(CAST, AMT, Magontec).
Since 2000 he has developed
strong industry-academia
collaborations through the
CAST Cooperative Research
Centre and ARC Linkage
grants. During the period
2000-2004 he held an
academic position at Monash
University where he led the
magnesium applications
activities within CAST. He
then transferred to AMT /
Magontec and continued the
collaboration with academia
from the industry side. He has
been particularly instrumental
in the development of
Magontec’s high value
magnesium alloy business,
particularly its core product
MicroZir. The high value
alloys segment has become
increasingly important to
Magontec’s alloy business in
recent years.
In 2013 he established
Abbottics Pty Ltd and
consults in metallurgical
fields, particularly magnesium,
aluminium, rare earths,
scandium and silicon.
Dr Zisheng Zhen
Technical Director (R&D
and Quality Management),
Magontec Asia
PhD, Materials Processing
Engineering (The University of
Science and Technology Beijing)
Dean Taylor
Company Secretary
FGIA, FCG
Prof Trevor Abbott
Director, Research and Development
B App Sc Metallurgy (SAIT/UniSA)
PhD (Monash)
Adjunct Professor, University of Queensland
Adjunct Professor, Swinburne University
of Technology
Adjunct Professor, RMIT University
Adjunct Fellow, Monash University
Dr Zhen joined Magontec
Limited in 2009 as the R&D
manager of Magontec Xi’an
Co. Ltd and was appointed
as the Technical Director
of Magontec Asia in 2011,
responsible for R&D activities
as well as quality management
in China.
Dr Zhen has over 20 years
of research and technical
development experience in
magnesium. He gained his
PhD in Materials Processing
Engineering from The
University of Science and
Technology Beijing, China
in 2003. He then conducted
further research works
on magnesium alloys and
processing technologies at
Oxford University and Brunel
University in England, and at
the Magnesium Innovation
Center in GKSS (then HZG,
now Helmholtz-Zentrum
Hereon) in Germany where he
was a senior research fellow.
He serves on various industrial
and academic committees
and organisations, including
the International Magnesium
Association, the China
Magnesium Association
and the Chinese Materials
Research Society (C-MRS).
He is the winner of the
International Magnesium
Science and Technology
Award for 2023 bestowed by
the International Mg Society.
Mr Dean Taylor was appointed
to the position of Company
Secretary in January 2023.
Mr Taylor is a Chartered
Secretary and member of
the Governance Institute
of Australia.
He has previously acted
as Chief Financial Officer,
Company Secretary
and a Board member for
an extensive range of
organisations including
Standards Australia,
LifeHealthcare and HPM
Legrand.
Executive Management (continued)
31
Magontec Limited
Annual Report 2024
32
Magontec Limited
Annual Report 2024
Financial Report
Directors’ Report
for the year ended 31 December 2024
1.
Corporate information
The consolidated financial statements of Magontec Limited and its controlled subsidiaries as listed in Note 22 herein
(collectively, the Group) for the year ended 31 December 2024 were authorised for issue in accordance with a resolution of
the directors on 26 February 2025. Magontec Limited is a company limited by shares incorporated in Australia. The shares are
publicly traded on the Australian Securities Exchange (ASX) under the code “MGL”.
2.
Glossary of entities referred to in this report
Formal Name of Entity
Description of Entity
Referred to as
Head Office Entities
Magontec Limited
The ultimate parent/holding company of the Group.
MGL, the
Company or the
Parent Entity
Advanced Magnesium
Technologies Pty Limited
Wholly owned subsidiary of Magontec Limited that acts as the
administrative operating entity.
AMT
Varomet Holdings Limited
The wholly owned holding entity that owns the Group's subsidiaries in
Xi'an (PRC) and Suzhou (PRC).
VHL
Operating Entities
Magontec GmbH
The wholly owned entity that owns the Group’s operations in Bottrop,
Germany.
MAB
Magontec SRL
The wholly owned entity that owns the Group’s operations in Santana,
Romania.
MAR
Magontec US LLC
The wholly owned entity that acts as the Group’s distributor located in
the United States of America.
MAU
Magontec Xi’an Co. Ltd.
The wholly owned entity that owns the Group’s operations in Xi’an, PRC.
MAX
Magontec Qinghai Co. Ltd.
The wholly owned entity that owns the Group’s operations in Qinghai,
PRC. Production ceased at this facility in 2024.
MAQ
Magontec Suzhou Co. Ltd.
The wholly owned entity that owned the Group’s operations in Suzhou,
PRC. Production ceased at this facility in 2016.
MAS
Major related shareholders
Qinghai Salt Lake Magnesium
Co. Ltd.
QSLM was a 28.48% shareholder in MGL as at balance date of
31 December 2024. Following QSLM's termination of the co- operation
agreements with Magontec Qinghai, an Extraordinary General Meeting
was convened on 5 February 2025 where MGL shareholders approved a
Memorandum of Settlement (MoS) between QSLM and the Group.
This included the selective share buy back of all the shares held by
QSLM in the Group. As set out in the MoS, QSLM relinquished its
entire shareholding of 22,681,940 MGL shares to the Group which
were cancelled in February 2025 in exchange for certain fixed assets of
Magontec Qinghai as well as both sides agreeing to forego any future
legal claims.
QSLM was a subsidiary of Qinghai Huixin Asset Management (QHAM).
QHAM is in turn owned by 3 Chinese state-owned enterprises. Its
shareholders included the state of Haixi (a region of Qinghai province
that includes Golmud) and two other Qinghai based investment entities.
QSLM
KWE (HK) Investment
Development Co Ltd
Former shareholder in Magontec Limited. Mr Li Zhong Jun, a director
of Magontec Limited is also a director and shareholder of KWE (HK)
Investment Development Co. Ltd. During 2024, the shareholding
in KWE (HK) was transferred to Ms Li Yuan Yuan, an associate of
Mr Li Zhong Jun.
KWE (HK)
3.
Rounding errors
The tables in this report may indicate apparent errors to the extent of one unit (being $1,000) in the addition of items
comprising totals and sub totals and the comparative balances of items from the financial accounts for the prior period. Such
differences arise from the process of converting foreign currency amounts to two decimal places in AUD and subsequent
rounding of the AUD amounts to one thousand dollars.
33
Magontec Limited
Annual Report 2024
Financial Report (continued)
The Directors of Magontec Limited submit herewith the Annual Financial Report of the Group for the twelve-month period
ended 31 December 2024. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows.
Directors who held office during and since the end of the financial year were:
–
Mr Nicholas Andrews (Executive Chairman)
–
Mr Robert Kaye (Lead Independent Director)
–
Mr Atul Malhotra (Independent Director)
–
Mr Andre Labuschagne (Independent Director)
–
Mr Li Zhong Jun (Independent Director)
–
Mr Li Xing Cai (Non-Executive Director) - resigned 5 February 2025
Mr Li Xing Cai Li (MBA, Qinghai Nationalities Minzu University, Graduate of Chongqing University).
Prior to his resignation from the Board in February 2025, Mr Xing Cai Li was the representative of the Qinghai Salt Lake
Magnesium Company (QSLM) on the Board of Magontec Limited. QSLM was previously a 28.5% shareholder of the Group
prior to the buyback and cancellation of their shareholding as detailed elsewhere in this report. Mr Xing Cai Li is the General
Manager of Qinghai Huixin Asset Management Co Ltd (QHAM), the owner of Qinghai Salt Lake Magnesium Co Ltd (QSLM).
Mr Li has held previous positions as the Deputy Director of Finance at the Shanghai and Hong Kong listed Aluminium
Corporation of China (Chalco), one of the world’s largest producers of alumina and aluminium. Prior to that Mr Li was Vice
President at Western Mining Co Ltd, responsible for overall financial management, fund raising and investment management
as well as being secretary to the Board. Western Mining is a ¥23 billion company listed on the Shanghai Stock Exchange
engaged in the mining, smelting, and trading of metal minerals, including copper, lead, zinc, iron, gold and silver.
Directorships of other Listed Companies
Directors who have held a Directorship position in another publicly listed company in the three years immediately before the
end of the financial year are as follows:
–
Mr Nicholas Andrews is a Non Executive Director of CarbonXT Group Limited
–
Mr Robert Kaye is Chair and a Non-Executive Director of Collins Foods Limited and a Non-Executive Director of FAR
Limited. During the relevant 3 year period, he also previously served as a Non-Executive Director of Electro Optic Systems
Holdings Limited.
–
Mr Andre Labuschagne is Executive Chair of Aeris Resources Limited.
Company Secretary
Mr Dean Taylor
Member, Institute of Chartered Secretaries (FCG), Governance Institute of Australia (FGIA)
Mr Dean Taylor was appointed to the position of company secretary in January 2023. Mr Taylor is a Chartered Secretary
and Fellow Member of the Governance Institute of Australia. He has previously acted as Chief Financial Officer, Company
Secretary and a Board member for a range of organisations including Standards Australia, LifeHealthcare and HPM Legrand.
Principal Activities
The principal activities of the consolidated entity during the course of the financial year consisted of:
–
Manufacture and sale of generic and specialist alloys (including both primary alloy manufacture and recycling);
–
Manufacture and distribution of magnesium and titanium cathodic corrosion protection products (anodes);
–
Research and development of new proprietary magnesium alloys and technologies;
–
Research and development of cathodic corrosion protection products (CCP); and
–
Creating markets for new magnesium alloys and technologies by supporting demonstration trials and programs for
developing new applications.
Directors’ Report
continued
34
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Report
continued
Directors’ Meetings
The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the
financial year and the number of meetings attended by each director while they were a director or committee member.
Board Meetings
FAC Meetings(1)
REM Meetings(2)
BRC Meetings(3)
Director
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Mr Nicholas Andrews
8
8
2
2
Mr Li Zhong Jun
7
8
2
2
Mr Atul Malhotra
7
8
2
2
2
2
2
2
Mr Robert Kaye
7
8
2
2
2
2
Mr Andre Labuschagne
6
8
2
2
2
2
Mr Li Xing Cai*
2
8
(1) Finance, Audit & Compliance Committee
(2) Remuneration & Nominations Committee
(3) Business Risk Committee
Directors’ Shareholdings
The following table sets out the relevant interest (direct and indirect) of each serving director in shares, debentures, and rights
or options in shares or debentures of the Company or a related body corporate as at the date of this report.
Director
Ordinary
Shares
Performance
Rights
Mr Nicholas Andrews
1,800,890
1,783,761
Mr Li Zhong Jun
3,937,386
–
Mr Atul Malhotra
–
–
Mr Robert Kaye
242,350
–
Mr Andre Labuschagne
–
–
Mr Li Xing Cai*
–
–
Remuneration Report
The Remuneration Report is set out on pages 36 to 50 and forms part of the Directors' Report for the financial year ended
31 December 2024.
Financial Report
Refer to ‘Financial Report’ section.
Operations Report
Refer to Operations Report.
Dividends
No dividend has been declared for the 12 month period to 31 December 2024.
Subsequent Events
Subsequent events are detailed in Note 27.
*
resigned 5 February 2025
35
Magontec Limited
Annual Report 2024
Financial Report (continued)
Future Developments
Disclosure of information regarding likely developments in the operations of the consolidated entity in future financial
years and the expected results of those operations are likely to result in unreasonable prejudice to the consolidated entity.
Accordingly, this information has not been disclosed in this report.
Non-Audit Services
Camphin Boston (the Group’s auditors) provided tax and other services during the financial year. Aggregate fees for non
audit services paid in the financial year were $15,275.
Auditor’s Independence Declaration
The Auditor’s independence declaration is included on page 51 of this Annual Report.
Indemnification of Officers and Auditors
The Group paid premia to insure certain officers of the Company and related bodies corporate in relation to performance of
their duties as officers of the Company. The officers of the Group covered by this insurance include directors or secretaries of
controlled entities.
The Company has not otherwise, during or since the financial year except to the extent permitted by law, indemnified or
agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such
an officer or auditor.
On behalf of the Board of Directors
Mr N Andrews
Executive Chairman
Signed on the 26 February 2025 in accordance with a resolution of the Directors made pursuant to Section 298(2) of
the Corporations Act 2001.
Directors’ Report
continued
36
Magontec Limited
Annual Report 2024
Financial Report (continued)
Remuneration Report (audited)
The Directors of Magontec are pleased to present
the Remuneration Report for the financial year
ended 31 December 2024. The report forms part
of the Directors' Report and has been audited in
accordance with section 300A and 308 (3C) of
the Corporations Act 2001.
The remuneration report is presented under the
following sections:
1.
Key Management Personnel (KMP) covered by
this Report
2. 2024 Remuneration at a glance
i.
Remuneration objectives
ii. Remuneration policy
iii. KMP remuneration mix
3. Group performance and the link to remuneration
4. Governance of remuneration framework
i.
Role of the Board
ii. Role of the Remuneration and Nominations
Committee
iii. Other governance requirements
5. 2024 KMP Remuneration
i.
Current service arrangements for Executive
KMP
ii. 2024 KMP remuneration
iii. Loans to Members of Key Management
Personnel
6. Independent & Non-executive Director
Remuneration arrangements
7.
2024 KMP statutory disclosures
i.
2024 Fixed Remuneration (TFR)
ii. 2024 Short-term incentive (STI)
iii. 2024 Long-term incentive (LTI)
iv. Valuation of LTI
v. KMP Equity Holdings
1.
Key Management Personnel (KMP) Covered by this Report
The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as
those persons having authority and responsibility for planning, directing and controlling the major activities of the Group,
whether directly or indirectly.
Key management personnel holding office in 2024 are:
Type
Name
Position
Appointed
Committee
Non-Executive
KMP
Robert Kaye
Lead Independent
Non-executive Director
19 Jul 2013
Chair – REM
Member - FAC
Atul Malhotra
Independent
Non-executive Director
1 Jan 2019
Chair - FAC
Member – REM
Member - BRC
Andre Labuschagne
Independent
Non-executive Director
22 Jan 2014
Chair – BRC
Member - FAC
Li Zhong Jun
Independent
Non-executive Director
31 Aug 2009
Member - REM
Li Xing Cai
Non-Executive Director
(resigned 05 February
2025)
28 Sep 2022
–
Executive KMP
Nicholas Andrews
Executive Chairman
14 May 2007
Member - BRC
Christoph Klein-Schmeink
President Magontec
Europe, North America
and Middle East
7 May 2012
–
Tong Xunyou
President Magontec Asia
7 May 2012
–
Derryn Chin
Chief Financial Officer
1 Mar 2016
–
FAC – Finance & Audit Committee
REM – Remuneration & Nominations Committee
BRC – Business Risk Committee
Directors’ Report
continued
37
Magontec Limited
Annual Report 2024
Financial Report (continued)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Executive KMP - other
Max LTI
Total
Fixed
Max STI
KMP - other Actual
KMP - other Max
2.
2024 Remuneration at a Glance
I.
Remuneration Objectives
Magontec’s remuneration objectives are to ensure that
there is an alignment between the outcomes desired by
shareholders with those of the employee with a clear vision
and focus on the agreed strategic direction and priorities of
the Group.
Vision
Magontec seeks to entrench itself as a leading global
manufacturer and recycler of magnesium alloys and
magnesium alloy products, to be known as a fair and
safe workplace, for its embrace of technology, high
environmental standards, efficient execution of global
logistics and high standards of corporate governance.
By ensuring this alignment between shareholders and
management, it creates the right environment to deliver on
the outcomes, providing a stability in the executive team
and focus on the right priorities that drive total shareholder
returns.
The Remuneration objectives are not singularly focused
on financial issues, but are balanced with environmental,
social and governance-based stakeholder expectations.
II.
Remuneration Policy
The Remuneration Policy is reviewed on an annual basis by
the Remuneration & Nominations Committee to ensure that
the principles and expected outcomes are matched with
the business strategy and an evolving market environment.
The remuneration policy objectives will be achieved
by ensuring remuneration is reflective of relevant
market conditions, our statutory obligations, the level of
accountability (responsibility, objectives, goals etc) assigned
and the provision of incentives to deliver outstanding
performance, whilst providing organisational flexibility and
operational efficiency.
The remuneration policy aims to retain key employees and
align employee interests with Group performance and
shareholders’ interests.
The policy is designed to:
–
motivate members of the Global Management Group to
originate innovate strategies for growth;
–
reward the Global Management Group for the
satisfaction of positive strategic and financial outcomes;
and
–
to provide an adjunct to cash remuneration to preserve
cash resources.
The Group uses a combination of cash and non-cash
mechanisms to remunerate key management personnel.
Directors’ Report
continued
III.
2024 KMP Remuneration Mix
The Group’s remuneration framework includes a mix of
fixed and variable at-risk remuneration and comprises of
the following three components:
a. Fixed remuneration (TFR),
b. Short-term incentives (STI) in the form of cash, and
c. Long-term incentives (LTI) in the form of equity.
The table below outlines the target remuneration mix
and actual received for the Executive Chair and other
key management personnel relative to the 2024 year.
100%
17%
0%
58%
$
$
$
$
$
$
Executive Chair
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
Max LTI
Total
Fixed
Max STI
Nicholas Andrews Actual
Nicholas Andrews Max
100%
32%
0%
56%
$
$
$
$
$
$
$
1.
TFR includes base salary, statutory superannuation and
allowances.
38
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Report
continued
2.
2024 Remuneration at a Glance (continued)
Total Fixed Remuneration (TFR)
Executive contracts of employment include base salary and post-employment benefits (statutory superannuation and certain
social benefits relative to region) and do not include any guaranteed base pay increases. These are assessed annually by the
Remuneration and Nominations Committee and approved by the Board with further independent assistance of remuneration
specialists where deemed necessary.
The annual review considers such factors as:
–
Role responsibilities and complexity
–
Geographic region and size of role
–
Experience and skills
–
Strategic value of the role
No TFR increases were provided in 2024. An external independent review will be completed for the 2025 year. The Group’s
aim is to reward its staff at Quartile 2 (50%) market rates within the industry, geographic region and their experience in the role
appointed as determined and in consultation with a remuneration specialist where appropriate.
Variable at-risk Remuneration
Each member of the Global Management Group has a set of key performance indicators (KPIs) mutually agreed by the
employee with the Regional CEO, Executive Chair or Board (as appropriate) on an annual basis.
The KPIs reflect the executive’s ability to add value to the Group and increase shareholder wealth by ensuring productive gains
such as increasing efficiencies, reduction in costs and increased profitability by maximising sales volumes and margins on sale
revenues. Performance against these KPIs forms a component of the assessment of both STI and LTI amounts as outlined
below.
The Board retains discretion to adjust final remuneration outcomes for all Executives. Board Policy is reviewed periodically
by the Remuneration and Nominations Committee. Where appropriate, recommendations to the Board for variations will be
made.
The Board believes that the balance between short-term and long-term remuneration is appropriate and encourages
long-term value creation.
2024 Short-Term Incentive (STI)
The STI plan rewards executives according to a set policy with reference to both group profitability and non-financial strategic
measures. This includes provisions to limit the overall maximum pool according to constraints inherent in the policy.
How is performance
measured?
The STI is measured based on successful achievement of financial and non-financial KPIs
based on certain performance criteria and minimum hurdles.
How is the STI
calculated for each
KMP?
The STI is calculated as a percentage of the KMP fixed remuneration and is capped for over
achievement.
Short-Term Incentive
Structure
The Short-Term Incentive contains 3 elements to encourage participant engagement at
a group and regional level and recognises both financial and non-financial performance
measures as follows:
i.
Group Performance achievement
ii. Regional Performance achievement
iii. Non-Financial Performance achievement
Short-Term Incentive
Hurdles
In order to qualify for Group and Regional Financial Performance award, a minimum Return on
Equity (ROE) is required for the Group and for Regional performance.
Group and / or Regional
Over-achievement
Where the Group and /or Regional over-achieves the ROE Target by more than 50%, an
additional STI amount will be paid up to a maximum of 150% of the STI element.
How is the STI
governed?
The payments are subject to approval by the Board upon the recommendation of the
Remuneration and Nominations Committee.
39
Magontec Limited
Annual Report 2024
Financial Report (continued)
How is risk managed
to prevent excessive
payment when there is
under performance?
There are several ways that risk is managed with the STI:
–
Minimum ROE hurdles required to be achieved. The ROE hurdles are aligned to exceed
market TSR returns for similar ASX listed entities.
–
The STI is capped as a % of fixed remuneration.
–
The Board has discretion relating to an assessment of the eligible executive’s contribution
to regional and Group performance, satisfaction of KPIs laid down by management and
other subjective factors identified by the Remuneration and Nominations Committee.
What period does the
STI relate to?
–
The commencement date of the STI plan is 1 January annually.
–
The STI performance period is the one-year period from the relevant
commencement date.
–
Net operating profit after tax (NOPAT) is defined as reported net profit after tax adjusted
for specific items as deemed appropriate by the board for the relevant year completed.
How is it paid?
STI remuneration is 100% cash settled annually and paid subsequent to completion of the
Approved Audited Financial Statements for the relevant year.
What happens if the
executive leaves?
If an executive resigns or is terminated for cause before the end of the financial year, or prior to
payment of the STI, no STI is awarded for that year unless otherwise determined by the Board.
2024 Long-Term Incentive (LTI)
Long term incentives are provided via the issue of performance rights (a form of option) to the Global Management Group
which may convert into Magontec ordinary shares subject to the achievement of pre-determined share price targets in
addition to non-market-based conditions.
The 2024 grant provided during the year was issued under the STI LTI Governing Document - 2020 Shareholder Approved
Plan per 2023 AGM (11 May 2023). No further grants will be made under this plan following the approval of the updated
Magontec Long-Term Incentive Plan approved at the AGM held on 15 May 2024. All grants issued under previous plans which
have not vested or lapsed, will continue to be administered under the terms of the respective plan of grant.
How is performance
measured?
The plan uses absolute total shareholder return (TSR) as the basis for setting share price
targets (based on the 30-day VWAP) for each three-year LTI performance period ended
31 December.
How is the TSR
calculated?
TSR comprises the percentage change in the Company’s share price, plus the value of any
future dividends during the period and is measured over the 3-year LTI performance period.
The performance condition of TSR is deemed as being the most appropriate by the Board.
It aligns the interests of employees in the management group with those of shareholders.
How is LTI granted?
From the 2021-23 Plan onwards, at the commencement date of the relevant 3-year LTI
performance period an eligible executive will receive Performance Rights –
i.
equal in value to 50% of the eligible executive’s total fixed remuneration (TFR) at that date;
ii. equal in number to the value in i. divided by 75% of the greater of the market value of
Magontec ordinary shares on the same date and the market value adopted under this
provision at the commencement date of the immediately prior 3-year LTI performance
period; and
iii. at nil consideration.
How do Performance
Rights Vest?
Performance Rights which are granted may convert into Magontec ordinary shares according
to the two tests below:
1. Tier 1 – Individual KPIs (30%)
The executive’s performance is rated against multiple KPIs prescribed by the individual and
approved by the Board.
2. Tier 2 – Group Level Share Price (70%)
Under Tier 2, further performance rights may vest upon achievement of the relevant absolute
share price targets (market-based vesting conditions).
The number of performance rights vesting under Tier 2 performance rights is only incremental
to the Tier 1 entitlement.
Directors’ Report
continued
2.
2024 Remuneration at a Glance (continued)
40
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Report
continued
How is the LTI
governed?
The payments are subject to approval by the Board upon the recommendation of the
Remuneration and Nominations Committee.
How is risk managed in
context to the LTI?
There are several ways that risk is managed with the LTI pool:
–
The maximum value of the LTI benefit is restricted to 50% of the employees' TFR.
–
The determination of the vesting conditions are recommended by the Remuneration and
Nominations Committee to the Board and are aligned with exceeding the share price of
the previous period.
–
The Performance Rights will lapse after 3 years if the vesting conditions are not achieved.
–
Performance Rights will automatically lapse in the event of the death, dismissal,
retrenchment, retirement or resignation of the eligible executive prior to the end date of
the 3-year LTI performance period unless otherwise determined by the Board.
What are the terms of
the LTI?
–
The commencement date of the LTI plan is 1 January annually.
–
The LTI performance period is the 3-year period from the relevant commencement date.
–
A Performance Right is a conditional right granted by the Company to an eligible executive
whereby that conditional right may, subject to the relevant terms and conditions, vest as
Magontec ordinary shares.
–
Performance Rights will automatically lapse in the event of the death, dismissal,
retrenchment, retirement or resignation of the eligible executive prior to the end date of
the 3-year LTI performance period unless otherwise determined by the Board.
–
Performance Rights will vest immediately in the event of a takeover (being the acquisition
of control over the voting shares) of the Company.
–
Performance Rights may not be transferred, assigned or novated except with the approval
of the Remuneration and Nominations Committee.
–
Eligible executives will not grant any security interest in or over or otherwise dispose of
or deal with any Performance Rights or any interest in them until the relevant Magontec
ordinary shares are issued to that eligible executive, and any such security interest or
disposal or dealing will not be recognised in any manner by the Company.
–
Performance Rights do not confer on a participant the right to participate in new issues of
shares by the Company, including by way of bonus issue, rights issue or otherwise.
–
The number of Performance Rights is rounded down to the next whole number if it is not a
whole number. Performance rights issued to executives do not have escrow periods.
–
No entitlement to Performance Rights accrues to the eligible executive until an
appropriate confirmation from the Company has been received by the eligible executive.
How is it paid?
Performance Rights are granted annually. If the vesting conditions are met, the Performance
rights will convert to fully paid ordinary shares in Magentec Limited.
What happens if the
executive leaves?
Performance rights will automatically lapse in the event of the death, dismissal, retrenchment,
retirement or resignation of the executive, unless otherwise determined by the Board having
regard to the nature of the contribution to the Company by and circumstances of, the
particular executive.
2.
2024 Remuneration at a Glance (continued)
41
Magontec Limited
Annual Report 2024
Financial Report (continued)
3.
Group Performance and the Link to Remuneration
Remuneration outcomes are intrinsically linked with achieving short-term and long-term performance targets. The targets
are directly linked with financial and non-financial KPIs and established within the annual Business Plan / Budget and 3-year
Strategic Plan approved by the Board.
The 2024 year was a difficult year with a number of unforeseen challenges impacting achievement of the financial targets. The
termination of the agreements with QSLM and subsequent closure of the Qinghai plant had a material impact on achievement
of the Annual Business Plan / Budget and the 3-year Strategic Plan approved by the Board.
These unforeseen events took significant management time to resolve, but resulted in a positive outcome in February 2025
where 99.86% of shareholders voted in favour of the resolutions presented at the EGM covering the MoS with QSLM and the
selective share buyback of its 28.48% MGL shareholding for zero cash consideration.
In assessing the Group Performance and the Link to Remuneration for 2024, the Remuneration Committee and the Board
took these circumstances into consideration.
$000s
2020
2021
2022
2023
2024
Sales
95,068
115,151
158,600
102,357
72,189
Reported Net Profit after Tax attributable
to shareholders
(717)
5,008
16,515
466
(9,517)
Reported Net Profit After Tax from
Continuing Operations
(232)
(5,187)
ACTUAL OUTCOMES - KMP
Actual STI % of TFR
0.0%
13.6%
32.2%
0.0%
12.2%
Actual LTI Vest % of Grant
0.0%
0.0%
0.0%
28.8%
0.0%
ACTUAL OUTCOMES - Shareholders
2020
2021
2022
2023
2024
Net tangible assets per share (cents)
32.5
42.4
67.9
67.8
58.0
Net tangible assets per share (cents) adjusting for QSLM
share buyback and cancellation*
81.1
Share Price closing (cents)
28.5
45.0
32.5
39.0
18.5
Dividend declared per share (cents, unfranked)
–
–
1.2
1.2
–
*
Based on ordinary shares issued post selective buyback and cancellation of QSLM shares held in MGL approved at the EGM held on
5 February 2025.
As the share price targets were not achieved, no vesting occurred for the Performance Rights issued for the 3 year period from
2022-2024.
Directors’ Report
continued
42
Magontec Limited
Annual Report 2024
Financial Report (continued)
4.
Governance of Remuneration Framework
Role of the Board
The Board maintains overall responsibility for the remuneration strategy and outcomes for executives and non-executive
directors and reviews and approves the recommendations received from the Remuneration and Nominations Committee.
The Board Charter is available on the website: www.magontec.com
Role of the Remuneration & Nominations Committee (REM)
The Remuneration & Nominations Committee is responsible for the oversight of the Remuneration Framework and ensures
that appropriate remuneration and retention strategies are established. The Committee will make recommendations to the
board on the remuneration arrangements for non-executive directors (NEDs) and executives.
The Committee is responsible for making recommendations to the Board on all aspects of appointment, remuneration
and termination for the Chair and Chief Executive Officer (or equivalent) and to review the appointment, remuneration or
termination of key management personnel (defined as those senior executives reporting directly to the Executive Chair / CEO
excluding the Company Secretary) as requested by the Board.
The committee assesses the appropriateness of the nature and amount of remuneration of NEDs and executives periodically
by reference to relevant employment market conditions, with the overall objective of ensuring maximum benefit from the
retention of its directors and executive team.
The REM Committee Charter is available on the website: www.magontec.com
Remuneration Approval Process
The board approves the remuneration arrangements of the Executive Chair and executives following recommendations from
the Remuneration & Nominations committee.
Remuneration benchmarking and use of Remuneration Consultants
From time-to-time external independent advice is sought to provide information that is relevant for remuneration
recommendations of the REM Committee and decisions by the Board. The advisors are engaged by the REM Committee and
is independent of management.
This advice includes, but is not limited to, advice on current remuneration practices, remuneration trends, regulatory and
governance updates and market data.
During the current year ended 31 December 2024, the Group did not engage any consultants for any purposes relating to
employee remuneration.
5. KMP Remuneration Arrangements
I.
Current Service Arrangements for Executive KMP
The table below sets out the current service arrangements of the Executive KMP.
Executive Contractual Arrangements
Name
Position
31 Dec 2024
Fixed
Remuneration
Contract
Term
Contract
Expiry
Notice Period
For Termination
Payment in
Lieu of Notice
Mr N Andrews
Executive Chairman
$560,263
3 years
30-Jun-26
Employer initiated - 6 mths
Employee initiated - 6 mths
6 months’ pay
Mr C Klein-
Schmeink
President Magontec
Europe & North
America
$417,185
5 years
14-Aug-27
Employer initiated - 12 mths
Employee initiated - 12 mths
12 months’ pay
Mr X Tong
President Magontec
Asia
$386,988
No fixed term or expiry Employer initiated - 6 mths
Employee initiated - 6 mths
6 months’ pay
Mr D Chin
Chief Financial Officer $335,107
3 years
30-Jun-26
Employer initiated - 6 mths
Employee initiated - 6 mths
6 months’ pay
Directors’ Report
continued
43
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Report
continued
5.
KMP Remuneration Arrangements (continued)
II.
KMP Remuneration for the year ended 31 December 2024
The Remuneration for Directors and Executive KMP in the current reporting period has been prepared according to
accounting standards as required by the Corporations Act 2001.
Non-Performance Related
Performance Related
Key Management
Personnel Remuneration
12 months ended 31 Dec
2024
Salary &
Allowances
$
Termination
Payment
$
Super &
Statutory
Pension
Benefits
$
Share
based
payments
$
Motor
Vehicle
& Other
Allow-
ances
$
STI
$
LTI
shares*
$
NON-
CASH
accrual
LTI
Rights**
$
Total
$
Mr N Andrews
2024
531,513
–
28,750
–
–
111,804
–
173,042
845,109
(Exec Chairman)
2023
531,513
–
27,500
–
–
–
–
140,576
699,589
Mr C Klein-Schmeink
2024
380,134
–
20,447
–
16,604
20,971
–
128,397
566,553
(President Magontec Europe) 2023
379,821
–
19,964
–
16,210
–
–
110,013
526,008
Mr X Tong
2024 362,508
–
24,480
–
–
13,237
–
114,625
514,850
(President Magontec Asia)
2023
365,333
–
22,833
–
–
–
–
96,543
484,709
Mr D Chin
2024 306,357
–
28,750
–
–
62,600
– 102,048
499,755
(Chief Financial Officer)
2023
306,357
–
27,500
–
–
–
–
82,263
416,120
Mr R Kaye
2024
80,000
–
–
–
–
–
–
–
80,000
(Lead Independent Dr)
2023
80,000
–
–
–
–
–
–
–
80,000
Mr A Malhotra
2024
60,000
–
–
–
–
–
–
–
60,000
(Independent Dr)
2023
60,497
–
–
–
–
–
–
–
60,497
Mr A Labuschagne
2024
60,000
–
–
–
–
–
–
–
60,000
(Independent Dr)
2023
60,000
–
–
–
–
–
–
–
60,000
Mr Z Li
2024
60,000
–
–
–
–
–
–
–
60,000
(Non Exec Dr)
2023
60,000
–
–
–
–
–
–
–
60,000
Mr X Li
2024
–
–
–
–
–
–
–
–
–
(Non Exec Dr)
2023
–
–
–
–
–
–
–
–
–
Total year ended
31 December 2024
1,840,512
– 102,427
–
16,604
208,612
–
518,112
2,686,267
Total year ended
31 December 2023
1,843,521
–
97,797
–
16,210
–
– 429,395
2,386,923
*
LTI shares
This reflects the expense related to actual shares vesting to the employee from the scheme that have not been previously
accrued.
** LTI Rights - Long Term Incentive rights explanatory note
The values listed in the table above under the column LTI rights are non-cash. This accounting expense represents the
estimated fair value that the employee obtains from participation in the LTI scheme as required by Australian accounting
standards and does not represent an amount that has been received by the employee.
III.
Loans to Members of Key Management Personnel
As at 31 December 2024, there was one employee loan outstanding to Mr Christoph Klein-Schmeink for a total of A$56,914
(2023: A$55,158).
The loan has a term of 10 years expiring on the 15 July 2026 or repayable in full on termination of employment or sale of shares
in part or full held in Magontec Limited. Interest of 1.81% (2023: 1.81%) is attached to the loan.
There were no other employee loans to key management personnel outstanding as at 31 December 2024.
44
Magontec Limited
Annual Report 2024
Financial Report (continued)
6.
Independent & Non-Executive Director Remuneration Arrangements
The remuneration of Independent and Non-Executive Directors (NEDs) consists of Directors’ fees. The aggregate amount of
independent and NEDs fees are approved by Shareholders and is currently limited to $600,000 per annum. Any increase to
the aggregate amount must be approved by Shareholders.
The Board decides how the aggregate amount, or a lesser amount is divided between the Directors.
Within the aggregate $600,000 fees approved by Shareholders for Independent and NEDs, compensation is set at $60,000
per annum for each Independent NED and at $80,000 for the Lead Independent Director inclusive of any payments for
superannuation.
There are currently no additional fees being paid to those directors serving on the Finance, Audit & Compliance Committee,
Remuneration & Nominations Committee or the Business Risk Committee.
Independent and NEDs are reimbursed for all reasonable travel costs and other expenses properly incurred by them in
attending any meetings of committees of the Board, in attending any general meetings or otherwise in connection with the
affairs of the Group
Equity based compensation including the issue of options is generally avoided for Independent and NEDs. However, this can
be provided to directors as long as any such issue complies with the requirements of the Corporations Act and the ASX Listing
Rules.
7.
2024 KMP Statutory disclosures
I.
2024 Fixed Remuneration (TFR)
During 2024, no fixed increases in fixed remuneration were received by Key Management Personnel (KMP).
The Remuneration Framework aims to reward KMP at the 50th percentile of the relative benchmark for each Executive
(measured independently). The benchmarking includes review of fixed and variable components in the relevant industry and
region, relative to the Board approved remuneration mix.
II.
2024 Short-Term Incentive (STI)
In accordance with the Group’s Remuneration Policy and Executive KMP employment arrangements, financial performance
KPIs relating to the current year ended 31 December 2024 were not achieved. However, included in the STI plan were personal
KPIs, where certain KPIs were assessed as being achieved and were subsequently provided for in the Financial Statements.
III.
2024 Executive Long-Term Incentive (LTI)
LTI vested grants converted to shares during 2024
Following the vesting of 842,858 performance rights with respect to the 3 year 2021-2023 performance period, these
performance rights were converted to the equivalent number of MGL ordinary shares on 29 February 2024.
LTI grants vested during 2024
Performance Rights granted in January 2022, for the period 1 January 2022 to 31 December 2024 totalling 3,125,212
Performance Rights, contained two vesting conditions. The share price target and KPI conditions were deemed not to have
been achieved on the vesting date and consequently, Performance Rights of 3,125,212 lapsed.
LTI granted during 2024
During the year ended 31 December 2024, a total of 3,742,227 performance rights were granted with respect to the three-year
period 1 January 2024 to 31 December 2026. The performance rights were granted subsequent to the AGM held in May
2024, but prior to the QSLM actions leading to the termination of the operating contracts and cancellation of the QSLM
shareholding.
No other LTIs were granted to Executive KMP during the 2024 financial period.
The calculation of these Performance Rights was included in previously released Notices of AGMs and ASX announcements
with the number of performance rights by employee summarised in the table below.
Directors’ Report
continued
45
Magontec Limited
Annual Report 2024
Financial Report (continued)
7.
2024 KMP Statutory disclosures (continued)
Summary of current LTI grants
The table below summaries the current LTI grants provided to eligible executive’s which includes current approved LTI grants.
Calculation of Performance Rights Issued to Global Management Group
3 Year LTI Performance Period
1 Jan 22 to
31 Dec 24
1 Jan 23 to
31 Dec 25
1 Jan 24 to
31 Dec 26
1.
Aggregate salaries of eligible participants at commencement of 3 year
LTI period
$2,109,518
$2,039,203
$2,189,203
2. Multiplication factor
50%
50%
50%
3. Value (1 x 2)
$1,054,759
$1,019,602
$1,094,602
4. Share price assumed at commencement of 3 year LTI period assumed
adjusted for share consolidation 15 for 1
$0.450
$0.450
$0.390
5. Performance Rights issued at commencement = Amount in step 3 / 75% *
share price in step 4
3,125,212
3,021,042
3,742,227
Date of issue of Performance Rights
01-Jan-22
01-Jan-23
01-Jan-24
Vesting date
31-Dec-24
31-Dec-25
31-Dec-26
LTI granted and on issue as at 31 December 2024
Performance Rights Issued to Global Management Group
3 year LTI Performance Period
1 Jan 22 to
31 Dec 24*
1 Jan 23 to
31 Dec 25
1 Jan 24 to
31 Dec 26
Total
Rights
2023
Value $
2024
Value $
Nicholas Andrews
774,074
828,175
955,586
2,557,835
136,495
187,400
Derryn Chin
455,556
494,620
570,716
1,520,892
81,521
111,923
Christoph Klein-Schmeink
620,594
591,401
682,385
1,894,380
97,471
133,823
Xunyou Tong
535,755
539,889
622,949
1,698,593
88,982
122,167
John Talbot
185,185
–
–
185,185
–
–
Patrick Look
321,075
332,190
383,296
1,036,561
54,750
75,168
Zisheng Zhen
232,973
234,767
270,885
738,625
38,693
53,123
Dean Taylor
–
–
256,410
256,410
–
50,286
Total Performance Rights
3,125,212
3,021,042
3,742,227
9,888,481
497,912
733,890
*
The 2022-2024 LTI grant lapsed following Board decision on 26 February 2025.
2022-2024 LTI Plan Vesting Schedule
Performance Level
Share Price
% of Performance
Rights vesting
Below threshold
Share price <
60.0
0%
Threshold range
Share price =
60.0
25%
Target range
Share price =
70.0
50%
Stretch
Share price >=
80.0
100%
Directors’ Report
continued
46
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Report
continued
7.
2024 KMP Statutory disclosures (continued)
2023-2025 LTI Plan Vesting Schedule
Performance Level
Share Price
% of Performance
Rights vesting
Below threshold
Share price <
45.0
0%
Threshold range
Share price =
45.0
25%
Target range
Share price =
51.8
50%
Stretch
Share price >=
59.6
100%
2024-2026 LTI Plan Vesting Schedule
Performance Level
Share Price
% of Performance
Rights vesting
Below threshold
Share price <
47.1
0%
Threshold range
Share price =
47.1
25%
Target range
Share price =
55.2
50%
Stretch
Share price >=
71.5
100%
The table below summarises the STI and LTI awards for key management personnel at their fair value at initial grant date.
Subsequently, this can differ from the disclosures in the remuneration report table above due to changes in the assessed
probability of achieving non-market based targets or other adjustments as required by accounting standards.
The 2024 LTI and 2023 LTI fair value at grant date awarded relates to the 2024-26 Plan and 2023-25 Plan respectively.
Summary of STI and LTI awarded to key management personnel
2024 STI
awarded
$
2024 LTI fair
value awarded
at grant date
$
2023 STI
awarded
$
2023 LTI fair
value awarded
at grant date
$
Current KMP executives
Nicholas Andrews
111,804
187,400
–
136,495
Christoph Klein-Schmeink
20,971
133,823
–
97,471
Xunyou Tong
13,237
122,167
–
88,982
Derryn Chin
62,600
111,923
–
81,521
Total
208,612
555,313
–
404,469
Non Market Vesting Probability at grant date (%)
100%
100%
47
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Report
continued
7.
2024 KMP Statutory disclosures (continued)
The following table details the number of LTI performance rights granted, lapsed or exercised during the year ended
31 December 2024, by plan participant and in aggregate.
Performance Rights Issued to Global Management Group
Name
Assumed
Grant date
Holding at
1 Jan 24
Granted in
2024
Lapsed in
2024
Vested in
2024
Holding at
31 Dec 2024
Vested at
31 Dec 2024
Nicholas Andrews
2022-24 Plan
1-Jan-22
774,074
–
(774,074)
–
–
–
2023-25 Plan
1-Jan-23
828,175
–
–
–
828,175
–
2024-26 Plan
1-Jan-24
–
955,586
–
–
955,586
–
Subtotal
1,602,249
955,586
(774,074)
–
1,783,761
–
Derryn Chin
2022-24 Plan
1-Jan-22
455,556
–
(455,556)
–
–
–
2023-25 Plan
1-Jan-23
494,620
–
–
–
494,620
–
2024-26 Plan
1-Jan-24
–
570,716
–
–
570,716
–
Subtotal
950,176
570,716
(455,556)
–
1,065,336
–
Christoph Klein-
Schmeink
2022-24 Plan
1-Jan-22
620,594
–
(620,594)
–
–
–
2023-25 Plan
1-Jan-23
591,401
–
–
–
591,401
–
2024-26 Plan
1-Jan-24
–
682,385
–
–
682,385
–
Subtotal
1,211,995
682,385
(620,594)
–
1,273,786
–
Xunyou Tong
2022-24 Plan
1-Jan-22
535,755
–
(535,755)
–
–
–
2023-25 Plan
1-Jan-23
539,889
–
–
–
539,889
–
2024-26 Plan
1-Jan-24
–
622,949
–
–
622,949
–
Subtotal
1,075,644
622,949
(535,755)
–
1,162,838
–
John Talbot
2022-24 Plan
1-Jan-22
185,185
–
(185,185)
–
–
–
2023-25 Plan
1-Jan-23
–
–
–
–
–
–
2024-26 Plan
1-Jan-24
–
–
–
–
–
–
Subtotal
185,185
–
(185,185)
–
–
–
Patrick Look
2022-24 Plan
1-Jan-22
321,075
–
(321,075)
–
–
–
2023-25 Plan
1-Jan-23
332,190
–
–
–
332,190
–
2024-26 Plan
1-Jan-24
–
383,296
–
–
383,296
–
Subtotal
653,265
383,296
(321,075)
–
715,486
–
48
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Report
continued
7.
2024 KMP Statutory disclosures (continued)
Performance Rights Issued to Global Management Group
Name
Assumed
Grant date
Holding at
1 Jan 24
Granted in
2024
Lapsed
in 2024
Vested
in 2024
Holding at
31 Dec 2024
Vested at
31 Dec 2024
Zisheng Zhen
2022-24 Plan
1-Jan-22
232,973
–
(232,973)
–
–
–
2023-25 Plan
1-Jan-23
234,767
–
–
–
234,767
–
2024-26 Plan
1-Jan-24
-
270,885
–
–
270,885
–
Subtotal
467,740
270,885
(232,973)
–
505,652
–
Dean Taylor
2022-24 Plan
1-Jan-22
–
–
–
–
–
–
2023-25 Plan
1-Jan-23
–
–
–
–
–
–
2024-26 Plan
1-Jan-24
–
256,410
–
–
256,410
–
Subtotal
–
256,410
–
–
256,410
–
Aggregate
2022-24 Plan
1-Jan-22
3,125,212
–
(3,125,212)
–
–
–
2023-25 Plan
1-Jan-23
3,021,042
–
–
–
3,021,042
–
2024-26 Plan
1-Jan-24
–
3,742,227
–
–
3,742,227
–
Total
6,146,254
3,742,227
(3,125,212)
–
6,763,269
–
IV.
Valuation of performance rights
The fair value of performance rights granted as consideration by the Group has been estimated by reference to the fair value of
the equity instruments granted.
The group uses a binomial options pricing model which was used to determine the fair value of performance rights issued to
executives for market-based conditions.
The fair value of the equity instruments granted for market-based conditions is calculated assuming a 0% probability of
forfeiture before grant date (i.e., it is assumed all participants remain employed by Magontec during the period) and is
expensed on a straight-line basis over the vesting period.
Tier 1 Non-Market Based Conditions are based on % of KPI achievement x 30%. The expense recorded assumes 100% KPI
achievement and 100% of eligible members will be still eligible at the end of the 3-year period.
49
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Report
continued
7.
2024 KMP Statutory disclosures (continued)
As the LTI payout under Tier 2 is only incremental to Tier 1, the valuation has been calculated as being the higher of:
a. the existing market-based binomial valuation model (Tier 2); or
b. the pay-out that would be owing by satisfaction of the non-market-based conditions (Tier 1)
Grant Year
2022
2023
2024
Status
Approved
Approved
Approved
Grant Date
01 January 2022
01 January 2023
01 January 2024
Performance Period
01 January 2022
to 31 December 2024
01 January 2023
to 31 December 2025
01 January 2024
to 31 December 2026
Vesting Date
31 December 2024
31 December 2025
31 December 2026
Vesting Period
3 years
3 years
3 years
Performance Rights Awarded – Exec Chair
774,074
828,175
955,586
Performance Rights Awarded – other KMP
2,351,138
2,192,867
2.786,641
Total Grant
3,125,212
3,021,042
3,742,227
Share Price at grant date
45.0c
32.5c
39.0c
Share Price Target (cents)
80.0c
59.6c
71.5c
Volatility %
62.3%
64.8%
56.0%
Discount rate (risk free) p.a.
0.93%
3.19%
3.81%
Dividend Yield p.a.
0.0%
3.7%
3.1%
Fair Value (cents)
25.2c
16.5c
19.6c
50
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Report
continued
7.
2024 KMP Statutory disclosures (continued)
V.
KMP Equity Holdings
Fully paid ordinary shares of Magontec Limited - 31 Dec 2024
Total balance
(held directly
and indirectly)
01 Jan 24
Granted as
remuneration
vesting
Acquired On
Market
Issued under
Dividend
Reinvestment
Plan
Total balance
(held directly
and indirectly)
31 Dec 24
Balance held
nominally
(indirectly)
No.
No.
No.
No.
No.
No.
Mr Z Li(a)
3,875,307
–
–
62,079
3,937,386
3,909,154
Mr N Andrews(b)
1,567,582
200,000
–
33,308
1,800,890
1,800,890
Mr R Kaye(c)
242,350
–
–
–
242,350
242,350
Mr C Klein-Schmeink
480,023
168,991
–
10,396
659,410
–
Mr X Tong
686,402
145,606
–
13,330
845,338
–
Mr D Chin(d)
104,071
111,933
–
4,070
220,074
220,074
Total
6,955,735
626,530
–
123,183
7,705,448
6,172,468
(a) 3,909,154 shares held via Yuan Yuan Li and 28,232 shares are held directly
(b) 1,800,890 shares are held via DEWBERRI PTY LIMITED as trustee for Andrews Superannuation Fund
(c) 242,350 shares held through Bella Rebecca Kaye
(d) 220,074 shares held through Fen Kang
Fully paid ordinary shares of Magontec Limited - 31 Dec 2023
Total balance
(held directly
and indirectly)
01 Jan 23
Granted as
remuneration
Acquired On
Market
Issued under
Dividend
Reinvestment
Plan
Total balance
(held directly
and indirectly)
31 Dec 23
Balance held
nominally
(indirectly)
No.
No.
No.
No.
No.
No.
Mr Z Li(a)
3,792,907
–
–
82,400
3,875,307
3,847,524
Mr N Andrews(b)
1,520,364
–
–
47,218
1,567,582
1,185,536
Mr R Kaye(c)
102,565
–
139,785
–
242,350
242,350
Mr C Klein-Schmeink
467,686
–
–
12,337
480,023
–
Mr X Tong
668,765
–
–
17,637
686,402
–
Mr D Chin
100,936
–
–
3,135
104,071
–
6,653,223
–
139,785
162,727
6,955,735
5,275,410
(a) 3,847,524 shares held via KWE (HK) Investment Development Co Limited and 27,783 shares are held directly
(b) 1,185,536 shares are held via DEWBERRI PTY LIMITED as trustee for Andrews Superannuation Fund and 382,046 are held directly
(c) 242,350 shares held through Bella Rebecca Kaye
51
Magontec Limited
Annual Report 2024
Financial Report (continued)
Lead Auditor’s
Independence
Declaration
Camphin Boston
Level 5, 179 Elizabeth Street
(02) 9221 7022
DĞŵďĞƌŽĨZƵƐƐĞůůĞĚĨŽƌĚ/ŶƚĞƌŶĂƟŽŶĂůͲĂŐůŽďĂůŶĞƚǁŽƌŬ
of independent professional services firms
Chartered Accountants
Sydney, NSW 2000
cambos@cambos.com.au
ABN 69 688 697 499
GPO Box 3403, Sydney NSW 2001
camphinboston.com.au
>ŝĂďŝůŝƚLJůŝŵŝƚĞĚďLJĂƐĐŚĞŵĞĂƉƉƌŽǀĞĚƵŶĚĞƌWƌŽĨĞƐƐŝŽŶĂů^ƚĂŶĚĂƌĚƐ>ĞŐŝƐůĂƟŽŶ͘
The Board of Directors
Magontec Limited
Level 2 Suite 1/139 Macquarie St
Sydney NSW 2000
Dear Board Members,
Lead Auditor’s Independence Declaration
Under Section 307C of the Corporations Act 2001
We hereby declare, that to the best of our knowledge and belief, during the financial year
ended 31 December 2024 there have been:
(i) no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the
audit.
Camphin Boston
Chartered Accountants
Justin Woods
Lead Audit Partner
Sydney
Dated this 28th day of February 2025.
52
Magontec Limited
Annual Report 2024
Financial Report (continued)
Consolidated Statement of Profit & Loss
and Other Comprehensive Income
for the year ended 31 December 2024
Note
Continuing
Operations
12 months
to
31 Dec 2024
$'000
Discontinued
Operations
12 months to
31 Dec 2024
$'000
Total
12 months
to
31 Dec 2024
$'000
Continuing
Operations
12 months
to
31 Dec 2023
$'000
Discontinued
Operations
12 months to
31 Dec 2023
$'000
Total
12 months
to
31 Dec 2023
$'000
Sale of goods
2(a)
57,093
15,096
72,189
79,460
22,897
102,357
Cost of sales
2(b)
(46,786)
(14,641)
(61,427)
(61,400)
(21,733)
(83,133)
Gross profit
10,307
455
10,762
18,060
1,164
19,224
Other income
2(c)
660
170
830
2,206
476
2,682
Interest expense
(330)
(22)
(352)
(407)
(88)
(495)
Impairment - inventory, fixed assets,
doubtful debts
2(d)
(801)
(3,482)
(4,283)
(1,281)
(190)
(1,471)
Travel accommodation and meals
(604)
(92)
(696)
(691)
(112)
(803)
Research, development, licensing and
patent costs
(814)
(20)
(834)
(1,024)
(99)
(1,123)
Promotional activity
(123)
–
(123)
(77)
–
(77)
Information technology
(347)
(35)
(382)
(363)
(39)
(402)
Personnel
(8,936)
(669)
(9,605)
(8,925)
(189)
(9,114)
Depreciation & amortisation
(671)
(1)
(672)
(721)
(9)
(730)
Office expenses
(388)
(74)
(462)
(486)
(140)
(626)
Corporate
(3,596)
(95)
(3,691)
(4,229)
(78)
(4,307)
Foreign exchange gain/(loss)
278
(108)
170
(684)
(88)
(772)
Profit/(Loss) before income tax
expense
(5,365)
(3,973)
(9,338)
1,378
607
1,985
Income tax (expense)/benefit
3(a)
178
(357)
(179)
(1,610)
91
(1,519)
Profit/(Loss) after income tax
expense
(5,187)
(4,330)
(9,517)
(232)
698
466
Other Comprehensive Income - that
may later emerge in the Profit and
Loss Statement
Exchange differences taken to reserves
in equity – translation of overseas entities
17
2,295
220
2,515
681
(139)
542
Other Comprehensive Income - that
will not emerge in the Profit and
Loss Statement
Movement in actuarial assessments
17
75
–
75
(461)
–
(461)
Total Comprehensive Income
(2,817)
(4,110)
(6,927)
(12)
560
548
Note
Continuing
Operations
12 months
to
31 Dec 2024
cents per
share
Discontinued
Operations
12 months to
31 Dec 2024
cents per
share
Total
12 months
to
31 Dec 2024
cents per
share
Continuing
Operations
12 months
to
31 Dec 2023
cents per
share
Discontinued
Operations
12 months to
31 Dec 2023
cents per
share
Total
12 months
to
31 Dec 2023
cents per
share
Profit/(Loss) after income tax
expense for the year
Members of the parent entity - Basic
(cents per share)
19
(6.5)
(5.5)
(12.0)
(0.3)
0.9
0.6
Members of the parent entity - Diluted
(cents per share)
19
(5.8)
(4.9)
(10.7)
(0.3)
0.8
0.5
53
Magontec Limited
Annual Report 2024
Financial Report (continued)
Consolidated Balance Sheet
as at 31 December 2024
Note
31 Dec 2024
$’000
31 Dec 2023
$’000
Current assets
Cash and cash equivalents
25(d)
7,750
13,136
Trade & other receivables
6
12,635
16,043
Inventory
7
29,270
32,805
Other
8
1,837
532
Total current assets
51,492
62,516
Non-current assets
Other receivables
9
293
307
Property, plant & equipment
10
14,188
17,786
Deferred tax asset
3(c)
1,596
1,582
Intangibles
11
3,021
2,977
Total non-current assets
19,098
22,652
TOTAL ASSETS
70,590
85,168
Current liabilities
Trade & other payables
12
6,402
6,751
Bank borrowings
13
1,356
4,418
Provisions
14
850
6,691
Total current liabilities
8,608
17,860
Non-current liabilities
Other payables
502
221
Bank borrowings
13
908
–
Provisions
15
10,576
10,440
Total non-current liabilities
11,986
10,661
TOTAL LIABILITIES
20,954
28,521
NET ASSETS
49,996
56,647
Equity attributable to members of MGL
Share capital
16
59,718
59,524
Reserves
17
17,929
15,255
Accumulated (losses)/profits
18
(27,651)
(18,133)
Total equity
49,996
56,647
54
Magontec Limited
Annual Report 2024
Financial Report (continued)
Consolidated Statement of Changes in Equity
for the year ended 31 December 2024
Share
Capital
Retained
Earnings
Profits
Reserve
Foreign
Currency
Translation
Reserve
Capital
Reserve
Actuarial
Reserve
Expired
Options
Reserve
Employee
Share
Issue
Reserve
Total
Equity
Ordinary
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Balance 1-Jan-23
59,174
(18,599)
6,857
4,250
2,750
(567)
1,637
627
56,129
Profit/(Loss) attributable to
members of parent entity
–
466
–
–
–
–
–
–
466
Transfer to Reserves
–
–
–
–
–
–
490
(490)
–
Dividends
–
–
(935)
–
–
–
–
–
(935)
Comprehensive income
–
–
–
542
–
(461)
–
–
82
Issue of shares (net of costs)
350
–
–
–
–
–
–
555
905
Balance 31-Dec-23
59,524
(18,133)
5,922
4,793
2,750
(1,028)
2,127
691
56,647
Balance 1-Jan-24
59,524
(18,133)
5,922
4,793
2,750
(1,028)
2,127
691
56,647
Profit/(Loss) attributable to
members of parent entity
–
(9,517)
–
–
–
–
–
–
(9,517)
Transfer to Reserves
–
–
–
–
–
–
(114)
–
(114)
Dividends
–
–
(476)
–
–
–
–
–
(476)
Comprehensive income
–
–
–
2,515
–
75
–
–
2,590
Share issue reserve
–
–
–
–
–
–
788
(788)
–
Issue of shares (net of costs)
194
–
–
–
–
–
–
673
866
Balance 31-Dec-24
59,718
(27,651)
5,446
7,308
2,750
(953)
2,802
577
49,996
Note: Amounts transferred to the Profits Reserve in prior periods characterise profits available for distribution as dividends in
future years.
55
Magontec Limited
Annual Report 2024
Financial Report (continued)
Note
12 months to
31 Dec 2024
$’000
12 months to
31 Dec 2023
$’000
Cash flows from operating activities
Profit before taxation
(9,338)
1,985
Adjustments for:
– Non-cash equity expense
673
555
– Depreciation & amortisation
2,752
2,990
– Impairment losses
3,482
2,990
– Foreign currency effects
89
1,281
– Other non-cash items
157
(666)
Cash generated from/(utilised in) underlying operating activities
(2,185)
6,145
Movement in working capital balance sheet accounts
– Trade receivables and other current assets
3,486
10,727
– Inventory
4,873
3,790
– Trade payables and other current liabilities
(1,173)
(5,297)
Cash generated from/(utilised in) underlying operational cash flow and net
working capital assets
5,001
15,365
– Net Interest paid
(115)
(271)
– Income tax paid
(5,882)
(3,698)
Cash generated from/(utilised in) operating activities
(996)
11,396
Cash flows from investing activities
Net cash out on purchase/disposal of property, plant & equipment
(1,803)
(3,823)
Group information technology software
(118)
(143)
Security deposits
(46)
(68)
Other
23
38
Net cash provided by/(used in) investing activities
(1,944)
(3,996)
Cash flows from financing activities
Dividends paid
(385)
(563)
Proceeds from borrowings
5,464
5,375
Repayment of borrowings
(7,642)
(10,116)
Cashflow from leasing activities
(285)
(219)
Other
–
(21)
Net cash provided by financing activities
2(e)
(2,848)
(5,544)
Net increase/(decrease) in cash and cash equivalents
(5,788)
1,856
Foreign exchange effects on total cash flow movement
402
21
Cash and cash equivalents at the beginning of the reporting period
25(d)
13,136
11,259
Cash and cash equivalents at the end of the reporting period
25(d)
7,750
13,136
Cashflows from Discontinued Operations as required by AASB 5 are disclosed in Note 2(g)
Consolidated Cash Flow Statement
for the year ended 31 December 2024
56
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
for the year ended 31 December 2024
1.
Summary of Accounting Policies
Statement of Compliance
The financial report is a general purpose financial report
which has been prepared in accordance with the
Corporations Act 2001, Australian Accounting Standards,
Australian Accounting Interpretations and other
authoritative pronouncements of the Australian Accounting
Standards Board.
Australian Accounting Standards set out accounting policies
that the AASB has concluded would result in a financial
report containing relevant and reliable information about
transactions, events and conditions. Compliance with
Australian Accounting Standards ensures that the financial
statements and notes also comply with International
Financial Reporting Standards. Material accounting policies
adopted in the preparation of this financial report are
presented below and have been consistently applied unless
otherwise stated.
The audited accounts were authorised for issue by the
Directors on 26 February 2025. The Group has assessed
that there are no new standards with a material impact to be
adopted with a date of initial application of 1 January 2024.
Basis of Preparation
The financial report has been prepared on an accruals basis
and is based on historical cost, modified where applicable,
by the measurement at fair value of selected non-current
assets, financial assets and financial liabilities. 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 accounts are prepared on a going concern basis. The
Group, having made appropriate enquiries have a reasonable
expectation that Magontec Limited has adequate resources
to continue in operational existence for the foreseeable
future.
Changes in Significant Accounting Policies
There were no changes in significant accounting policies
during the period.
Significant Accounting Policies
The following significant accounting policies have been
adopted in the preparation and presentation of the financial
report:
a. Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, cash in
banks, at call and on deposit.
b. Employee Benefits
Provision is made for benefits accruing to employees in
respect of wages and salaries, annual leave and long service
leave when it is probable that settlement will be required and
they are capable of being measured reliably.
Provisions made in respect of employee benefits expected
to be settled within 12 months are measured at their
nominal values using the remuneration rate expected
to apply at the time of settlement. Provisions made in
respect of employee benefits which are not expected to
be settled within 12 months are measured at the present
value of the estimated future cash outflows to be made by
the consolidated entity in respect of services provided by
employees up to reporting date. Contributions by the Group
to superannuation plans on behalf of Australian employees
and other defined contribution payments on behalf of
employees are expensed when incurred.
Provision is made for any long term defined benefit
pension obligations the Group has to employees in foreign
jurisdictions. The required amount of the provision is
actuarially assessed having regard to such matters as future
interest rates, the date at which pension payments might
commence and the likely period over which pensions
may be paid.
c. Financial Assets
Subsequent to initial recognition, investments in subsidiaries
are measured at cost less any allowance for impairment.
Other financial assets are classified into the following
categories in accordance with AASB 9 Financial Instruments
being ‘amortised cost‘, ‘fair value through profit or loss’
and ‘ fair value through other comprehensive income’. The
classification depends on the nature and purpose of the
financial asset.
Receivables
Trade receivables and other receivables are recognised
initially at their fair value and subsequently at amortised cost
less impairment in accordance with the Expected Credit
Loss method.
d. Financial Instruments Issued by the Group
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.
Transaction Costs on the Issue of Equity Instruments
Transaction costs arising on the issue of equity instruments
are recognised directly in equity as a reduction of the
proceeds of the equity instruments to which the costs relate.
Transaction costs are the costs that are incurred directly in
connection with the issue of those equity instruments and
which would not have been incurred had those instruments
not been issued.
57
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
continued
1.
Summary of Accounting Policies
(continued)
e. Foreign Currency
Foreign Currency Transactions
All foreign currency transactions during the financial year are
brought to account using the exchange rate in effect at the
date of the transaction. Foreign currency monetary items
are translated at the exchange rate prevailing at the end of
the reporting period. Non-monetary items measured at fair
value are reported at the exchange rate prevailing at the date
when the fair value was determined
Foreign Operations
On consolidation, the assets and liabilities of the
consolidated entity’s overseas operations are translated at
exchange rates prevailing at the reporting date. Income and
expense items are translated at the average exchange rates
for the period unless exchange rates fluctuate significantly.
Exchange differences arising, if any, are recognised in the
foreign currency translation reserve, and recognised in profit
or loss on disposal of the foreign operation.
f. Goods and Services Tax and Value Added Tax
Revenues, expenses, assets and liabilities are recognised
net of the amount of goods and services tax (GST) or value
added tax (VAT) for certain foreign jurisdictions, except
where the GST or VAT is not recoverable from the relevant
tax authority. In these circumstances the GST or VAT is
recognised as part of the cost of acquisition of the asset or as
part of an item of the expense. Receivables and payables in
the balance sheet are shown inclusive of GST.
Cash flows are included in the cash flow statement on a gross
basis. The GST or VAT 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.
g. Impairment of Assets
At each reporting date, the consolidated entity reviews
the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those
assets have been impaired. If any such indication exists,
the recoverable amount of the asset, being the higher
of the asset’s fair value less costs to sell and value in use,
is compared to the asset’s carrying value. Any excess of
the asset’s carrying value over its recoverable amount is
expensed to the income statement.
Where it is not possible to estimate the recoverable amount
of an individual asset, the consolidated entity estimates the
recoverable amount of the cash generating unit to which the
asset belongs.
h. Income Tax
Current Tax
Current tax is calculated by reference to the amount of
income taxes payable or recoverable in respect of the
taxable profit or loss for the period. It is calculated using tax
rates and tax laws that have been enacted or substantively
enacted by reporting date. Current tax for current and prior
periods is recognised as a liability to the extent that it is
unpaid.
Deferred Tax
Deferred tax assets and liabilities are ascertained based on
temporary differences arising from differences between
the carrying amount of assets and liabilities in the financial
statements and the corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that sufficient
taxable amounts will be available against which deductible
temporary differences or unused tax losses and tax offsets
can be utilised. However, deferred tax assets and liabilities
are not recognised if the temporary differences giving rise to
them arise from the initial recognition of assets and liabilities
(other than as a result of a business combination) which
affects neither taxable income nor accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, branches,
associates and joint ventures except where the consolidated
entity is able to control the reversal of the temporary
differences and it is probable that the temporary differences
will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated
with these investments and interests are only recognised
to the extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of the
temporary differences and they are expected to reverse in
the foreseeable future.
Deferred tax assets and liabilities are calculated at the
tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax
rates enacted or substantively enacted at reporting date.
Their measurement also reflects the manner in which
management expects to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and
liabilities on a net basis.
Current and Deferred Tax for the Period
Current and deferred tax is recognised as an expense or
income in the income statement, except when it relates to
items credited or debited directly to equity, in which case
the deferred tax is recognised directly in equity, or where it
arises from the initial accounting for a business combination,
in which case it is taken into account in the determination of
goodwill or excess.
58
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
continued
1.
Summary of Accounting Policies
(continued)
Tax Consolidation
The Parent Entity and all its wholly-owned Australian
subsidiaries are part of a tax-consolidated group under
Australian tax consolidation legislation. Magontec Limited is
the head entity in the tax-consolidated group. Tax expense/
income, deferred tax liabilities and deferred tax assets
arising from temporary differences of the members of the
tax-consolidated group are recognised in the separate
financial statements of the members of the tax-consolidated
group using the ‘stand-alone taxpayer’ approach. Current
tax liabilities and assets and deferred tax assets arising from
unused tax losses and tax credits of the members of the tax
consolidated group are recognised by the Company (as head
entity in the tax-consolidated group).
Due to the existence of a tax funding arrangement between
the entities in the tax-consolidated group, amounts are
recognised as payable to or receivable by the Company and
each member of the group in relation to the tax contribution
amounts paid or payable between the parent entity and the
other members of the tax-consolidated group in accordance
with the arrangement. Further information about the
tax funding arrangement is detailed in the notes to the
financial statements. Where the tax contribution amount
recognised by each member of the tax-consolidated group
for a particular period is different to the aggregate of the
current tax liability or asset and any deferred tax asset arising
from unused tax losses and tax credits in respect of that
period, the difference is recognised as a contribution from
(or distribution to) equity participants.
i. Intangible Assets
Patents, Trademarks and Licences
Patents, trademarks and licences are recorded at cost of
acquisition. Patents and trademarks have an indefinite useful
life and are carried at cost. Carrying values are subject to
impairment testing as outlined above.
Research and Development Costs
Expenditure on the research phase of a project is recognised
as an expense when incurred. Development costs are
capitalised only when technical feasibility studies identify
that the project is expected to deliver future economic
benefits and these benefits can be measured reliably.
j. Inventories
Inventory is measured at the lower of cost and net realisable
value. Costs are assigned to inventory using a weighted
average cost method. Net realisable value represents
the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing, selling
and distribution.
k. Leases
Leases are recognised by recording a lease liability at
inception and a corresponding “right of use” asset on the
balance sheet. The lease liability is unwound over time,
with each lease payment apportioned between an interest
expense component and a principal reduction component.
The right of use asset is depreciated over the useful life of the
asset.
l. Non-current Assets Held for Sale
Non-current assets (and disposal groups) classified as
held for sale are measured at the lower of carrying amount
and fair value less costs to sell. Non-current assets and
disposal groups are classified as held for sale if their carrying
amount will be recovered through a sale transaction rather
than through continuing use. This condition is regarded
as met only when the sale is highly probable and the asset
(or disposal group) is available for immediate sale in its
present condition. The sale of the asset (or disposal group)
is expected to be completed within one year from the date
of classification.
m. Payables
Trade payables and other accounts payable are recognised
when the consolidated entity becomes obliged to make
future payments resulting from the purchase of goods and
services.
n. Presentation Currency
The presentation currency of the Group is Australian dollars.
o. Principles of Consolidation and Investments in
Subsidiaries
The consolidated financial statements are prepared by
combining the financial statements of all the entities that
comprise the consolidated entity, being the Company (the
parent entity) and its subsidiaries as defined in Accounting
Standard AASB 127 ‘Consolidated and Separate Financial
Statements.’ A list of subsidiaries appears in the notes to
the financial statements. Consistent accounting policies
are employed in the preparation and presentation of the
consolidated financial statements. On acquisition, the
assets, liabilities and contingent liabilities of a subsidiary are
measured at their fair values at the date of acquisition. Any
excess of the cost of acquisition over the fair values of the
identifiable net assets acquired is recognised as goodwill.
Similarly, any excess of the fair market value over the cost
of acquisition is recognised as a discount upon acquisition.
The consolidated financial statements include the
information and results of each subsidiary from the date on
which the Company obtains control and until such time as
the Company ceases to control such entity. In preparing the
consolidated financial statements, all intercompany balances
and transactions, and unrealised profits arising within the
consolidated entity are eliminated in full.
59
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
continued
1.
Summary of Accounting Policies
(continued)
p. Plant and Equipment
Plant and equipment is 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.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset only when it is
probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance are
charged to the income statement during the financial period
in which they are incurred.
Depreciation is provided on plant and equipment and 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. Useful life
is determined having regard to the nature of the plant and
equipment, the environment in which it operates (including
geographical and climatic conditions) and an expectation
that maintenance is conducted on a scheduled basis.
Leasehold improvements are depreciated over the period
of the lease or estimated useful life, whichever is the shorter,
using the straight-line method. The assets’ estimated
useful lives and residual values are reviewed, and adjusted if
appropriate, at the end of each annual reporting period. The
estimated useful lives of significant items of property, plant
and equipment are as follows:
- Land & Buildings
4 - 60 years
- Plant & Equipment
3 - 20 years
q. Provisions
Provisions are recognised when the consolidated entity has a
legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will
result and that outflow can be reliably measured.
r. Revenue Recognition
Sale of Goods
Revenue from the sale of goods is recognised when the
consolidated entity has satisfied performance obligations in
transferring to the buyer the significant risks and rewards of
ownership of the goods. The Group’s activities involve the
sale and delivery of a variety of products including primary
and recycled magnesium ingots, as well as both magnesium
and titanium anodes.
As it relates to Magontec specifically, the timing of revenue
recognition and satisfaction of performance obligations
is determined with reference to the INCO shipping terms
(e.g. FOB, CIF, DDP, DAP) that apply to each delivery.
Invoices are issued and revenue is recognised at the point
where the transfer of the significant risks and rewards of
ownership of the goods are determined to have passed to
the customer in line with this framework. For example, under
FOB shipping terms, the Group recognises revenue at the
point when goods have arrived at the port of departure and
has received the bill of lading.
Rendering of Services
Revenue from a contract to provide services is recognised by
reference to the stage of completion of the contract.
Interest Revenue
Interest revenue is recognised on a time proportionate basis
that takes into account the effective yield on the financial
asset.
s. Share-based Payments
Senior executives of the Group receive remuneration in
the form of share-based payments, whereby employees
render services as consideration for equity instruments
(equity‑settled transactions).
Equity-settled Transactions
The cost of equity-settled transactions is determined by the
fair value at the date when the grant is made using a binomial
options pricing valuation model. 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 Company’s estimate of shares that will
eventually vest.
The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired
and the Company’s best estimate of the number of equity
instruments that will ultimately vest. The expense or credit
in the statement of profit or loss for a period represents
the movement in cumulative expense recognised as at the
beginning and end of that period.
Service and non-market performance conditions are not
taken into account when determining the grant date fair
value of awards, but the likelihood of the conditions being
met is assessed as part of the Company’s estimate of the
number of equity instruments that will ultimately vest.
Market performance conditions are reflected within the
grant date fair value. Any other conditions attached to an
award, but without an associated service requirement, are
considered to be non‑vesting conditions. Non-vesting
conditions are reflected in the fair value of an award and lead
to an immediate expensing of an award unless there are also
service and/or performance conditions.
60
Magontec Limited
Annual Report 2024
Financial Report (continued)
1.
Summary of Accounting Policies (continued)
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions
have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested
irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of
the unmodified award, provided the original terms of the award are met. Any additional expense, measured as at the date of
modification, is recognised for any modification that increases the total fair value of the share-based payment transaction,
or is otherwise beneficial to the employee. Where an award is cancelled by the entity or by the counterparty, any remaining
element of the fair value of the award is expensed immediately through profit or loss. The dilutive effect of outstanding options
is reflected as additional share dilution in the computation of diluted earnings per share.
Cash-settled Transactions
A liability is recognised for the fair value of cash-settled transactions. The fair value is measured initially and at each reporting
date up to and including the settlement date, with changes in fair value recognised in employee benefits expense. The fair
value is expensed over the period until the vesting date with recognition of a corresponding liability.
t. Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Group’s accounting policies, which are described in this note, 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 the current and future periods.
Material examples of management applying critical accounting judgements and key sources of estimation uncertainty include:
–
impairment assessments
–
valuation of Long Term Incentive Expenses;
–
actuarial assessment of future pension liabilities;
–
value of trade debtors; and
–
valuation of intellectual property acquired
u. New Accounting Standards for Application in Future Periods
The AASB has issued new and amended standards and interpretations that have mandatory application dates for future
reporting periods. The Group has not early adopted any of these standards.
v. Discontinued operations
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly
distinguished from the rest of the Group and which represents a separate major line of business or geographic area of
operations, is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations
or is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be
classified as held-for-sale. When an operation is classified as a discontinued operation, the comparative statement of profit
or loss and OCI is re-presented as if the operation had been discontinued from the start of the comparative year.
Notes to the Financial Statements
continued
61
Magontec Limited
Annual Report 2024
Financial Report (continued)
2.
Results from Operations
Continuing
Operations
12 months to
31 Dec 2024
$'000
Discontinued
Operations
12 months to
31 Dec 2024
$'000
Total
12 months to
31 Dec 2024
$'000
Continuing
Operations
12 months to
31 Dec 2023
$'000
Discontinued
Operations
12 months to
31 Dec 2023
$'000
Total
12 months to
31 Dec 2023
$'000
(a) Sales Revenue
Metal
21,280
15,096
36,376
30,710
22,897
53,607
Anodes - Cathodic Corrosion
Protection
35,813
–
35,813
48,750
–
48,750
57,093
15,096
72,189
79,460
22,897
102,357
(b) Cost of Sales
Metal
(19,555)
(14,641)
(34,196)
(27,552)
(21,733)
(49,285)
Anodes - Cathodic Corrosion
Protection
(27,231)
–
(27,231)
(33,848)
–
(33,848)
(46,786)
(14,641)
(61,427)
(61,400)
(21,733)
(83,133)
Gross Profit
Metal
1,725
455
2,180
3,158
1,164
4,322
Anodes - Cathodic Corrosion
Protection
8,582
–
8,582
14,902
–
14,902
10,307
455
10,762
18,060
1,164
19,224
12 months to
31 Dec 2024
$’000
12 months to
31 Dec 2023
$’000
(c)
Other Income in Comprehensive Income Statement
Interest revenue
193
179
Government grants
585
643
Derivative market re-valuation
(22)
(37)
Gain/(Loss) on disposal of fixed assets
–
126
Compensation received including insurance
101
182
Write back of provisions
6
1,294
Other adjustments
(33)
295
830
2,682
Notes to the Financial Statements
continued
62
Magontec Limited
Annual Report 2024
Financial Report (continued)
2.
Results from Operations (continued)
12 months to
31 Dec 2024
$’000
12 months to
31 Dec 2023
$’000
(d) Significant expenses in Comprehensive Income Statement
(not detailed elsewhere)
Personnel Costs
Consultancies
(413)
(264)
Share based payments
(673)
(555)
Defined contribution payments recognised as an expense
(1,136)
(1,160)
Other staff payments
(7,383)
(7,135)
Total personnel costs
(9,605)
(9,114)
Director fees
(260)
(260)
Asset impairment expense
Inventory Impairment Expense
(756)
(1,251)
Fixed Asset Impairment Expense
(3,482)
(200)
Write down of trade debtors
(45)
(20)
Total asset impairment expense
(4,283)
(1,471)
31 Dec 2023
$’000
Cash Flows
$’000
Non-cash
movements
$’000
Non-cash FX
& other
$’000
31 Dec 2024
$’000
(e) Financing cash flows reconciliation
Bank Borrowings
4,418
(2,178)
–
24
2,264
Lease liabilities
443
(285)
584
11
753
Total liabilities from financing activities
4,861
(2,463)
584
34
3,017
Notes to the Financial Statements
continued
63
Magontec Limited
Annual Report 2024
Financial Report (continued)
2.
Results from Operations (continued)
(f)
Share-Based Payments
Executive LTI plan
Under the executive LTI plan, awards are made to executives and other key talent who have an impact on the Group’s
performance. LTI awards are delivered in the form of performance rights which vest into shares upon achievement of share
price targets (market based) and or operational outcomes (non-market based).
For market based targets, the Board uses absolute total shareholder return (TSR) as the key performance measure.
TSR comprises the percentage change in the company’s share price, plus the value of any future dividends received during the
period and is measured over a 3 year period.
The fair value of this scheme is recorded as an expense in the profit and loss statement. Refer to the Remuneration Report for
further detail.
31 Dec 2024
$’000
31 Dec 2023
$’000
(Expense)/Writeback recognised from equity-settled share-based payments
(673)
(555)
Total (Expense)/Writeback - share-based payments
(673)
(555)
(g) Discontinued Operations
PRC Metal Business
During the year ended 31 December 2024, production ceased at the Magontec Qinghai Mg Alloy plant and the PRC Metal
Business was deemed to be a discontinued operation per AASB 5 Non-Current Assets Held for Sale and Discontinued
Operations. Accordingly the results of these operations have been presented separately on the face of the Comprehensive
Income Statement for both the current period and the prior period.
Cash flows from (used in) Discontinued Operations
31 Dec 2024
$’000
31 Dec 2023
$’000
Net cash from operating activities
5,041
435
Net cash from investing activities
(55)
(192)
Net cash from financing activities
–
–
Net cash flows
4,986
243
Notes to the Financial Statements
continued
64
Magontec Limited
Annual Report 2024
Financial Report (continued)
3.
Income Taxes
12 months to
31 Dec 2024
$’000
12 months to
31 Dec 2023
$’000
(a) Income tax recognised in profit and loss
Tax expense comprises:
Current tax expense
(199)
(1,000)
Deferred tax expense
Utilisation/(write down) of tax losses
46
52
Change in recognised deductible temporary differences
(26)
(571)
Subtotal deferred tax expense
20
(519)
Total tax expense
(179)
(1,519)
The prima facie income tax expense on pre-tax accounting profit/(loss) from operations
reconciles to the income tax expense in the financial statements as follows:
Profit/(Loss) from total operations before tax
(9,338)
1,985
Nominal Income tax benefit/(expense) calculated at 30%
2,801
(595)
Nominal tax benefit (expense) effected by:
Adjusted for effect of tax rates in foreign jurisdictions
(808)
66
Tax effect - P & L items not assessable or deductible for tax purposes.
(1,323)
(340)
Adjustments - changes in deductible temporary differences, tax losses
(849)
(650)
Actual tax benefit/(expense)
(179)
(1,519)
The tax expense related to the profit or loss from the ordinary activities of the discontinued operation for the current and prior
period have been presented on the face of the Consolidated Statement of Profit & Loss and Other Comprehensive Income.
12 months to
31 Dec 2024
$
12 months to
31 Dec 2023
$
(b) Income tax amounts recognised in OCI
Revaluation of defined benefit pension plan
112
(688)
Tax effect (expense)/benefit through OCI
(37)
227
31 Dec 2024
$’000
31 Dec 2023
$’000
(c) Deferred Tax Asset
Current
363
–
Non-Current
Timing differences
1,340
1,263
Carryforward tax losses
256
319
Non-Current deferred tax asset
1,596
1,582
Total
1,959
1,582
Notes to the Financial Statements
continued
65
Magontec Limited
Annual Report 2024
Financial Report (continued)
3.
Income Taxes (continued)
Tax Consolidation
The parent Company and its wholly-owned Australian subsidiary (AMT) have formed a tax-consolidated group with effect
from 1 February 2003 and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated
group is Magontec Limited.
The members of the tax-consolidated group are identified at Note 22.
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax-consolidated group ensure that inter-company transactions are conducted at fair market value and at
arm’s length.
Magontec Limited has not entered into a tax funding arrangement or tax sharing agreement with AMT.
Consolidated Parent Entity
31 Dec 2024
$’000
31 Dec 2023
$’000
(d) Unrecognised deferred tax balances
The following deferred tax assets have not been brought to account as assets:
Australian Tax Consolidated Group
Deferred Tax Asset (DTA) on pre-tax consolidation revenue losses
81,581
81,581
DTA on post-tax consolidation revenue losses*
39,695
38,524
DTA on capital losses
29,019
29,019
Sub Total Australian Tax Consolidated Group
150,295
149,124
These are based on the following tax losses:
Aust consolidated group Tax losses – revenue pre-tax consolidation
271,936
271,936
Aust consolidated group Tax losses – revenue post-tax consolidation*
132,317
128,415
Aust consolidated group Tax losses – capital
96,732
96,732
Consolidated Group Total
500,985
497,083
*
The 31 December 2023 numbers were updated subsequent to the release of the 2023 Annual Report following the finalisation of the Tax
Return for the Australian Tax Consolidated Group.
The benefit from the Australian deferred tax asset in respect of unused tax losses will only be obtained if:
a. the tax consolidated group derives future Australian assessable income of a nature and amount sufficient to enable the
benefits to be realised;
b. the consolidated group continues to comply with the conditions for deductibility imposed by the tax law; and
c. no changes in tax legislation adversely affect the consolidated group in realising the benefit of the losses.
No deferred tax asset has been brought to account as an asset for the Australian Tax Consolidated Group because it is not
probable that taxable profit will be available against which such an asset could be utilised.
Unused tax losses incurred after the formation of the former Advanced Magnesium Limited (the former name of Magontec
Limited) consolidated group are $132.3 million. These losses will be fully available to offset future taxable income to the extent
MGL continues to satisfy the loss integrity rules (i.e. Continuity of Ownership Test and Same Business Test).
Based on testing performed by MGL and its advisors, these losses should satisfy the loss integrity rules as at 31 December 2024.
Unused tax losses incurred prior to the formation of the former Advanced Magnesium Limited (the former name of Magontec
Limited) consolidated group were $271.9 million. These losses will be subject to restricted use (Available Fraction rules).
These restrictions on use are in addition to the loss integrity rules. Broadly, the Available Fraction rules limit the amount of
losses that can be used each year by applying the following formula:
Available Fraction x Taxable income for year = Pre consolidation losses available for use for year
Notes to the Financial Statements
continued
66
Magontec Limited
Annual Report 2024
Financial Report (continued)
3.
Income Taxes (continued)
Based on testing performed by MGL and its advisors, MGL’s pre consolidation losses should satisfy the loss integrity rules at
31 December 2024 subject to further testing and continued compliance with loss integrity rules. No detailed Available Fraction
calculations have been performed as at 31 December 2024, however it is unlikely that the Available Fraction applying to
pre-consolidation tax losses will be greater than 0.2.
The Australian tax consolidated entity has not paid income tax up to 31 December 2024 and neither is any assessment
expected to be received which will result in a tax liability for the period to 31 December 2024. Accordingly, there are no franking
credits available for distribution in the year ended 31 December 2024.
Tax outside of Australian tax consolidation regime
The Group has overseas entities which are not subject to Australian tax consolidation and are therefore not sheltered by
Australian tax losses. Those entities may incur income tax based on local corporate tax law and are subject to the local
jurisdiction.
4.
Key Management Personnel Remuneration
The aggregate compensation of the key management personnel of the Group is set out below:
12 months to
31 Dec 2024
$’000
12 months to
31 Dec 2023
$’000
Short term employee benefits
2,049
1,844
Post-employment benefits
102
98
Motor vehicle
17
16
Equity based payment
518
429
Total Remuneration KMP
2,686
2,387
Individual directors and executives compensation disclosures
Information regarding individual directors' and executives' compensation and some equity instruments disclosures as required
by Corporations Regulations 2M.3.03 is provided in the remuneration report section of the directors’ report.
5.
Remuneration of Auditors
12 months to
31 Dec 2024
$’000
12 months to
31 Dec 2023
$’000
Group auditor
– Audit or review of the financial report
132
100
– Accounting/taxation services
15
9
Auditors of subsidiaries
– Audit or review of the financial reports
120
81
– Accounting/taxation services
25
57
292
247
The auditor of Magontec Limited is Camphin Boston Chartered Accountants. Magontec GmbH, Magontec Xi'an Co Limited,
Magontec Qinghai Co Limited and Magontec Romania are all audited by local auditors who supply information as requested
by the Group Auditor Camphin Boston.
Notes to the Financial Statements
continued
67
Magontec Limited
Annual Report 2024
Financial Report (continued)
6.
Current Trade and Other Receivables
31 Dec 2024
$’000
31 Dec 2023
$’000
Trade receivables (1)
8,058
10,381
Allowance for doubtful debts
(403)
(342)
7,655
10,039
Net GST/VAT recoverable
298
314
Security deposits
120
72
Notes and other receivables due to operating entities (2)
4,556
5,591
Other
6
27
4,980
6,004
Total receivables
12,635
16,043
(1) Trade receivables represent 40.9 days sales at 31 Dec 24 (37.0 days sales at 31 Dec 23)
(2) Notes receivable are issued by customers and their banks as consideration for services provided and can be redeemed prior to maturity for
cash at a discount. These notes are limited to a 6-month term. Refer also to Note 25(j) for further detail.
7.
Current Inventories
31 Dec 2024
$’000
31 Dec 2023
$’000
Inventory of finished goods at cost
10,765
12,348
Provision for inventory loss
(1,653)
(1,573)
Net value of finished goods inventory
9,112
10,775
Raw materials
11,194
13,397
Work in progress
8,964
8,633
Current inventories at net realisable value
29,270
32,805
8.
Other Current Assets
31 Dec 2024
$’000
31 Dec 2023
$’000
Prepayments
1,474
532
Other
363
–
1,837
532
9.
Non Current Trade and Other Receivables
31 Dec 2024
$’000
31 Dec 2023
$’000
Pension asset
290
304
Security deposits and prepayments
3
3
293
307
Notes to the Financial Statements
continued
68
Magontec Limited
Annual Report 2024
Financial Report (continued)
10. Property Plant & Equipment
Capital WIP
$’000
Land &
Buildings
$’000
Plant &
Equipment
$’000
Total
$’000
Gross carrying amount
Balance at 1 January 2023
641
19,500
39,599
59,740
Additions
1,105
36
2,833
3,974
Transfer from CWIP to PP&E
(724)
–
724
–
Adjustments, reclassifications, right of use additions
679
(139)
(814)
(274)
Impairment
(186)
(5)
–
(191)
Disposals and write offs
(84)
(3)
(5,272)
(5,359)
Net foreign currency exchange differences
(15)
340
228
553
Balance at 31 December 2023
1,417
19,729
37,298
58,443
Additions
455
22
1,373
1,850
Adjustments, reclassifications, right of use additions
(1,494)
1,338
704
548
Disposals
(42)
(480)
(1,231)
(1,753)
Net foreign currency exchange differences
14
794
1,361
2,169
Balance at 31 December 2024
349
21,403
39,505
61,257
Accumulated depreciation/amortisation and impairment
Balance at 1 January 2023
–
12,544
30,097
42,641
Disposals and write offs
–
–
(5,246)
(5,246)
Adjustments and reclassifications
–
–
(2)
(2)
Depreciation expense
–
583
2,176
2,758
Net foreign currency exchange differences
–
225
282
506
Balance at 31 December 2023
–
13,351
27,306
40,657
Disposals and write offs
–
–
(840)
(840)
Adjustments and reclassifications
–
–
(290)
(290)
Impairment
–
–
3,482
3,482
Depreciation expense
–
501
2,130
2,631
Net foreign currency exchange differences
–
526
903
1,429
Balance at 31 December 2024
–
14,378
32,691
47,069
Net Book Value As at 31 Dec 23
1,417
6,378
9,992
17,786
Net Book Value As at 31 Dec 24
349
7,025
6,814
14,188
During the year to 31 December 2024, the Group mutually agreed with QSLM to discontinue the operating agreements with
Magontec Qinghai. An impairment expense of $3.5 million was recorded during the year to reflect the write off of property
plant & equipment and production of Mg Alloy was ceased. As a result, the Group reassessed the CGUs of the remaining
PRC segment as at 31 December 2024 and determined that this entire segment is now a CGU (PRC CGU). The PRC CGU
now primarily includes the existing Anodes Production facility at Magontec Xi'an as well as some smaller trading activities.
During the period, the Anodes business saw a drop in volume during the year which was deemed an indicator of impairment.
Therefore the PRC CGU was further tested for impairment at balance date as required by AASB 136.
The recoverable amount was estimated based on the higher of fair value less costs to sell, and its value in use. The fair value
less costs to sell PRC CGU was estimated with reference to an external third party assessment of the Land & Buildings at the
Magontec Xi'an facility.
The value in use of the PRC CGU was assessed using forward projections drawing upon the Group’s long experience in the
Mg Anodes industry. The volumes through to year 5 of the forecast in the value in use calculation were assumed to be below
the peak historical sales and profitability assumptions were also reduced to below target levels that the Group believes are
reasonably achievable given the operating history of the Group.
Notes to the Financial Statements
continued
69
Magontec Limited
Annual Report 2024
Financial Report (continued)
10. Property Plant & Equipment (continued)
The value in use calculation started with a Base Scenario which assumed a pre-tax discount rate of 8.2% and a terminal growth
rate of 0%. Following this, the Group used the Expected Cashflow Approach whereby a probability weighted analysis of
possible expected cashflow scenarios surrounding this Base Scenario ranging from most pessimistic to most optimistic was
compiled to arrive at the final value in use estimate used to obtain an estimate of the Recoverable Amount.
The Recoverable Amount determined on this basis was higher than the carrying value of the PRC CGU, and therefore no
further impairment expense was recorded during the year ended 31 December 2024.
11. Intangibles
Indefinite
Life(1)
$’000
Finite Life
$’000
Total
$’000
Gross carrying amount
Balance at 31-Dec-23
2,800
2,662
5,462
Additions
–
118
118
Adjustments
–
39
39
Net foreign currency exchange differences
–
86
86
Balance at 31-Dec-24
2,800
2,905
5,705
Accumulated depreciation/amortisation and impairment
Balance at 31-Dec-23
–
2,485
2,485
Depreciation/amortisation expense
–
121
121
Net foreign currency exchange differences
–
78
78
Balance at 31-Dec-24
–
2,684
2,684
Net Book Value As at 31-Dec-23
2,800
177
2,977
Net Book Value As at 31-Dec-24
2,800
221
3,021
Note 1 - Indefinite Life Intangible Assets - Patents and trademarks in relation to “AE44” and “Correx”.
The indefinite life intangible assets comprise the patents and trademarks over the “AE” alloys and the “Correx” anode system.
Both products enjoy technical superiority over possible alternatives and continue to earn high margins. In testing this asset for
impairment, an average discount rate of 8.8% (2023: 9.5%) to management cash flow forecasts was applied. A zero growth rate
has been assumed over the initial 5 year period, with an average terminal decline rate of 5% (2023: 5%) per annum thereafter.
The value in use was found to be in excess of the carrying amount and thus no impairment loss was recorded during the year
ended 31 December 2024.
12. Current Trade and Other Payables
31 Dec 2024
$’000
31 Dec 2023
$’000
Trade creditors (1)
4,170
5,131
Other creditors and accruals
2,232
1,620
6,402
6,751
(1) Trade creditors represent 24.7 days cost of goods sold at 31 Dec 24 (22.5 days cost of goods sold at 31 Dec 23)
Notes to the Financial Statements
continued
70
Magontec Limited
Annual Report 2024
Financial Report (continued)
13. Borrowings
31 Dec 2024
31 Dec 2024
31 Dec 2024
31 Dec 2023
31 Dec 2023
31 Dec 2023
Notes
$’000
Maturity
Date
Interest
pa
$’000
Maturity
Date
Interest
pa
Bank & Institutional
Borrowings
Magontec GmbH (Bank Loan) (1)
25(i)
908 30-Nov-26
4.26%
– 30-Nov-26
5.49%
Magontec GmbH (Factoring
Facility) (3)
860
28-Feb-25
3.91%
528
28-Feb-25
5.14%
Magontec SRL (Working Capital
Facility) (2)
1,356
28-Feb-25
7.10%
1,312
28-Feb-24
7.34%
Magontec Xi'an Limited
(Bank Loan)
– 06-Aug-25
2.35%
3,106
06-Jun-24
3.00%
Total Bank Borrowings
3,124
4,946
Current Borrowings
Bank borrowings as above
(excluding factoring facility)
1,356
Various
4,418
Various
Total Current Borrowings
1,356
4,418
Non-Current Borrowings
Bank borrowings as above
908
–
–
Total Non-Current borrowings
908
–
(1) These borrowings are secured by a charge over MAB's trade debtors to the extent of €530,000 ($887,000) and inventory of €5,543,000
($9,279,000) plus land & buildings.
(2) These borrowings are secured by a charge over MAR's trade debtors and inventory to the extent of RON16,403,000 ($5,519,000) plus land
& buildings. It is anticipated the Magontec Romania Unicredit Facility will be extended for a further 12 months in early March 2025 on the basis
of our prior working relationship with the bank and positive discussions to date.
(3) This factoring facility is set off against trade debtors, and thus is not shown in 'Borrowings' on the balance sheet.
14. Current Provisions
31 Dec 2024
$’000
31 Dec 2023
$’000
Provision for annual & long service leave and employee costs
549
650
Provision for income tax payable
–
5,448
Other current provisions
301
593
Total
850
6,691
15. Non-Current Provisions
31 Dec 2024
$’000
31 Dec 2023
$’000
Provision for defined benefit pension obligation
10,311
10,048
Other provisions
266
392
Total
10,576
10,440
Notes to the Financial Statements
continued
71
Magontec Limited
Annual Report 2024
Financial Report (continued)
15. Non-Current Provisions (continued)
Reconciliation of the defined benefit pension obligation
Year Ended
31 Dec 2024
$’000
Year Ended
31 Dec 2023
$’000
Defined benefit obligation beginning of year
10,048
9,024
Current service cost
122
111
Interest cost
350
355
Total benefits paid - actual
(418)
(399)
Foreign currency exchange rate changes
320
269
Actuarial (gains)/ losses due to change of assumptions
(111)
688
Defined benefit obligation end of year
10,311
10,048
The extent of the Provision for the Defined Benefit Obligation is assessed annually based on actuarial calculations which take
into account such matters as:
–
number of participants in the plan;
–
likely retirement salaries of participants in the pension plan;
–
their life expectancy beyond retirement; and
–
implied interest earnings on the extent of the fund
The defined benefit plan is an unfunded plan which has been provided to certain employees in the European business.
Increasing interest rates will act to decrease the Provision. The converse is also true. A summary of the key assumptions
underpinning the actuarial calculation and a sensitivity analysis is provided below.
Key actuarial assumptions used in calculation of the defined benefit obligation
Year Ended
31 Dec 2024
$’000
Year Ended
31 Dec 2023
$’000
Discount rate
3.50%
3.45%
Expected salary increase per annum
2.75%
2.75%
Expected pension increase per annum
2.20%
2.20%
Key sensitivities of actuarial assumptions used in calculation of defined benefit obligation
% chg
Year Ended
31 Dec 2024
$’000
Year Ended
31 Dec 2023
$’000
Discount rate (%)
+0.5%
(696)
(696)
(0.5)%
783
785
Salary increase (%)
+0.5%
23
26
(0.5)%
(22)
(25)
Pension increase (%)
+0.5%
620
613
(0.5)%
(569)
(562)
Life expectancy (years)
+ 1 year
488
467
Notes to the Financial Statements
continued
72
Magontec Limited
Annual Report 2024
Financial Report (continued)
16. Share Capital
31 Dec 2024
$’000
31 Dec 2023
$’000
Opening balance of share capital attributable to members of MGL
59,524
59,174
Dividend Reinvestment Plan
91
372
Vesting of Performance Rights
114
–
Various costs associated with issue of shares
(11)
(21)
Share capital on issued ordinary shares 79,643,766 (2023: 78,515,474)
59,718
59,524
A reconciliation of the movement in fully paid ordinary shares during the period is set out below.
CONSOLIDATED/PARENT ENTITY
31 Dec 2024
31 Dec 2023
No.
$’000
No.
$’000
Fully paid ordinary shares
Balance at beginning of financial year
78,515,474
59,524
77,521,835
59,174
Dividend reinvestment plan
285,434
91
993,639
372
Vesting of Performance Rights
842,858
114
–
–
Expenses of various issues
–
(11)
–
(21)
79,643,766
59,718
78,515,474
59,524
During the year to 31 December 2024, the Dividend Reinvestment Plan resulted in the issue of 285,434 new shares (2023:
993,639 new shares). Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Cancellation of QSLM shares
As described in Notes 24 and 27, an Extraordinary General Meeting (EGM) was convened on 5 February 2025 post balance
date.
At this EGM, Magontec Limited shareholders approved the selective buyback of QSLM's 28.48% shareholding in MGL (total
of 22,681,940 shares) in exchange for the transfer of certain fixed assets at Magontec Qinghai (zero book value at 31 December
2024) and the waiver of all current and future claims between both parties as described in the summary of the Memorandum
of Settlement tabled at the meeting.
These shares were subsequently cancelled by the Group, substantially reducing the number of ordinary shares on issue post
balance date of 31 December 2024.
Dividend Declaration
No dividends were declared with respect to the 12 months ended 31 December 2024. The DRP issue during the year related to
dividends declared in the prior period.
Performance rights
Performance rights carry no rights to dividends and no voting rights until converted into ordinary shares.
Further details of the share-based payment schemes are contained in the Remuneration Report.
Notes to the Financial Statements
continued
73
Magontec Limited
Annual Report 2024
Financial Report (continued)
17. Reserves
31 Dec 2024
$’000
31 Dec 2023
$’000
Capital reserve
Balance at beginning of financial year
2,750
2,750
Balance at end of financial year
2,750
2,750
Foreign currency translation reserve
Balance at beginning of financial year
4,793
4,250
Movement in VHL Consolidated accounts
2,515
542
Balance at end of financial year
7,308
4,793
Actuarial Reserves
Balance at beginning of financial year
(1,028)
(567)
Deferred tax assets
(37)
227
Employee pensions
112
(688)
Balance at end of financial year
(953)
(1,028)
Expired Options Reserve
Balance at beginning of financial year
2,127
1,637
Transfer to Expired Options Reserve
788
490
Adjustment
(114)
–
Balance at end of financial year
2,802
2,127
Share Issue Reserve
Balance at beginning of financial year
691
627
Transfer from / (to) Expired Options Reserve
(674)
(490)
Vesting of performance rights
(114)
–
Fair value of performance rights issued for future periods
673
555
Balance at end of financial year
577
691
Profit Reserve
Balance at beginning of financial year
5,922
6,857
Dividends paid
(476)
(935)
Balance at end of financial year
5,446
5,922
Total reserves
17,929
15,255
OCI - that may later emerge in the Profit and Loss Statement
Exchange differences taken to reserves in equity – translation of overseas entities
2,515
542
OCI - that will not emerge later in the Profit and Loss Statement
Movement in actuarial assessments
75
(461)
Total Other Comprehensive Income
2,590
82
Notes
(1) The capital reserve is a historical reserve from 2002 that arose after calculation of the outside equity interest in the (as it was then) Australian
Magnesium Investments Pty Ltd consolidated entity.
The foreign currency translation reserve arises as a result of translating overseas subsidiaries from their functional currency to the
presentation currency of Australian dollars.
The expired options reserve captures the balance of unexercised options on their expiry date from the appropriate share capital account.
The actuarial reserve represents the cumulative amount of actuarial gains / (losses) on the Group's unfunded defined benefit pension
obligation that needs to be recognised in “Other comprehensive income” (OCI) as well as movements attributable to the market value of
derivatives and deferred tax assets where relevant.
The profit reserve represents profits from prior periods transferred into this reserve instead of against accumulated retained losses. This is in
order to preserve their nature as being available for distribution as dividends in future years.
Notes to the Financial Statements
continued
74
Magontec Limited
Annual Report 2024
Financial Report (continued)
18. Accumulated Losses
31 Dec 2024
$’000
31 Dec 2023
$’000
Balance at beginning of financial year
(18,133)
(18,599)
Profit/(Loss) attributable to members of Magontec Limited
(9,517)
466
(27,651)
(18,133)
19. Earnings/(Loss) Per Share
Continuing
Operations
12 months to
31 Dec 2024
cents per
share
Discontinued
Operations
12 months to
31 Dec 2024
cents per
share
Total
12 months to
31 Dec 2024
cents per
share
Continuing
Operations
12 months to
31 Dec 2023
cents per
share
Discontinued
Operations
12 months to
31 Dec 2023
cents per
share
Total
12 months to
31 Dec 2023
cents per
share
Basic earnings/(loss) per share
(6.5)
(5.5)
(12.0)
(0.3)
0.9
0.6
Diluted earnings/(loss) per share
(5.8)
(4.9)
(10.7)
(0.3)
0.8
0.5
The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted loss per share are as
follows:
Continuing
Operations
12 months to
31 Dec 2024
$'000
Discontinued
Operations
12 months to
31 Dec 2024
$'000
Total
12 months to
31 Dec 2024
$'000
Continuing
Operations
12 months to
31 Dec 2023
$'000
Discontinued
Operations
12 months to
31 Dec 2023
$'000
Total
12 months to
31 Dec 2023
$'000
Profit/(Loss) after income tax
expense
Attributable to owners of the parent
(5,187)
(4,330)
(9,517)
(232)
698
466
Total Comprehensive Income
Attributable to owners of the parent
(2,817)
(4,110)
(6,927)
(12)
560
548
Weighted average number of
ordinary securities on issue (for
basic earnings calculation)
79,411,228
78,089,812
Performance rights
9,340,404
8,435,052
Weighted average number of
ordinary securities on issue (for
diluted earnings calculation)
88,751,632
86,524,864
20. Contingent Assets and Liabilities
At 31 December 2024 a contingent liability exists in relation to the item below.
Claim Against MAS
A claim was made against the Magontec Suzhou company with respect to restoration costs on the property formerly occupied
by this plant. The Group does not believe there is a reasonable basis for this claim. Although there has been a judgement
against the Group, the Group continues to contest this matter.
Notes to the Financial Statements
continued
75
Magontec Limited
Annual Report 2024
Financial Report (continued)
21. Capital and Leasing Commitments
a.
Right of use assets
The Group recognises a right of use lease asset at inception in the Property, Plant & Equipment caption on the balance sheet,
which includes equipment and vehicles as well as a corresponding lease liability in the Current and Non Current Provisions on
the balance sheet.
The right of use asset is depreciated on a straight-line basis per the term of the lease.
The lease liability is unwound over the term of the lease, with interest expense recorded in the income statement.
The movement in the right of use assets balance during the period is summarised below.
RIGHT OF USE ASSETS SUMMARY
31 Dec 2024
$’000
31 Dec 2023
$’000
Opening balance
448
449
Add new leased assets
585
218
Depreciation charge
(289)
(232)
FX movements
10
13
Closing balance
754
448
b.
Lease liabilities
The total lease liabilities recorded on the balance sheet are as follows:
31 Dec 2024
$’000
31 Dec 2023
$’000
Lease liabilities recognised in the balance sheet
Current
252
222
Non Current
501
221
Total lease liabilities recognised in the balance sheet
753
443
Interest charges and amounts recognised in interest payments in the cash flow statement during the period were as follows:
12 months to
31 Dec 2024
$’000
12 months to
31 Dec 2023
$’000
Amounts recognised in the profit and loss statement
Interest charge on lease liabilities
30
15
Amounts recognised in the cash flow statement
Total cash inflow/(outflow) for leases
(315)
(234)
c.
Low value items
During the year to 31 December 2024, the expense relating to leases of low value was $11,000 (2023: $27,000).
d.
Capital Expenditure Commitments
There are no material capital commitments for the Group as at 31 December 2024.
Notes to the Financial Statements
continued
76
Magontec Limited
Annual Report 2024
Financial Report (continued)
22. Controlled Entities
a.
Consolidated Controlled Entities
Name of entity
Ownership
Entity
Country of
Incorporation
Ownership
interest
31 Dec 2024
Ownership
interest
31 Dec 2023
Parent entity
Magontec Limited (a)
Australia
100%
100%
Directly Controlled Subsidiaries Of Parent
Advanced Magnesium Technologies Pty Ltd (a)
Magontec Limited
Australia
100%
100%
Magontec GmbH
Magontec Limited
Germany
100%
100%
Varomet Holdings Limited
Magontec Limited
Cyprus
100%
100%
Magontec Qinghai Co. Ltd.
Magontec Limited
China
100%
100%
Magontec US LLC
Magontec Limited
United States
100%
100%
AML China Ltd (b)
Magontec Limited
China
100%
100%
Indirectly Controlled Subsidiaries of Parent -
Level 1
Magontec SRL
Magontec GmbH
Romania
100%
100%
Magontec Xi'an Co Ltd.
Varomet Holdings Ltd
China
100%
100%
Magontec SuZhou Co Ltd
Varomet Holdings Ltd
China
100%
100%
(a) Entities included in the Australian tax consolidated Group.
(b) Dormant from 30 June 2012.
Notes to the Financial Statements
continued
77
Magontec Limited
Annual Report 2024
Financial Report (continued)
22. Controlled Entities (continued)
b.
Corporate Structure as at 31 December 2024
Magontec Limited Corporate Structure
Magontec Limited
(Australia)
Advanced Magnesium
Technologies Pty Limited
(Australia)
Varomet Holdings Limited
(Cyprus)
Administration
Entities
Operating
Entities
Parent
Entity
Magontec Qinghai Co Ltd
(China)
Magontec US LLC
(United States)
Magontec Xi’an Co Ltd
(China)
Magontec Suzhou Co Ltd
(China)
Magontec GmbH
(Germany)
Magontec SRL
(Romania)
100%
100%
100%
100%
100%
100%
100%
100%
c.
Acquisition of Controlled Entities
There were no acquisitions of controlled entities made during the relevant period.
d.
Disposal of Controlled Entities
There were no disposals of controlled entities made during the relevant period.
23. Segment Information
Identification of reportable segments
The consolidated entity comprises the entities as described in Note 22.
In respect of the period to 31 December 2024, segment information is presented in respect of the three main departments
within the Group.
–
’Admin Units’ = Magontec administrative entities performing a Head Office function comprising -
Magontec Limited (Australia), Advanced Magnesium Technologies Pty Limited (Australia), Varomet Holdings
Limited (Cyprus)
–
’EUR’ = Magontec operating entities in Europe comprising -
Magontec GmbH (Germany), Magontec SRL (Romania), Magontec LLC (United States)
–
’PRC’ = Magontec operating entities in the People’s Republic of China comprising -
Magontec Xi’an Co. Ltd. (China), Magontec Qinghai Co. Ltd. (China), Magontec Suzhou Co. Ltd. (China)
Types of products and services
The principal operating activities comprise:
–
Magnesium alloy production
–
Magnesium alloy recycling
–
Manufacture of cathodic corrosion protection products
Accounting policies and inter-segment transactions
The accounting policies used by the Group in reporting segments internally are the same as those contained in Note 1 to the
accounts. The segment data below is presented net of intergroup transactions (other than sales).
Notes to the Financial Statements
continued
78
Magontec Limited
Annual Report 2024
Financial Report (continued)
23. Segment Information (continued)
Statement of Comprehensive Income
12 months to 31 December 2024
12 months to 31 December 2023
$’000
Admin
$’000
EUR
$’000
PRC
$’000
TOTAL
$’000
Admin
$’000
EUR
$’000
PRC
$’000
TOTAL
Sale of goods
–
42,243
29,972
72,215
–
58,017
44,380
102,397
Less Inter-segment sales
(26)
(40)
Net Sales
–
42,243
29,972
72,189
–
58,017
44,380 102,357
Cost of sales
–
(32,925)
(28,528)
(61,453)
–
(41,999)
(41,174)
(83,173)
Less Inter-segment sales
26
40
Net Cost of Sales
–
(32,925) (28,528)
(61,427)
–
(41,999)
(41,174)
(83,133)
Gross Profit
–
9,318
1,444
10,762
–
16,018
3,206
19,224
Other income
2
267
561
830
3
1,777
902
2,682
Interest expense
(13)
(295)
(44)
(352)
–
(319)
(176)
(495)
Impairment - inventory, fixed assets,
doubtful debts
–
(801)
(3,482)
(4,283)
(1)
(1,270)
(200)
(1,471)
Travel accommodation and meals
(148)
(363)
(185)
(696)
(162)
(417)
(225)
(803)
Research, development, licensing
and patent costs
–
(176)
(658)
(834)
(5)
(423)
(695)
(1,123)
Promotional activity
(3)
(120)
–
(123)
–
(77)
–
(77)
Information technology
(16)
(297)
(69)
(382)
(25)
(299)
(78)
(402)
Personnel
(1,723)
(6,294)
(1,588)
(9,605)
(1,550)
(6,099)
(1,464)
(9,114)
Depreciation & amortisation
(43)
(557)
(72)
(672)
–
(681)
(49)
(730)
Office expenses
(125)
(189)
(148)
(462)
(82)
(264)
(279)
(626)
Corporate and other
(906)
(1,976)
(809)
(3,691)
(750)
(2,876)
(680)
(4,307)
Foreign exchange gain/(loss)
(311)
835
(354)
170
(42)
(457)
(274)
(772)
Profit/(Loss) before income tax
expense
(3,286)
(648)
(5,404)
(9,338)
(2,615)
4,612
(12)
1,985
Income tax expense
–
123
(302)
(179)
–
(1,506)
(13)
(1,519)
Profit/(Loss) after income tax
expense
(3,286)
(525)
(5,706)
(9,517)
(2,615)
3,106
(25)
466
Other Comprehensive Income
Movement in actuarial assessments
–
75
–
75
–
(461)
–
(461)
FX differences taken to Reserves –
translation of overseas entities
(16)
1,426
1,105
2,515
88
923
(468)
542
Total Comprehensive Income
(3,302)
976
(4,601)
(6,927)
(2,527)
3,568
(494)
548
Segment Disclosures
Segment assets
5,219
40,983
24,388
70,590
3,229
48,020
33,919
85,168
Segment liabilities
1,493
16,878
2,223
20,594
814
20,937
6,770
28,521
Segment net assets
3,726
24,105
22,165
49,996
2,415
27,083
27,149
56,647
Acquisition of segment fixed assets
–
1,302
558
1,860
–
2,285
1,538
3,823
Non-cash share based payments
expense
311
198
164
673
247
170
139
555
Provisioning
- Inventory Increase/(Decrease)
–
80
–
80
–
1,394
–
1,394
- Doubtful debts Increase/
(Decrease)
–
61
–
61
–
(316)
–
(316)
Notes to the Financial Statements
continued
79
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
continued
24. Related Party Disclosures
a.
Equity interests in related parties
Equity interest in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 22 to the financial statements.
b.
Transactions with Key Management Personnel including Loans
Details of KMP compensation are disclosed in Note 4 to the financial statements and in the Remuneration Report.
c.
Group Entity
The parent entity is Magontec Limited. Members of the group are set out in Note 22. Transactions during the financial year
between group entities included:
–
Investment in controlled entities;
–
Repayment of interest free funds from controlled entities to the parent entity; and
–
Incurring expenditure on behalf of other entities for office rental and related costs, travel costs, seconded employees and
other sundry costs.
The entity is fully reimbursed for these costs on an actual cost basis.
d.
Transactions with Related Parties apart from Directors and Key Management Personnel
Sales to
Related
Parties
$’000
Purchases
from
Related
Parties
$’000
Amounts
owed by
Related
Parties
$’000
Amounts
owed to
Related
Parties
$’000
Entity with significant influence
Qinghai Salt Lake Magnesium Co. Ltd
2024
–
–
–
–
2023
–
–
–
–
Nature of related party transactions with Qinghai Salt Lake Magnesium Co. Ltd
During the year, there were no purchases from Qinghai Salt Lake Magnesium Co. Ltd. (QSLM), the largest shareholder of
Magontec Limited as at the balance date.
Outstanding balances owing to QSLM are unsecured and are on an interest free basis. Settlement occurs in cash, with no
guarantees provided for any related party receivable or related party payable balance outstanding between the parties.
Memorandum of Settlement with QSLM (post balance date event)
On 1 November 2024, the Group announced to the ASX that following the termination of the Agreements with QSLM, the two
parties had agreed a Memorandum of Settlement.
The terms of this Memorandum of Settlement can broadly be summarised as follows:
–
The Group agreed to swap all its current and future potential claims against QSLM for all the MGL fully paid ordinary shares
held by QSLM (total of 22,681,940 shares or 28.48% of MGL's issued capital as at 31 December 2024). These shares were to
be bought back by the Group and cancelled.
–
MGL agreed to transfer ownership of agreed upon fixed assets owned by its subsidiary, Magontec Qinghai Co Ltd, to
QSLM for zero cash consideration. These assets had been fully impaired to a zero book value in the financial statements as
at 31 December 2024.
–
All debts payable to QSLM by Magontec and its subsidiaries were cancelled and vice versa. Each party agreed to
irrevocably waive all rights of action, objection or arbitration and to withdraw all claims.
–
Mr Li Xing Cai, the representative of QSLM on the Board of MGL, will resign and the right to further QSLM Board
representation will expire.
The execution of this Memorandum of Settlement was subject to approval at an Extraordinary General Meeting post balance
date on 5 February 2025, and was subsequently ratified by shareholders on this date.
80
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
continued
25. Financial Instruments
AASB 9 - classification and measurement of financial assets and financial liabilities
AASB 9 provides three categories for classification of financial assets, being amortised cost, fair value through other
comprehensive income and fair value through profit and loss. This is assessed in accordance with the contractual cash flows
and nature of the underlying asset. The table below summarises the classifications under AASB 9.
The main financial impact of adopting AASB 9 related to the application of the impairment of trade receivables arising from
Lifetime Expected Credit Losses as can be seen below. The Group did not apply hedge accounting to derivatives during the
reporting period.
Category per AASB 9
Fair value
hierarchy
where applicable*
Financial assets:
Cash and cash equivalents
Amortised cost
Not applicable
Trade & other receivables
Amortised cost
Not applicable
Other
Amortised cost
Not applicable
Financial liabilities:
Trade & other payables
Other financial liabilities
Not applicable
Current Bank Borrowings
Other financial liabilities
Level 2
Non-Current Bank Borrowings
Other financial liabilities
Level 2
*
Fair value information is not provided where carrying amounts are assumed to be a reasonable approximation of fair value
AASB 9 - Impairment of Financial Assets
The Group adopts an "Expected Credit Loss" model to assess impairment of financial assets. The Group has elected to apply
the practical expedient with respect to impairment losses on trade receivables with the use of a provision matrix which takes
into account historical bad debt losses as well as estimates of future losses where considered material. More detail is provided
in the credit risk section below.
(a) Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising
the potential future return to stakeholders through the development and marketing of the Group’s technologies and its
production facilities.
The capital structure of the Group consists of cash and cash equivalents, equity attributable to equity holders of the parent,
comprising issued capital, reserves and accumulated losses as disclosed in Note 16, Note 17 and Note 18 respectively and debt
funding provided by Chinese and European banks (Note 13).
The Group’s main financial risk management issues are ensuring the integrity of debtors and the continued availability of
debt funding. The Group operates globally, primarily through subsidiary companies established in the markets in which the
Group trades.
None of the Group’s entities are subject to externally imposed capital requirements.
(b) Financial risk management objectives
The magnesium alloy industry operates with a disparity of trade terms on the purchase of production inputs and the sale
of output. The Group’s senior management effort is aimed at firstly, arranging funding for working capital and secondly,
negotiating with purchasers and buyers the best available terms.
The Group’s senior management team co-ordinates access to domestic and international financial markets and monitors and
manages the financial risks relating to the operations of the Group in line with the Group’s policies. These risks include market
risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.
The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative
purposes.
81
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
continued
25. Financial Instruments (continued)
(c)
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 to the financial statements.
(d) Categories and maturity profile of financial instruments and interest rate risk
The following table details the consolidated entity’s exposure to interest rate risk as at 31 December 2024.
31 December 2024
Notes
Weighted
average
effective
interest rate
%
Variable
interest rate
$’000
Fixed
interest rate
$’000
Non-interest
bearing
$’000
Total
$’000
Financial assets:
Cash and cash equivalents
1.21%
7,750
–
–
7,750
Trade & other receivables (net of provision for loss)
–
–
–
12,635
12,635
Other
–
–
–
1,474
1,474
7,750
–
14,109
21,859
Financial liabilities:
Trade & other payables
–
–
–
6,402
6,402
Current Bank Borrowings
13
5.86%
2,216
–
–
2,216
Non-Current Bank Borrowings
13
–
908
–
–
908
3,124
–
6,402
9,526
The following table details the consolidated entity’s exposure to interest rate risk as at 31 December 2023.
31 December 2023
Notes
Weighted
average
effective
interest rate
%
Variable
interest rate
$’000
Fixed
interest rate
$’000
Non-interest
bearing
$’000
Total
$’000
Financial assets:
Cash and cash equivalents
2.46%
4,998
–
8,138
13,136
Trade & other receivables (net of provision for loss)
–
–
–
16,043
16,043
Other
–
–
–
532
532
4,998
–
24,713
29,711
Financial liabilities:
Trade & other payables
–
–
–
6,751
6,751
Current Borrowings
13
4.38%
4,946
–
–
4,946
Non-Current Borrowings
13
–
–
–
–
–
4,946
–
6,751
11,697
82
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
continued
25. Financial Instruments (continued)
(e) Market risk
Refer comments under headings a and b of Note 25.
(f)
Liquidity risk management
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and banking facilities by continuously
monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
(g) Fair value of financial instruments
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.
(h) Foreign currency risk management
The Group has exposure to four main currencies – the United States Dollar (USD), the Euro (EUR), the Chinese Yuan (RMB)
and the Romanian Leu (RON). The carrying amount of the Group’s foreign currency denominated monetary assets and
monetary liabilities at the reporting date are as follows.
Foreign Currency Monetary Assets & Liabilities Table
Assets
Liabilities
31 Dec 2024
$’000
31 Dec 2023
$’000
31 Dec 2024
$’000
31 Dec 2023
$’000
Foreign currency monetary assets and liabilities
Cash and cash equivalents
6,164
13,058
Trade and other receivables
12,635
16,045
Other non-current receivables
290
304
Trade and other payables
6,278
7,151
Provisions
10,743
16,536
Borrowings
2,264
4,418
Other
Other net assets and liabilities
51,501
55,761
1,669
416
Total
70,590
85,168
20,954
28,521
The Group undertakes sales transactions denominated in RMB, USD and EUR and incurs manufacturing input costs
denominated in EUR, RMB and RON. Additionally certain Head Office overheads are incurred in AUD and the Group reports
in AUD. The objective is to centralise treasury risk and cash management so that foreign exchange risk washes through to a
single point.
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 10% increase and 10% decrease in relevant foreign currency monetary
items against the Australian Dollar. 10% is the sensitivity rate used when reporting foreign currency risk internally to key
management personnel and represents management’s assessment of the possible change in foreign exchange rates over the
medium term. The sensitivity analysis includes foreign currency monetary items and adjusts their translation at the period end
for a 10% change in foreign currency rates.
83
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
continued
25. Financial Instruments (continued)
A positive number in the table below indicates an increase in profit or a decrease in loss and other equity where the foreign
currency strengthens against the Australian dollar. A negative number in the table below indicates a decrease in profit or an
increase in loss and other equity where the foreign currency weakens against the Australian dollar.
Notes
31 Dec 2024
$’000
31 Dec 2023
$’000
USD impact
Effect on Profit/Loss and other equity of a 10% increase in USD rate
(i)
(78)
533
Effect on Profit/Loss and other equity of a 10% decrease in USD rate
78
(533)
EUR impact
Effect on Profit/Loss and other equity of a 10% increase in EUR rate
(ii)
(980)
(713)
Effect on Profit/Loss and other equity of a 10% decrease in EUR rate
980
713
RMB impact
Effect on Profit/Loss and other equity of a 10% increase in RMB rate
(iii)
1,256
534
Effect on Profit/Loss and other equity of a 10% decrease in RMB rate
(1,256)
(534)
RON impact
Effect on Profit/Loss and other equity of a 10% increase in RON rate
(iv)
(217)
(224)
Effect on Profit/Loss and other equity of a 10% decrease in RON rate
217
224
A positive number in the above table represents a reduction in the operating profit/loss and or other equity
(i)
Exposure to USD is represented by net monetary liabilities of USD 0.5 million as at 31-Dec-24 (Net monetary assets of USD 3.6 million as at
31–Dec–23)
(ii) Exposure to EUR is represented by net monetary liabilities of EUR 5.9 million as at 31-Dec-24 (Net monetary liabilities of EUR 4.4 million as at
31–Dec–23)
(iii) Exposure to RMB is represented by net monetary assets of RMB 56.7 million as at 31-Dec-24 (Net monetary assets of RMB 25.8 million as at
31–Dec–23)
(iv) Exposure to RON is represented by net monetary liabilities of RON 6.5 million as at 31-Dec-24 (Net monetary liabilities of RON 6.8 million as at
31–Dec–23)
Derivatives and hedging
The Group engages in foreign exchange hedges primarily to manage risks associated with its USD receivables and securing
the EUR-USD rate on real metal purchases of pure magnesium. The gains and losses on the market value of these hedges are
recognised directly in the profit and loss statement. There were no open FX hedges as at 31 December 2024.
Notes
Carrying value
$’000
Market value
$’000
Cash flow due
within 1 year
$’000
Cash flow due
after 1 year
$’000
31 December 2024
Interest rate swaps
14
6
6
6
–
31 December 2023
Interest rate swap
14
27
27
–
27
84
Magontec Limited
Annual Report 2024
Financial Report (continued)
Notes to the Financial Statements
continued
25. Financial Instruments (continued)
The sensitivity of interest rate hedges to movements in the underlying rates is outlined in the table below:
AUD impact of change
31 Dec 2024
$’000
31 Dec 2023
$’000
Interest rate swaps
Sensitivity to +0.5% change in interest rates
2
4
Sensitivity to -0.5% change in interest rates
(2)
(4)
(i)
Capital Management and Interest rate risk management
The Group has bank loans outstanding of $908,000 (refer Note 13) owing to Commerzbank globally. Management remains
confident that Commerzbank will continue offering its facilities as the Group's relationship with the bank is strong and
significant headroom exists compared with facilities drawn.
(j)
Credit risk management
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 adopted a policy of as far as possible dealing with creditworthy counterparties – an ideal not always possible in
a product development environment. The use of collateral or other contributions can act as a means of mitigating the risk of
financial loss from defaults. Credit exposure is controlled by limits that are continually reviewed.
The Group’s alloy sales to European customers are, for the most part, centralised through Magontec GmbH in Bottrop
Germany. Magontec GmbH has insurance cover in place to cover its exposure to debtors secured under the Commerzbank
facility. The insured percentage cover for 'named' debtors is 90% and for 'unnamed' debtors is 80% but with individual claims in
respect of 'unnamed' debtors limited to EUR 10,000.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the
Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.
The Group also receives notes receivable (promissory notes) as consideration for goods and services provided from a limited
number of counterparties in China. The majority of these are guaranteed by a bank, and the Group only accepts these from
specific large customers. Upon maturity, these are converted into cash at no charge. Early redemption of Notes Receivable for
cash can be requested, however an interest charge will apply on a pro rata basis for the remaining term of the receivable. As the
term of the Notes Receivables are limited to 6 months, these are recorded at the undiscounted value and classified as a current
asset on the balance sheet.
Provision matrix
The Group applies a provision matrix in order to determine Expected Credit Losses in accordance with AASB 9 Financial
Instruments. This provision matrix is based on:
–
Historical experiences of bad debts in the last 5 years (which have been low as a percentage of sales)
–
Where deemed material, estimates to incorporate the Group's forward looking expectations on future operating and
economic conditions
Provision Matrix
EU & NA
PRC
Due Date
0.01%
0.01%
1-30 days overdue
0.02%
0.02%
31-60 days overdue
0.03%
0.03%
61-90 days overdue
0.04%
0.04%
90 days + overdue
0.05%
0.05%
85
Magontec Limited
Annual Report 2024
Financial Report (continued)
26. Parent Entity Information Magontec Limited
Statement of Comprehensive Income
Magontec Limited
12 months to
31 Dec 2024
$’000
12 months to
31 Dec 2023
$’000
Sale of goods
–
–
Cost of sales
–
–
Gross profit
–
–
Other income
–
2
Interest expense
–
–
Impairment - investments
(4,838)
290
Travel accommodation and meals
–
–
Research, development, licensing and patent costs
–
(5)
Promotional activity
–
–
Information technology
–
–
Personnel
–
(30)
Depreciation & amortisation
–
–
Office expenses
(1)
(14)
Corporate
(1,701)
(681)
Foreign exchange gain/(loss)
852
(21)
Other operating expenses
–
–
Profit/(Loss) before income tax expense/benefit from continuing operations
(5,688)
(458)
Income tax (expense)/benefit
–
–
Profit/(Loss) after income tax expense/benefit from continuing operations
(5,688)
(458)
Other Comprehensive Income - that may later emerge in the Profit and Loss Statement
Exchange differences taken to reserves in equity – translation of overseas entities
–
–
Other Comprehensive Income - that will not emerge in the Profit and Loss Statement
–
–
Movement in actuarial assessments
–
–
Total Comprehensive Income
(5,688)
(458)
Notes to the Financial Statements
continued
86
Magontec Limited
Annual Report 2024
Financial Report (continued)
26. Parent Entity Information Magontec Limited (continued)
Balance Sheet
Magontec Limited
31 Dec 2024
$’000
31 Dec 2023
$’000
Cash and cash equivalents
1,557
23
Trade & other receivables
2
–
Other
106
76
Total current assets
1,665
99
Non-current assets
Inter Company Loan Receivables (net of provisioning)
11,140
11,324
Investment in shares of subsidiaries (net of provisioning)
5,596
11,718
Other financial assets
8,314
8,314
Total non-current assets
25,050
31,356
Total assets
26,714
31,455
Current liabilities
Trade & other payables
106
89
Total current liabilities
106
89
Non-current liabilities
Other
3,522
2,196
Total non-current liabilities
3,522
2,196
Total liabilities
3,628
2,285
Net assets
23,086
29,170
Equity attributable to members of MGL
Share capital
59,313
59,233
Reserves
7,083
7,559
Accumulated losses
(43,310)
(37,623)
Total equity
23,086
29,170
Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2024.
Capital commitments - Property, plant and equipment
The parent entity had no material capital commitments for property, plant and equipment as at 31 December 2024.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1.
Notes to the Financial Statements
continued
87
Magontec Limited
Annual Report 2024
Financial Report (continued)
27. Subsequent Events
Cancellation of QSLM shares
As described in Note 24 (Related Party Disclosures), on 1 November 2024 the Group announced to the ASX that it had entered
into a Memorandum of Settlement with QSLM following the termination of the Operating Agreements regarding the Group's
Magontec Qinghai facility.
At an Extraordinary General Meeting (EGM) convened on 5 February 2025 post balance date, Magontec Limited
shareholders approved this Memorandum of Settlement.
This included:
–
The selective buyback of QSLM's 28.48% shareholding in MGL (total of 22,681,940 shares) for zero cash consideration.
These shares were subsequently cancelled by the Group, substantially reducing the number of ordinary shares on issue.
–
The transfer of certain agreed upon remaining fixed assets from the Magontec Qinghai plant to QSLM for zero cash
consideration (book value of zero as at 31 December 2024); and
–
The waiver of all present and future claims as detailed in the key terms of the Memorandum of Settlement tabled at
the EGM.
Further to the events above, it is anticipated that the Magontec Romania Unicredit bank borrowing facility referred to in
Note 13 (Borrowings) will be renewed in early March 2025 for a further 12 month term through to February 2026 on the basis
of the Group's prior working relationship with the bank and positive discussions to date.
To the best of the Group's knowledge there have been no other material subsequent events that require disclosure.
ADDITIONAL COMPANY INFORMATION
Magontec Limited (MGL) is a listed public company and is incorporated in Australia. The MGL Group operates globally
including subsidiaries in Australia, Europe and China.
Registered Office and Principal Place of Business
Level 2, Suite 1
139 Macquarie St,
Sydney, NSW 2000
Tel: 61 2 8084 7813
In accordance with the requirements of Subsection 295(3A) of the Australian Corporations Act 2001 (Cth), set out below is the
consolidated entity disclosure statement disclosing information in respect of Magontec Limited and entities it controlled at
31 December 2024.
Notes to the Financial Statements
continued
Consolidated Entity Disclosure Statement
Body Corporates
Tax Residency
Entity Name
Entity Type
Trustee,
Partner or
Joint Venture
Place
Incorporated
or Formed
% of Share
Capital Held
Australian or
Foreign
Jurisdiction
Magontec Limited
Body Corporate
No
Australia
100%
Australian
Australia
Advanced Magnesium
Technologies Pty Ltd
Body Corporate
No
Australia
100%
Australian
Australia
Magontec GmbH
Body Corporate
No
Germany
100%
Foreign
Germany
Magontec SRL
Body Corporate
No
Romania
100%
Foreign
Romania
Magontec US LLC
Body Corporate
No
United States
100%
Foreign
United States
Magontec Xi'an Co Ltd.
Body Corporate
No
China
100%
Foreign
China
Magontec Qinghai Co. Ltd.
Body Corporate
No
China
100%
Foreign
China
Magontec SuZhou Co Ltd
Body Corporate
No
China
100%
Foreign
China
Varomet Holdings Limited
Body Corporate
No
Cyprus
100%
Foreign
Cyprus
AML China Ltd
Body Corporate
No
China
100%
Foreign
China
Consolidated Entity Disclosure Statement
88
Magontec Limited
Annual Report 2024
Financial Report (continued)
Directors’ Declaration
The Directors declare as follows -
a. in the Directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when
they become due and payable;
b. in the Directors’ opinion:
i.
the financial statements and notes thereto set out on pages 52 to 88 of this Annual Report, are in accordance with the
Corporations Act 2001, including compliance with accounting standards and give a true and fair view of the financial
position and performance of the Group;
ii. the consolidated entity disclosure statement required by s295(3A) of the Australian Corporations Act 2001 (Cth)
disclosed in this report is true and correct; and
c. the Directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to s.295A of the Corporations Act 2001.
On behalf of the Board of Directors
Mr N Andrews
Mr A Malhotra
Executive Chairman
Non-Executive Director
26 February 2025
89
Magontec Limited
Annual Report 2024
Financial Report (continued)
Independent
Auditor’s Report
to the Members
of Magontec
Limited
Camphin Boston
Level 5, 179 Elizabeth Street
(02) 9221 7022
DĞŵďĞƌŽĨZƵƐƐĞůůĞĚĨŽƌĚ/ŶƚĞƌŶĂƟŽŶĂůͲĂŐůŽďĂůŶĞƚǁŽƌŬ
of independent professional services firms
Chartered Accountants
Sydney, NSW 2000
cambos@cambos.com.au
ABN 69 688 697 499
GPO Box 3403, Sydney NSW 2001
camphinboston.com.au
>ŝĂďŝůŝƚLJůŝŵŝƚĞĚďLJĂƐĐŚĞŵĞĂƉƉƌŽǀĞĚƵŶĚĞƌWƌŽĨĞƐƐŝŽŶĂů^ƚĂŶĚĂƌĚƐ>ĞŐŝƐůĂƟŽŶ͘
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MAGONTEC LIMITED
Report on the Audit of the Financial Report
Auditor’s Opinion
We have audited the accompanying financial report of Magontec Limited and Controlled Entities (the
‘Group’), which comprises the Consolidated Balance Sheet as at 31 December 2024, and the
Consolidated Statement of Profit & Loss and Other Comprehensive Income, Consolidated Statement of
Changes in Equity and Consolidated Cash Flow Statement for the year ended on that date, a statement of
accounting policies, other explanatory notes and the Directors’ Declaration.
In our opinion the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2024 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) 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 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 and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (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 same
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 of 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.
Key audit matter
How our audit addressed the key audit matter
Impairment of Assets
The Company’s assets include plant &
equipment in the MAQ and MAR
subsidiary entities. We focused on this
area due to the:
Customer concentration risk at
MAR;
The discontinued operations at
MAQ
The Group’s Net Assets exceeding
its Market Capitalisation; and
Our procedures included, amongst others,
Assessing management’s determination of the
relevant CGU;
Comparing the underlying values and
assumptions in the cash flow model to
approved budgets;
Challenging management with respect to key
forward looking assumptions including future
production volumes, the forecast period and
discount rates applied, and compare these
90
Magontec Limited
Annual Report 2024
Financial Report (continued)
Extent of management judgment
involved in assessing impairment
indicators and determining the
assumptions used in evaluating
these indicators.
Management conducts a test for
impairment on an annual basis using a
value in use model. This model requires
the application of significant judgements
and estimates. The assets at MAQ were
fully impaired during the year.
assumptions with internally reported metrics
and external information.
Discuss the operations at MAR with Magontec
local management and auditors and review
the local audit papers;
Retrospective review of historical results
against budgets and forecasts to identify any
indications of management bias;
Assessing the sensitivity of the value in use
model to variances in key inputs.
Discontinued Operations
During the year the Company
discontinued operations at MAQ.
This impacted the metal production
segment.
Closed a business segment within
the PRC operations; and
Impacted the supply of Metal
products to customers.
Our procedures included, amongst others,
Management was challenged on how the
allocation of overhead costs meets the
requirement in AASB5 para 30 to present the
financial effect of the discontinued operations.
We checked the accuracy of the calculated
allocation between continuing and
discontinued operations.
Valuation and Existence of Inventory
We focused on this area as a key audit
matter due to the:
Quantum of amounts involved;
Sensitivity of the Company’s
margins to changes in the
underlying price of Magnesium;
Multiple geographical areas; and
Declining prices for the Group’s
products presenting a risk that
inventory may not be recorded at a
recoverable value.
Management recorded an inventory
write-down as disclosed in Note 2(d).
Our procedures included, amongst others,
Attendance at stock takes by subsidiary
auditors for all significant locations to conduct
test counts and assess internal controls;
Reviewing the work papers of the subsidiary
auditors comparing the carrying value of a
sample of inventory items to subsequent sales
price;
Review of costing methodology applied by
entities within the group for compliance with
the Group accounting policy;
Discuss the inventory processes used at MAB, MAX
and MAR with Magontec’s local management and
auditors and review the local audit work papers.
Other Information
The Directors are responsible for the other information in the Annual Report. The other information
comprises the pages spanning from the Executive Chair’s Letter through to and including the Directors’
Report and the Shareholder Information, but does not include the financial report, Directors’ Declaration
and our Auditor’s Report thereon.
Our opinion on the financial report does not cover the other information, except for the Remuneration
Report, and accordingly we do 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 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.
91
Magontec Limited
Annual Report 2024
Financial Report (continued)
If, based on the work we have performed, 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.
Directors’ Responsibility for the Financial Report
The Directors of Magontec Limited 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.
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 Responsibility
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.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/Home.aspx. This description forms part
of our auditor’s report.
Report on the Remuneration Report
Auditor’s Opinion
We have audited the Remuneration Report included in pages 36 to 50 of the Annual Report for the year
ended 31 December 2024.
In our opinion the Remuneration Report of Magontec Limited for the year ended 31 December 2024
complies with section 300A of 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.
Camphin Boston
Chartered Accountants
Justin Woods
Partner
Level 5, 179 Elizabeth Street, Sydney NSW 2000
Dated: this 28th day of February 2025
92
Magontec Limited
Annual Report 2024
Financial Report (continued)
Class:
Ordinary shares fully paid
ASX Code:
MGL
Voting Rights: Voting rights of members are governed by the Company’s constitution. In summary, every member present in
person or by proxy, attorney or representative has one vote on a show of hands and one vote for each share on
a poll.
Twenty Largest Holders of Ordinary Shares as at End Date of Current Reporting Period
Name of Holder
No. Of Shares
%
1
QINGHAI SALT LAKE MAGNESIUM CO LTD
22,681,940
28.48
2
CITICORP NOMINEES PTY LIMITED
9,783,983
12.28
3
J P MORGAN NOMINEES AUSTRALIA
3,913,371
4.91
4
LI YUAN YUAN & LI ZHONG JUN
3,909,154
4.91
5
YELLOW ZONE SUPER FUND
3,332,844
4.18
6
BNP PARIBAS NOMINEES PTY LTD
2,656,312
3.34
7
HSBC CUSTODY NOMINEES (AUSTRALIA) LTD
2,026,342
2.54
8
DEWBERRI PTY LTD
1,800,890
2.26
9
MIENGROVE PTY LTD
1,380,000
1.73
10 MR SCOTT PARHAM
1,338,063
1.68
11
BELLINO PTY LTD
1,260,583
1.58
12 MR SHAUN WILLIAM SAINSBURY DRABSCH
936,908
1.18
13 MR XUNYOU TONG
845,338
1.06
14 MRS PAMELA ELIZABETH DRABSCH
678,975
0.85
15 DALSIZ PTY LTD
668,310
0.84
16 MR CHRISTOPH KLEIN-SCHMEINK
659,410
0.83
17 BRIAN GORMAN SELF MANAGED SUPER FUND PTY LTD
650,000
0.82
18 DR ANDREW DUNCAN MACLAINE-CROSS
643,882
0.81
19 MR JOHN MICHAEL PATRICK O'REILLY
560,000
0.70
20 MR PETER FABIAN HELLINGS & MRS JACQUELINE KIM GUN HELLINGS
545,000
0.68
Total
60,271,305
75.66
Distribution of Shareholders as at End Date of Current Reporting Period
Number Held
Holders
No. of Securities
Percentage
1–1,000
600
86,630
0.11
1,001–5,000
729
1,646,244
2.06
5,001–10,000
187
1,355,090
1.70
10,001–100,000
239
6,885,222
8.65
100,001 and over
63
69,670,580
87.48
Total
1,818
79,643,766
100.00
Shareholder Information
93
Magontec Limited
Annual Report 2024
Financial Report (continued)
Substantial shareholders as at 31 December 2024
Magontec Limited has been notified of the following substantial shareholdings:
Holder
Number of
ordinary shares
% of issued
ordinary share
capital
Qinghai Salt Lake Magnesium Co. Ltd (QSLM)
22,681,940
28.48%
Allan Gray Australia Pty Limited
15,109,260
18.97%
As at 31-Dec-2024 a marketable parcel of securities ($500) is a holding of at least 2,703 securities.
This is based on a closing share price of $0.185
Issued Capital and Securities
On Issue at
31 Dec 2024
Ordinary Shares fully paid
79,643,766
Share Registry: Boardroom Pty Limited
Postal:
Local:
International
Address: Level 8,
GPO Box 3993,
Tel: 1300 737 760
Tel: +61 2 9290 9600
210 George Street
SYDNEY NSW 2001
Fax: 1300 653 459
Fax: +61 2 9279 0664
SYDNEY, NSW 2000
Website: www.boardroomlimited.com.au
Top 10 shareholders 31 December 2024 incorporating the cancellation of QSLM shares following the
EGM on 5 February 2025
Magontec Limited has been notified of the following substantial shareholdings:
Holder
Number of
ordinary shares
% of issued
ordinary share
capital
CITICORP NOMINEES PTY LIMITED
9,783,983
17.18%
J P MORGAN NOMINEES AUSTRALIA
3,913,371
6.87%
LI YUAN YUAN & LI ZHONG JUN
3,909,154
6.86%
YELLOW ZONE SUPER FUND
3,332,844
5.85%
BNP PARIBAS NOMINEES PTY LTD
2,656,312
4.66%
HSBC CUSTODY NOMINEES (AUSTRALIA) LTD
2,026,342
3.56%
DEWBERRI PTY LTD
1,800,890
3.16%
MIENGROVE PTY LTD
1,380,000
2.42%
MR SCOTT PARHAM
1,338,063
2.35%
BELLINO PTY LTD
1,260,583
2.21%
TOP 10 SUBTOTAL
31,401,542
55.12%
OTHER SHAREHOLDERS
25,560,284
44.88%
TOTAL SHARES ON ISSUE POST CANCELLATION OF QSLM HOLDING
56,961,826
100.00%
Shareholder Information
continued
Level 2, Suite 1, 139 Macquarie Street, Sydney, 2000 NSW Australia
T. +61 2 8084 7813 | www.magontec.com